How To Profit From Lack of Profitability

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These articles by Bart Jackson and Kathleen McGinn Spring were prepared for the June 12, 2002 edition of

U.S. 1 Newspaper. All rights reserved.

Trenton Builds An Investor’s Dream

When did your leasing agent last offer to lower your

rent by $20,000? When did your client last hasten to adjust his needs

to your schedule and capacity? When were you absolutely guaranteed

incremental payment that arrived on time? Well, everyone from real

estate brokers to construction folk to retail and wholesale firms

of all sizes get ready. The city of Trenton is offering all these

in a massive, many-million-dollar rejuvenation sweep.

Individuals and businesses seeking a piece of this action will want

to attend "Business Opportunities in the New Trenton" on Wednesday,

June 19, at 7:30 a.m. the Nassau Club, sponsored by the Princeton

Chamber of Commerce. Cost: $24. Call 609-520-1776. Mercer County Executive

Bob Prunetti speaks on the major locations of renovation and

reconstruction, along with the benefits for building, investment,

and business relocation.

"The goal here is to recreate neighborhoods," says Prunetti,

"to embellish, without dispossessing. Over the next three years,

it will create one of the most meaningful changes the city has seen."

Prunetti knows about Trenton and change. Born and raised in the city,

he graduated from Trenton High and then from Trenton State, now the

College of New Jersey. Living now in Ewing, he has spent the last

seven years as Mercer’s top administrator.

Forty-one million dollars will go just for the construction of expanded

parking facilities in four different locales. The over 2,000-car capacity

will help clear the streets, laid out well before the invention of

the automobile, and afford access to the new light rail systems in

the city. In each of the four cases, the parking facilities are only

vertically expanding existent parking areas. New residences, restaurants,

businesses, and office spaces will be built in front of them and around

them. Also, old residences will be refurbished by individual contractors.

Planned neighborhoods will be rebuilt with a mix of residential and

commercial elements.

Targeted areas include:

The Furman Street parking lot. This lot is located one

block away from the city sports arena where a new restaurant row is

planned in front of an expanded parking facility. Keating Construction

intends to break ground on the multi-story garage project this winter.

The former metal plating factory on Hamilton Avenue. The

site, across from Route 129, has been cleaned up. The new parking

facility here will serve the adjacent light rail shelter. In addition,

office space, commercial, and retail frontage is planned.

South Broad Street Village. Located near the former site

of Apex Lumber, this area is slated to become a blended complex of

residences, retail stores and office space. An innovative parking

structure, as yet to be determined, will support the nearby light

rail service.

Hudson and South Clinton Street. The existing Roebling

Market and Kids’ Bridge Museum, along with the upcoming Invention

Factory and a new school, are expected to transform this refurbished

neighborhood into a city-wide education center.

"Opportunities, particularly for local firms, absolutely abound,"

says Steve Dixon, head of the Mercer County Improvement Authority

(MCIA). Dixon, a man whose Rutgers Ph.D. in urban planning launched

him into a 20-year career of improving Central Jersey life, has melded

a multitude of programs to provide avenues for investors and participants:

Business location. Distinct tax advantages will go to

any firm planning to build or locate within the above areas, which

are designated as urban enterprise zones. Within these zones, retail

shops charge only three percent sales tax, rather than the normal

six percent, on all goods. No sales tax is paid on any material used

in building or refurbishing your office and shop. A host of state

and county low and no-interest startup loans are available.

Residential and commercial construction. Residential properties

receive the benefit of the Home-ownership and Neighborhood Development

Program (HAND.) Incentives include a $20,000 forgivable loan for current

residents and for newcomers seeking to refurbish. For a property valued

at $80,000, HAND offers either the buyer — whether it is an individual

or a construction firm — a low-interest $60,000 mortgage with

the remaining $20,000 provided a a grant. The note for the $20,000

does not fall due until a profitable sale is made. MCIA will link

homeowners with groups of contractors to handle refurbishing tasks.

Venture capitalization. Investors purchasing individual

residences or vacant properties have a good chance of seeing their

properties increase in value. MCIA will aid in redevelopment by linking

investors with contractors of equal means and capacity. Brokers can

receive a full, detailed list of available properties and new structures.

Major investments. A consortium of banks has been enlisted

by Mercer County to handle most of the major parking facility funds.

Yet backers are still very much sought for all the other construction

from the museums to the sports bars. Dixon and his MCIA stand ready

to facilitate loans, connecting investors with businesses of all sizes.

What Trenton makes for the next three years will be a rejuvenation

with profitable participation for all kinds of business. Those interested

may directly contact the Mercer County Improvement Authority at 609-278-8080.

The MCIA has developed a CD detailing the scope and specifics of the

plan.

— Bart Jackson

Top Of Page
How To Profit From Lack of Profitability

Last year nearly 40 high tech Princeton companies raised

cash by selling their tax losses to other businesses. They successfully

applied to New Jersey’s Technology Business Tax Certificate Transfer

Program, which made $40 million available to 118 businesses.

Maybe your company is eligible to sell its tax credits too. The deadline

to apply is Friday, June 28.

To be eligible, the company must have a new or expanding technology

or biotechnology and have no more than 225 employees. At least 75

percent of the employees must work in New Jersey, and the company

must do a major part of its business in New Jersey. Companies can

keep on applying every year until they reach a lifetime cap of $10

million.

It’s as if a minimum wage earner who pays no income tax could sell

her deductions to someone in a high tax bracket. Technology companies

can take research and development tax credits to offset the nine percent

corporate tax, but young companies are so poor they aren’t paying

that tax.

Under the law passed four years ago, the young and poor firm can sell

the tax credit to the more profitable firm. The bigger company pays

at least 75 percent of the value of the credit but gets to take 100

percent off its state tax. The small company can use the proceeds

mostly for fixed assets but also for salaries and working capital.

