Brownfield Reimbursement Program
Administered by the New Jersey Economic Development Authority (NJEDA) and the Department of Treasury (Treasury), the Brownfield Reimbursement Program allows developers to enter into an agreement that allows for the reimbursement of up to 75% of the remediation costs incurred at a brownfield site. The reimbursement comes from certain new state taxes generated by the project. Created under the Brownfields and Contaminated Site Remediation Act of 1998, the Brownfields Reimbursement Program is designed to provide financial incentives for developers to remediate and redevelop New Jersey’s many brownfield sites. The reimbursement process starts with the developer submitting a request to NJDEP to approve its remediation costs
Who is eligible to apply?
This program is available to any party that is not liable for the cost of cleaning up a property under the Spill Compensation and Control Act, specifically, N.J.S.A.58:10-23.11g. A developer is required to sign a Certification of Non-Liability as part of the application process.
What taxes are eligible for reimbursement to the developer?
The major taxes that are eligible are:
Sales and Use Tax;
Corporate Business Tax;
Realty Transfer Tax; and
Sales Tax paid on the materials used for remediation or for the construction of new structures.
There are several other minor taxes that are eligible for reimbursement.
How can I take advantage of this program?
Contact the NJEDA to schedule a pre-meeting that will also include NJEDA’s partners, Treasury and the Department of Environmental Protection (DEP). This is an opportunity to get feedback on whether you have an eligible project and to raise questions. After the pre-meeting, you will be required to submit a narrative application describing how the project meets the criteria outlined in the Brownfields law. The decision as to whether or not to enter into a Redevelopment Agreement is solely within the discretion of the NJEDA and Treasury. If Treasury and NJEDA determine that you are eligible for the program, you will be required to enter into a Redevelopment Agreement.
What is a Redevelopment Agreement?
The Redevelopment Agreement is a contract between the State and a brownfields redeveloper. It identifies the party that will be reimbursed under the program, the specific reimbursement percentage, and any limitations in the reimbursement, such as the length of time the reimbursement will be in effect. The Redevelopment Agreement is signed by NJEDA, Treasury and the applicant.
Is there a cap on the reimbursement?
There is no dollar limit on the amount of taxes reimbursed, however, there is a limitation on the percentage of the remediation costs that are eligible for reimbursement. A maximum of 75% of the remediation costs are eligible for reimbursement. The actual reimbursement amount is based on the percentage outlined in the Redevelopment Agreement, any limitations on the duration of the length of payment duration, the eligible remediation costs incurred by the developer and the actual taxes remitted to the State Treasury.
Can I combine this program with other brownfield incentives?
Any benefits received from tax abatement or a grant must be credited against the remediation costs. The NJEDA offers bridge loans for pre-development and brownfield remediation costs up to $1 million. These loans can be obtained without effecting the amount of your reimbursement.
Is the program limited to specific areas of the State?
Redevelopment projects from all areas of the State are eligible; however, the site must meet the definition of a brownfield site. A brownfield is defined as any former or current commercial or industrial site, currently vacant or underutilized and on which there has been, or is suspected to have been a discharge of a contaminant.
Can I apply to the program if I don’t own the property or I intend to sell the property in the future?
You do not have to own the property to be eligible for the reimbursement program. If you enter the program as the owner and subsequently sell the property, you would still be eligible to be reimbursed as long as you are the party that has incurred the remediation costs. Contract purchasers may also enter the Program, again provided that they incur the remediation costs.
Do I have to be the entity that generates the taxes to receive a reimbursement?
Often an entity other than the developer generates the taxes at a redevelopment site, particularly in the retail context. You do not have to be the party who remits the eligible taxes to the State, however, you can only receive a reimbursement after the taxes are remitted and filed from the location that is the subject of the Redevelopment Agreement.
How am I reimbursed?
The reimbursement of remediation costs occurs only after the remediation is completed and the offsetting taxes have been paid into the Treasury. Remediation costs should be submitted to DEP along with a copy of the Redevelopment Agreement, a certification that the costs were solely for remediation; a summary which details the remedial work, and a summary identifying each of the invoices for the remedial work. Upon review of this information, DEP will certify the eligible remediation costs to Treasury.
How frequently are reimbursement payments issued?
Reimbursement payments will be made at different stages in the process, depending upon the type of tax that is remitted and the type of redevelopment project. The Sales Tax on construction material can be reimbursed after the completion of new structures. Sales and Use Tax generated from the end use are reimbursed on an annual basis after the business is operating and generating taxes. All reimbursements are contingent upon the remediation being completed for the entire site or an area of concern at the site.
What if I normally file a consolidated return as a corporation?
The taxes must be generated from that redevelopment location in order to be eligible for reimbursement. Therefore, for companies with many corporate locations, in order for taxes to be eligible for reimbursement, the corporation must files its taxes from that specific redevelopment location.
NJDEP-Office of Brownfield Reuse
401 East State Street
PO Box 028
Trenton, NJ 08625