New Jersey Awards Tax Credits for $1 Billion Studio Project

Togus Urban Renewal LLC has achieved a significant milestone in its 1888 Studios project in Bayonne, N.J., securing a Film-Lease Partner Facility designation from The New Jersey Economic Development Authority (NJEDA). This designation offers future tenants enhanced tax credits for projects produced under the Film and Digital Media Tax Credit program. However, this benefit is contingent upon the developer committing to occupy the facility for a minimum of five years.

The Project Overview

The 1888 Studios project, designed by Gensler, marks the inception of the first campus-style film and studio facility in the Northeast region. Spanning 1.5 million square feet across 58 acres of land, with an additional 20 acres in Newark Bay, the project is estimated to cost $1 billion and is slated for completion in 2026. The facility will comprise 23 smart sound stages ranging from 18,000 to 60,000 square feet, boasting features such as 40- to 50-foot ceilings, 350,000 square feet of production support space, office areas, mills, lighting and grip facilities, as well as outdoor backlot space and storage.

Financing and Economic Impact

Public financing for the development includes a $65 million bond approved in March 2023. Additionally, the Bayonne City Council endorsed a 30-year Payment in Lieu of Taxes (PILOT) agreement. Under this agreement, the developer's payments will commence at approximately $2.6 million annually and incrementally rise to $7.5 million. The project is anticipated to generate approximately 2,100 full-time permanent jobs, according to NJ.com.

Film-Lease Partner Benefits

Governor Murphy reinstated the Film and Digital Media Tax Credit program in 2018, which is funded until 2039. In 2021, the program received an expansion with $400 million in yearly allocations, and NJEDA was authorized to designate Film-Lease Partner facilities. This initiative offers tax credits of up to 40 percent for labor expenditures and 35 percent for production expenses, with the potential for an additional diversity credit of up to 4 percent.

Qualifications for Tenants

Tenants stand to benefit from increased tax credit awards if they qualify as film-lease production companies. To obtain this designation, production firms must conduct at least half of their total shoot days at the facility.