The New Jersey Economic Development Authority took steps to help spur more affordable housing construction by adopting new rules for the Aspire program, a gap financing program that supports commercial, mixed-use and residential real estate development projects.
The Aspire program encourages place-based economic development throughout New Jersey by providing tax credits to the developer, with the credit generally being based on a percentage of the project’s costs, subject to statutory cap based on the location of the project as well as the specific aspects of the projects.
On Thursday, the NJEDA Board adopted rule changes that increased per project caps, expanded eligibility for “transformative projects” and increased affordability controls for residential units.
“Since launching, the Aspire Program has supported innovative commercial projects like HELIX and affordable and mixed-income residential developments in downtowns across the state, including in Newark and Trenton,” said NJEDA Chief Executive Officer Tim Sullivan.
“The adoption of these new rules will allow the NJEDA to support even more transformative, mixed-use, transit-oriented development which will help revitalize communities and strengthen our economy,” Sullivan said. “Importantly, the rules will strengthen affordable housing, increasing access to hardworking New Jersey families.”
The Aspire program was created under the New Jersey Economic Recovery Act of 2020 (ERA) to support mixed-use, transit-oriented development with tax credits to commercial and residential real estate development projects that have financing gaps. In July, Gov. Phil Murphy signed a law, supported by NJBIA, that responded to changing economic conditions by updating Aspire to make it more accessible and able to support more projects that create jobs and housing.
Under the new rules approved by the board, project awards will be increased in response to inflation, supply chain disruptions and rising interest rates, and the new legislation that increased caps per project according to the following schedule.
Increased Project Awards
- 80% of eligible costs up to $120 million for Atlantic City, Trenton, and Paterson
- 60% of eligible costs up to $90 million for Four Percent Low-Income Housing Tax Credit projects, projects in a qualified incentive tract, a municipality with a Municipal Revitalization Index score over 50, or an enhanced area
- 50% of eligible costs up to $60 million for all other eligible projects
- Transformative project caps are subject to the above percentages with a dollar cap of $400 million
Transformative Projects
Transformative projects must demonstrate special economic importance to New Jersey and leverage the state’s mass transit assets, higher education assets, and other economic development assets to attract or retain employers and skilled workers or in targeted industries by providing employment or housing. Transformative projects must meet the following criteria:
- Minimum project costs increased from $100 million to $150 million
- Minimum commercial project size remains 500,000 square feet or
- 300,000 square feet in an enhanced area
- 200,000 square feet in Atlantic City, Paterson, or Trenton
- 250,000 square feet for film production studios
- Minimum residential project size of 700 newly constructed units
- Minimum mixed-use project of 50,000 square feet plus
- 200 residential units in Atlantic City, Paterson, or Trenton
- 300 residential units in an enhanced area
- 400 residential units in other eligible locations
Affordability Controls
For a project that includes newly constructed residential units, at least 20% of the units must be reserved for low- and moderate-income households. These income-restricted units will include a minimum number of three-bedroom units and a maximum number of studios and one-bedroom units, ensuring more options for families. They also must include more units for very low-income and low-income households with the remainder for moderate-income.
To date, the NJEDA Board has approved 10 projects for over $500 million in Aspire awards, representing over 500,000 square feet of commercial space, 490 income-restricted units, and 1,040 market-rate units.
The Aspire program application, as well as complete rules, eligibility requirements, award sizes, and other information can be found here.