Another potential deduction that can be sold is the one for net operating

loss (NOL). Companies can sell NOL carryforwards and unused research

and development tax credits to other New Jersey corporations for at

least 75 percent of their value.

"Last year, a record 119 companies were approved to share the

$40 million available annually through the program, says Caren

S. Franzini, the New Jersey Economic Development Authority’s executive

director. The NJEDA administers the program in conjunction with the

state taxation division and the Commission on Science and Technology.

Among the major buyers for these credits have been the Bank of New

York, PSE&G, Tiffany and Company, the New York Times Company, BNY

Capital Markets Inc., Comcast Cablevision of New Jersey, and Merrill

Lynch Professional Clearing Corp. Approvals will be made in early

fall.

For a detailed guide to EDA programs, "The Power to Help New Jersey

Business Grow," call 609-292-1800 or write to NJEDA, Box 990,

Trenton 08625, or go to www.njeda.com. At the website, look

for the Resources/Applications/New Applicants Selling Business Application.

The site also has a clickable map locating EDA projects by county

and a questionnaire that helps companies figure out what programs

might work in their business.

Of last year’s successful applications, nearly 40 are from Central

Jersey. Two have ceased operating (Princeton Teaching Associates Software

Inc. and Ariel Corp., the digital signal processor company). Another

of last year’s recipients, Anthra Pharmaceuticals, is downsizing its

offices at the Carnegie Center. EchoCath, the medical device company,

is down to a handful of people at 4326 Route 1 North.

Last year’s pharmaceutical and biotech sellers included Xechem Inc./Xechem

International, a generic and proprietary drug company on Jersey Avenue

in New Brunswick; Aesgen Inc. on Research Way, Gynetics Inc. on Route

1 in Lawrenceville; Hymedix Inc., the hydrogel/drug delivery

company in Dayton; and Morphochem/Small Molecule Therapeutics at Princeton

Corporate Plaza. Among the other R&D sellers of tax credits:

Biotech R&D

Biomira U.S.A. Inc., 1002 Eastpark Boulevard, Cranbury

08512. 609-655-5300. Www.biomira.com

Research and development of immunotherapy products for treating cancer,

formerly OncoTherapeutics Inc., owned by Alberta-based firm.

Cytogen Corporation, 600 College Road East, CN

5308, Princeton 08543-5308. 609-987-8200. Www.cytogen.com

Marketing and development of products for targeted delivery of diagnostic

and therapeutic substances directly to sites of disease.

Delsys Pharmaceutical Corporation, 11 Deer Park

Drive, Monmouth Junction 08852. 732-329-3407. Www.delsyspharma.com

Privately-held developer of automated drug manufacturing and drug

delivery systems through electrostatic dry powder, with a total of

54 employees.

Integra LifeSciences Corporation, 105 Morgan Lane,

Box 688, Plainsboro 08536. 609-275-0500. Home page: www.integra-ls.com

Tissue and organ replacements, including artificial skin, cartilage,

and nerve conduits.

Elan Pharmaceutical, 1 Research Way, Princeton

08540. 609-452-7060. Www:elan.com

Development of advanced liposomal drugs for the treatment of cancer

and infectious diseases, also at 600 College Road and 4 Corporate

Drive at Exit 8A.

Orchid BioSciences Inc., 303 College Road East,

Princeton 08543. 609-750-2200. Www.orchid.com

Production services and technologies of single nucleotide polymorphism

(SNP) scoring and genetic diversity analysis, with 300 employees overall.

Palatin Technologies Inc., 103 Carnegie Center,

Suite 200, Princeton 08540. 609-520-1911. Www.palatin.com

Products for sexual dysfunction and appendicitis detection.

Senesco Technologies Inc., 303 George Street, Suite

420, New Brunswick 08901. 732-296-8400. Home page: www.senesco.com

Agrobiotechnology — developing gene technology to extend the shelf-life

of produce.

Chemical R&D

BlackLight Power, 493 Edinburg Road, Cranbury 08512.

609-490-1090. Home page: www.blacklightpower.com

Research and development of novel hydrogen chemistry with applications

of novel compounds and alternative power sources.

Electronic R&D

Princeton Lightwave Inc., 2601 Route 130 South,

Cranbury 08512. 609-925-8100. Home page: www.princetonlightwave.com

High performance optical components including high-power pump lasers

and modules for advanced network applications.

Also among the sellers last year were Fullcomm Inc.,

a computer hardware company at the Straube Center; Digital Demographics,

a New-Brunswick-based Internet advertising and marketing firm; Dotphoto.com,

Glenn Paul’s online photo company in Ewing (www.dotphoto.com), and

Panama Tech, an E-commerce company at 5 Independence Way.

Princeton Video Image (PVI), which has innovative software and hardware

for television advertising, also tried to help out its financial situation

by selling the tax credits. Other sales were by Datamark Technologies,

the developer of electronic customer loyalty programs that is now

part of American List Counsel and Impower at the Dow Jones campus;

Knowledge Window Inc., a distance learning software company at Princeton

Service Center; Voxware Inc., voice-based solutions at Franklin Corner

Road.

Also Envirogen, the bioremediation company on Quakerbridge Road; i-Stat

Corporation, the diagnostic blood analysis equipment manufacturing

in East Windsor; Ocean Power Technologies on Reed Road; Quantem Corporation,

a thermal sensing and control device company on Lower Ferry Road,

Systech Solutions Inc., maker of automatic inspection systems in Cranbury;

WorldWater Corp., the renewable energy company at Pennington Business

Park: and Laser Energetics Inc., maker of laser processors on Quakerbridge Road.


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