The resulting revenues will be used to fund grants, loans, and technical assistance programs in food desert communities like Camden City, Pennsauken, and Woodlynne.
By Matt Skoufalos | August 21, 2023
To spur investment in food desert communities throughout New Jersey, the state Economic Development Authority (NJEDA) will auction off $10 million in tax credits to qualified businesses next month.
Through the Food Desert Relief Tax Credit Auction, corporations and insurance companies with New Jersey state tax liability may buy credits towards that liability for 85 cents on the dollar, starting September 18.
NJEDA approved the auction at its April 2023 board meeting.
The New Jersey state legislature passed the $240-million Food Desert Relief Act (FDRA) as a component of the New Jersey Economic Recovery Act (ERA) of 2020. It allocates $40 million annually over six years to food desert relief throughout the state, from fiscal 2021 through fiscal 2027.
In September 2022, NJEDA identified 50 communities that qualify for FDRA programs; locally, they include Camden City, Pennsauken, and Woodlynne.
The Food Desert Relief Tax Credit Program supports the development and operation of new supermarkets in those communities. The auction process can supplement those tax credits by converting as much as $10 million in tax credits into grants, loans, and technical assistance monies.
NJEDA can then leverage those funds to support projects that are smaller than supermarket construction —namely, helping existing small and mid-sized food retailers and hunger relief programs in New Jersey municipalities where residents lack access to nutritious and affordable food.
Help for farmers markets, for small vendors building infrastructure to accept SNAP and WIC benefit payments, or for programs like the NJEDA Food Retail Innovation in Delivery Grant (FRIDG), are all examples of projects that revenues raised by the auction could support.
To date, NJEDA has awarded more than $1 million in Food Security Planning Grants to nine projects across the state. Among them is Chef Aaron McCargo’s “Camden Food Factory” project, for which Camden City was awarded $125,000 in technical assistance grants.
The tax credit auction functions more like a purchase transaction rather than a rebate, said Riley Edwards, NJEDA Team Lead for Economic Security Projects.
“It’s a way for the largest businesses and employers in the state to contribute to alleviate food deserts in a way that they might not be prepared to do directly,” Edwards said.
With bids in minimum increments of $500,000, the auction could benefit as many as 20 companies, and if all $10 million credits are sold, it could raise $8.5 million for NJEDA food desert programs.
Depending upon interest in the auction, the agency could approve additional credit auctions, Edwards said, although it hasn’t outlined yet the ends to which they could be applied in those communities of need.
“We wanted to convert some of the allocated tax credits into dollars that go into grants and loans and technical assistance,” she said. “We don’t know exactly what those programs are or when they’ll launch, but that will be something in 2024.”
Whatever the outcome of the auction, the revenues raised offer NJEDA greater flexibility in its allocation of resources for projects in food desert communities beyond supermarket development plans, Edwards said.
“It’s a win for the companies, it’s a win for us to have this source of funding for these programs, and it’s a win for these communities that will ultimately benefit from these future programs,” she said.
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