Transit and freight rail can be powerful tools for development. Seeking to maximize those tools, NJ in 2008 established the Urban Transit Hub Tax Credit, which provides tax credits for businesses that use freight rail and those that develop housing, plan large expansions, or relocate within a half-mile of transit hubs in nine cities.

According to data received from the NJ Economic Development Authority, the state has approved credits worth $352 million for nine projects in Newark, Elizabeth, New Brunswick, and Jersey City. NJEDA says these will lead to $910 million in capital investment and create 1,409 new permanent and 3,816 construction jobs, and retain 2,018 jobs. The tax credit has also become central in New Jersey’s efforts to keep Panasonic’s US headquarters in the state.

Four of the approved credits are going to projects in Newark. These include the planned “Teachers Village” near Broad Street station, which would include three charter schools, 60,000 square feet of retail and workforce housing for teachers. A market-rate condominium development on Rector Street will also benefit. And the credit will be “critical” to One Theater Square, a 44-story mixed-use tower with market-rate and artist housing that is planned across the street from the NJ Performing Arts Center, according to developer Dranoff Properties.

Nearby Elizabeth has benefited from the freight provision of the program, according to William O’Dea, Deputy Executive Director of the Elizabeth Development Company. “It’s made a very notable difference on freight rail,” O’Dea told MTR. “It’s been the difference between Wakefern [Food Corporation] leaving the state and staying.” Wakefern received a credit late last year to expand its food distribution operations in Elizabeth and Newark, creating 500 new permanent jobs and over 800 construction jobs.

O’Dea added that the program had inspired the city to explore other ways of using transportation to drive redevelopment. He suggested that if a major office tenant came to the area around Broad Street Elizabeth station, a logical next step could be an east-west dedicated busway connecting to nearby destinations.

Now in its third year, the Urban Transit Hub Tax Credit has clearly helped build a critical mass of development in Newark and other cities. It could be a worthy model for other states looking to use existing and planned transit services to drive urban redevelopment.