CONSTRUCTION INFLATION FUND
The application window for the the Construction Inflation Fund Grant Program closed October 19, 2023 at 5:00pm.
The Construction Inflation Fund is a pilot program established to provide grants for real estate development projects that have experienced increased construction costs and project funding gaps resulting from the COVID-19 pandemic.
PROGRAM DETAILS
The American Rescue Plan (ARP), which was signed into law by President Joe Biden on March 11, 2021, is a $1.9 trillion economic stimulus bill designed to rebuild and restart the American economy in the wake of the Coronavirus (COVID-19) public health emergency by investing in families, communities, and small businesses.
Through the Coronavirus State and Local Fiscal Recovery Funds (SLFRF), the ARP delivered $350 billion to state, local, and tribal governments to support their response to, and recovery from COVID-19.
In June 2022 the Murphy Administration and the New Jersey Legislature made funds available through the state budget appropriation process for “Real Estate Gap Financing” which led to the creation of the Construction Inflation Fund.
The Construction Inflation Fund program (the “Fund”) is a competitive grant program proactively deploying $10 million in ARP SLFRF funding to address the impacts of COVID-19.
The Fund will provide funding to eligible applicants for real estate development projects that have experienced increased construction costs and project funding gaps resulting from the COVID-19 pandemic. The Fund is established to mitigate the negative economic impacts of the COVID-19 pandemic by providing support to real estate development in the form of grants for real estate substantial rehabilitation, new construction, and development costs associated to each project.
ELIGIBILITY
Eligible Projects
The below types of real estate projects are eligible and will be considered for Construction Inflation Fund grants:
- Commercial (including office)
- Manufacturing
- Mixed Use developments: any residential portion must comply with the 20% reservation for low- and moderate-income households required by N.J.S.A. 52:27D-329.9(b
- Additionally, any warehouse uses included must be ancillary and in direct support of the site’s eligible primary uses
Eligible real estate development projects must be sized such as to have at least $5million of total project costs.
Eligible projects must have a COVID-19 induced funding gap evidenced by related documentation (i.e. project budget, construction contract, other agreements or contracts, etc.)
All projects will be subject to prevailing wage law and compliance with other labor standards requirements. Projects that have started construction prior to application may include expenses as covered costs only if either New Jersey state prevailing wage or federal Davis Bacon wage requirements were incorporated into the construction contract prior to construction start and the project has been paying either prevailing wage or Davis Bacon wage rates as applicable.
Eligible Applicants
Eligible applicants are small businesses which are undertaking an eligible real estate project in New Jersey (as outlined above) that experienced a COVID-related funding gap.
As defined in the Coronavirus State and Local Fiscal Relief Funds final rules (31 CFR 35.3), a small business is: a business concern or other organization that:
1. Has no more than 500 employees or, if applicable, the size standard in number of employees established by the Administrator of the Small Business Administration for the industry in which the business concern or organization operates, and
2. Is a small business concern as defined in section 3 of the Small Business Act (15 U.S.C. 632)
Applicants must evidence a COVID-19 impact funding gap and need as outlined below in the application process and must agree to 50% developer fee deferral.
Additional applicant requirements:
- Must be in substantial good standing with the New Jersey Department of Labor and Workforce Development and the NJ Department of Environmental Protection at the time of application to be eligible. A current tax clearance certificate must be provided prior to approval to demonstrate the applicant is in substantial good standing with the NJ Division of Taxation, unless the applicant is not required to register with the Division of Taxation.
- Applicants will be reviewed against the Federal System for Award Management to ensure entity is not debarred.
FUNDING USE
Funding can only be used for the approved real estate development project costs based on application, Authority review, and funding grant agreement.
Grants will be used for prospective real estate development project hard and soft costs, where no more than 20% of a grant can be used to support project development soft costs.
Funding cannot be used for payment of developer fees.
AWARD SIZE
- Minimum grant funding of $500,000 and maximum grant funding of $5,000,000 provided.
- Grant Funding may not exceed 20% of Total Project Costs.
- Grant Funding to be provided based on demonstrated pandemic related cost increase and funding gap including review of construction contract wage requirements. Grant funding amounts will be determined following cost reasonableness and Duplication of Benefits review.
- A maximum of one grant will be awarded per real estate developer regardless of having different special purpose entities; staff will review for common management or construction responsibilities between applicants.
FUNDING DISBURSEMENTS
- Once a project is approved for funding, the Authority will enter into a grant agreement with the applicant detailing the project to be funded, eligible project costs, the amount of grant funding, and all financial programmatic requirements.
- The grant funds will be disbursed either incrementally as eligible project expenses are incurred and prorated with other funding sources with the Authority’s standard construction retainage withheld until project completion or grant funds may be disbursed in coordination with the other lender’s disbursement process.
- Funding disbursement requests must be evidenced by documentation supporting that the expenses were incurred, work has been performed in accordance with prevailing wage and labor standards compliance requirements, and work was done consistent with project approval and eligible uses of program funding.
- Final payment to be made upon the Authority’s inspection of completed project and receipt of either temporary certificate of occupancy or certificate of occupancy as determined by the Authority.
PROGRAM GUIDE
QUESTIONS
For more information or to ask a specific question please send an email to realestateinfo@njeda.com and a team member will reach out to you.