Economic Development

Food Desert Relief Tax Credit Program Rules Approved

On Apr 13, 2023

The New Jersey Economic Development Authority (NJEDA) Board has approved proposed rules for the $240 million Food Desert Relief Tax Credit Program, which will help address food access challenges by attracting and retaining new supermarkets in the 50 Food Desert Communities (FDCs) designated by the NJEDA last year. Additionally, the Board approved the sale of up to $50 million of the $240 million in tax credits in 2023, the proceeds of which will fund future grant, loan, and technical assistance programs under the Food Desert Relief Act (FDRA). These programs will help increase availability of nutritious foods and develop new approaches to alleviate food insecurity.

The FDRA was established by the New Jersey Economic Recovery Act (ERA) of 2020 and signed into law by Gov. Phil Murphy in January 2021. As authorized by the ERA, the NJEDA Board approved proposed rules that will allow the NJEDA to launch the Food Desert Relief Tax Credit Program this year.

The Food Desert Relief Tax Credit program establishes two types of tax credits that encourage resiliency of supermarkets for a lasting impact on communities. Both are available to new and rehabilitated supermarkets within the areas designated as FDCs, which span all 21 New Jersey counties and are home to over 1.5 million residents. The Financing Gap Tax Credit will provide up to 40% of project’s costs for development of the first new supermarket located in any one FDC, and up to 20% for the second new supermarket. The Initial Operating Cost Tax Credit will be available to supermarket operators to help fill a shortfall in initial operating income.

To be eligible, stores must be located within the boundaries of NJEDA-designated FDCs. Applicants must demonstrate that the project would not be feasible without the tax credit award and demonstrate that the supermarket will remain open for business for at least seven years. Applicants must also commit that the supermarket will accept federal benefits such as the Supplemental Nutrition Assistance Program (SNAP) and the Special Supplemental Nutrition Program from Women, Infants, and Children (WIC). Additionally, supermarkets must devote at least 10% of retail space to fresh and/or frozen fruits and vegetables and host a community listening session in the FDC at least once a year. A complete overview of the rules and more information on the Food Desert Relief Tax Credit program can be found here.

The FDRA allocates $40 million per year for six years, totaling $240 million, in tax credits and enables NJEDA to sell a portion of the tax credits to support future grant, loan, and technical assistance programs. Today, the Board approved the sale of up to $50 million in tax credits. Proceeds from the sale will be used to support programs that will advance the priorities established by the FDRA and be available to a wide array of organizations, companies, and retailers to strengthen food security in FDCs. These programs will support costs associated with equipment and technology to make nutritious foods more accessible and affordable, as well as other initiatives to ensure food security of FDC residents.

“Food insecurity is a widespread and longstanding issue that has been exacerbated by the pandemic, and New Jersey is taking innovative steps to ensure no resident goes hungry,” said Gov. Phil Murphy. “By expanding grocery options in an intentional manner, more families across our state’s food desert communities will be able to put affordable and healthy food on their tables. Fighting food insecurity fosters greater wellbeing for countless communities and families, advancing our vision for a truly stronger, fairer New Jersey economy.”

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