OFFSHORE WIND TAX CREDIT PROGRAM
Please be advised that as of November 15, 2021, NJEDA has adopted new rules for implementing the Offshore Wind Tax Credit Program to reflect legislative changes made to the program in June 2021. To access a courtesy copy of the legislation, please click here. To access the updated rules, please click here
The Offshore Wind Tax Credit is a powerful financial tool designed to spur private capital investment and employment growth in major, land-based offshore wind industry projects. The tax credit program provides reimbursement for capital investments in industry-specific facilities located in New Jersey.
APPLICATION
NJEDA is currently accepting applications for the Offshore Wind Tax Credit.
Offshore Wind Tax Credit Program Businesses must apply for the tax credits by July 1, 2025 and satisfy the capital investment and employment conditions for award of the credits by July 1, 2028.
If you are interested in applying for the Offshore Wind Tax Credit Program, please contact Olivia Barone, NJEDA Senior Project Officer, at Olivia.barone@njeda.gov
PROGRAM DETAILS
If You Are:
A business making a capital investment in a qualified wind energy facility of $50M ($17.5M if a tenant) in New Jersey and will be employing at least 150 new, full-time employees at the qualified wind energy facility or through an equipment supply coordination agreement.
You Can Apply For:
The tax credit provides coverage for a portion of a capital investment in a qualified wind energy facility, subject to various assumptions and conditions. Tax credits are capped at up to 100% of the qualified capital investments made.
Taxpayers may apply 20% of the total credit amount per year over a five-year period against their corporate business tax or insurance premiums, or sell the tax credit certificate for an amount not less than 75% of the credit amount.
ELIGIBILTY
Capital Investment Requirements:
Businesses: Must make or acquire a minimum $50 million capital investment in a qualified wind energy facility located in New Jersey.
Tenants: Must occupy space in a qualified wind energy facility located in New Jersey where the owner has made or acquired a minimum $50 million capital investment in the facility. The tenant-occupied space must represent at least $17.5 million of the capital investment in the facility.
New Full-Time Employee Requirements:
In addition to making the required capital investment, including tenants at their qualified wind energy facility, must employ a minimum number of new, full-time employees during the five eligibility years following application for the tax credit in order to receive the full twenty percent of the total value of the tax credit in that year as follows:
Eligibility Year | Minimum number of new, full-time employees compared to the number of full-time employees at the time of application |
First Year | 100 |
Second Year | 150 |
Third Year | 200 |
Fourth Year | 300 |
Fifth Year | 300 |
Otherwise, eligible businesses with between 150 and 300 new, full-time employees compared to the number of full-time employees at the time of application will receive an award based on the following prorated formula:
Percent of the full value of the tax credit for that eligibility year | Number of new, full-time employees compared to the number of full-time employees at the time of application |
50 percent | 150 to 199 |
65 percent | 200-249 |
85 percent | 250-299 |
The calculation of new full-time employees may include new full-time employees resulting from supply coordination agreements between the applicant and an equipment manufacturer, supplier, installer or operator that supports a qualified offshore wind project. All supply chain jobs must also be new jobs (above a baseline set before the first-year supplier agreement with the applicant). These positions will be counted on a cumulative hour/full time equivalent basis.
New full-time jobs can be counted if the employee’s primary office is at the qualified wind energy facility and they spend at least 80% of his or her time at the facility. They can also be counted if they result from a supply coordination agreement and the employee spends at least 80% of his or her time in New Jersey.
Please note the tax credits may be reduced or forfeited if facility or employment levels are not maintained for the required term.
AWARD SIZE
Tax credits under the OSW tax credit program will be structured so that the award will consist of up to five compliance years, each equaling twenty percent of the total value of the tax credit.
Illustrative Award Sizes:
Dollar award amount is only used for illustrative purposes and should not be assumed as the final award amount. Please reach out to offshorewindtaxcredit@njeda.com with any questions.
Net Positive Economic Benefits Test:
Tax credit awards will be subject to a net positive economic benefits test. NJEDA uses the IMPLAN model to calculate the expected net economic benefit from Authority projects. The primary within-firm factors of production which help to calculate the OSW Tax Credit award include number and salary of jobs, hard construction costs, local property taxes, and duration of the commitment to the state. This information will be submitted by the applicants when applying for the OSW tax credit program. The OSW Tax Credit rules require projects to create positive economic benefit to the State equal to 110 percent of the approved tax credit allocation amount for the period equal to 75 percent of the useful life of the investment. For more information, please download the Net Economic Benefit Analysis Overview document on the right hand side of the webpage.
FEES
In order to receive the Offshore Wind Tax Credit, a business must pay the following fees based on the number of new, full-time employees at the qualified wind energy facility (QWF) as listed in the application, and subsequently approved by NJEDA as follows:
Application Fee: a one-time non-refundable fee due at the time of application, based on the number of new, full-time employees as listed in the application:
Letter of Intent Fee: a non-refundable fee due at the time of execution of the non-binding letter of intent between the business and NJEDA based on the number of new, full-time employees proposed for consideration by the board. However, this fee shall be refunded if the Authority does not approve the tax credit.
Tax Credit Certificate (Issuance fee) (one time only): a non-refundable fee due prior to the receipt of the tax credit certificate based on the number of new, full-time employees approved by the board.
Annual Servicing Fee: an annual fee due at the time the business submits its annual report.
Tax Credit Transfer Fee: a fee due should a business apply for a tax credit transfer certificate or for permission to pledge a tax credit transfer certificate purchase contract as collateral.
Administrative Change Fee: a non-refundable fee for each request for any administrative changes, additions, or modifications to the tax credit. Major administrative changes, such as those requiring extensive staff time and Board approval, incur higher fees.
Certification Extension Fee: a non-refundable fee for each request for the first and subsequent six-month extension(s) to the date by which the business shall submit the certifications with respect to the capital investment and employees required upon completion of the capital investment and employment requirement
Termination Fee: an additional fee for businesses seeking to terminate an existing incentive agreement in order to participate in a different incentive agreement pursuant to P.L. 2018, c. 161. Major terminations, such as those that require extensive staff time or Board approval, incur higher fees.
Projects with 150-299 jobs at the QWF | Project with 300+ jobs at the QWF | |
Application Fee | $10,000 | $15,000 |
Approval Fee | $150,000 | $300,000 |
Tax Credit Certificate (Issuance fee) (one time only) | $150,000 | $300,000 |
Annual Servicing Fee | $50,000 | $75,000 |
Tax Credit Transfer Fee (initial request) | $10,000 | $15,000 |
Tax Credit Transfer Fee (subsequent requests) | $5,000 | $7,500 |
Administrative Change Fee | $5,000 | $7,500 |
Major Administrative Change fee | $15,000 | $25,000 |
Certification Extension Fee (first six-month extension) | $10,000 | $15,000 |
Certification Extension Fee | $15,000 | $ 25,000 |
Termination Fee | $5,000 | $7,500 |
Major Termination Fee | $15,000 | $25,000 |
Projects utilizing NJEDA financial assistance for construction related costs are subject to state prevailing wage requirements.
Effective April 1, 2020 all construction contracts in which prevailing wage applies must provide proof of valid NJ Department of Labor Construction Registration Certification. Please email PWCR@dol.nj.gov if you have any questions about this requirement. Please be advised that a valid Contractor Registration Certificate is required to perform construction on this NJEDA financially assisted project.
Courtesy Copy – Special Adopted New Rules: N.J.A.C. 19:31-20 – Offshore Wind Tax Credit Program
PROGRAM GUIDE
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