NJEDA paused a $500M AI tax credit program earlier this month, as four more towns have joined the fight against data centers. CoreWeave's $250M Kenilworth award remains.
The New Jersey Economic Development Authority (NJEDA) quietly suspended applications for the Next New Jersey Program—AI on June 1, a move that only became public on June 23, when agency spokesperson Chris Flores confirmed the hold to NJ.com. The pause followed Governor Mikie Sherrill's late-May announcement of a four-part plan to regulate the industry. Meanwhile, municipal opposition to data centers — what NJ.com calls a "rebellion" — has spread across nine towns since February.
Flores said in a statement to NJ.com that the agency is "temporarily pausing the acceptance of applications" while it reviews the program. He also said that the NJEDA supports the industry but that AI leadership must align with Sherrill's push for responsible operation and "strong, transparent guardrails."
No press release from NJEDA announced the pause. The agency’s website still carries a June 24, 2025 announcement that applications for the Next New Jersey Program – AI are open, alongside a notice that the Authority is temporarily pausing new applications while it reviews the program. Tim Sullivan stepped down as CEO in December 2025 after nearly eight years; Mary Maples, who had been deputy CEO, is serving as acting CEO. The board will meet next on July 22, 2026.
CoreWeave Facility’s Award Remains
The pause leaves roughly $250 million in unallocated credits in the pool. Only CoreWeave, a Livingston-based cloud computing company, had secured an award: up to $250 million over five years for a $1.8 billion facility in Kenilworth, Union County. RE-NJ reported that the project, under construction on a former Merck campus, will require up to 250 megawatts of electricity and create 143 permanent jobs when it opens in 2027.
CoreWeave bought 27 acres of a 107-acre former Merck campus in Kenilworth for $322 million in August 2025. The company is Nasdaq-listed. It reported $2.078 billion in first-quarter 2026 revenue and a $99.4 billion backlog. NJBallot did not uncover any public statements from CoreWeave on the pause.
Proponents contend that the facility will generate property tax revenue for Kenilworth's school district and that the 250-megawatt capacity will expand grid capacity for broader use. The IBEW and NJBIA also argue that data centers anchor regional supply chains. Neither side has published a comprehensive cost-benefit analysis for the Kenilworth project.
A CoreWeave spokesperson told WABC in mid-May: "CoreWeave views data centers as investments in the communities that host them. Our facility is designed to be a responsible neighbor and to support long-term economic activity in the region. We remain committed to ongoing engagement which is central to how CoreWeave earns its place in the communities where we operate."
Residents have pushed back. Patch reported that more than 100 people packed the June 3 Kenilworth council meeting. Tyler Rich called the project an "objective threat to our environment." Timmy McConway dissented, calling it a "good thing for the community." At a May 26 meeting, resident Victor Gomez told officials, "You have brought foxes to speak to a room full of chickens."
A Change.org petition opposing the project had drawn over 11,500 signatures as of last week, according to Patch. The concerns raised — water use, noise, and power grid strain — have since spread to nine towns across the state, according to NJ.com and GovTech.
At full capacity, the facility would consume roughly as much electricity as 286,000 New Jersey homes, according to U.S. Energy Information Administration data. One facility of comparable scale can draw up to five million gallons of water daily, Kathryn Fisher of the New Jersey League of Conservation Voters testified in June.
Kenilworth Mayor Linda Karlovitch told residents that the facility has its own electric grid and does not use water. She said there is no burn off and no emissions. CoreWeave's own filings estimate a 250-megawatt electricity draw. The mayor's claims could not be independently verified.
The Kenilworth fight is one of nine municipal battles, including four more towns that joined this month. Asbury Park's council passed a resolution calling for a statewide halt, Red Bank banned the facilities outright, Warren Township approved a prohibition in a 5-0 vote, and Sayreville introduced an 18-month moratorium. Pemberton Township, Monroe Township, Millville, Andover Township, and East Greenwich had enacted bans in prior months.
The energy and water figures have become central to some municipal opposition. "Data centers of this scale need land, water and power that a city like ours just doesn't have to spare, and honestly, we're built out already," Asbury Park Mayor John Moor said in a statement.
Sherrill Proposes Regulation as Opponents Demand Moratorium
Sherrill's administration announced a four-part plan in late May that requires developers to fund grid upgrades, report energy and water use every six months, negotiate community benefit agreements, and pay prevailing wages for construction and operations. Her administration described it as the first state-level strategy in the nation to balance AI investment with safeguards for residents.
The plan leaves the tax credit program untouched, preserves CoreWeave's award, and keeps the remaining pool intact. It also stops short of the moratorium that more than 60 environmental, community, and labor organizations demanded in a May 14 letter to Sherrill.
Under the program rules, CoreWeave's 143 permanent positions must pay at least 120% of the county median wage or the state average, whichever is lower. The IBEW Local 102 and New Jersey Business and Industry Association defended the employment impact in an NJ.com op-ed, arguing that critics who focus on low headcounts ignore contractors, on-site tenant workers, and suppliers. They also wrote, "We should be positioning ourselves as a leader in AI innovation at exactly the moment that position is worth something."
Business and labor groups have backed the framework. Environmental, community, and labor organizations have pressed for a moratorium: The New Jersey Conservation Foundation, Pinelands Preservation Alliance, New Jersey Highlands Coalition, NY/NJ Baykeeper, and Food & Water Watch were among more than 60 signatories to a May 14 letter to Sherrill.
Polls have found majority support for restrictions. A Fairleigh Dickinson University poll in April, sponsored by the International Union of Operating Engineers Local 825, found 65% support for banning new data centers until more power plants can be built, including 69% of Democrats, 61% of Republicans, and 60% of independents. A Stockton University poll in May, with no disclosed sponsor, found 56% support a local ban in their own community, 72% oppose tax incentives, and 84% believe data centers should supply their own power.
New Jersey is not the only state to suspend data center tax incentives. Illinois Governor J.B. Pritzker suspended the state's data center tax incentive program via executive directive, effective July 1, 2026. Illinois had provided $983 million in such incentives from 2020 to 2024, according to Capitol News Illinois. Fourteen states are considering moratorium bills, according to the National Conference of State Legislatures.
No New Jersey legislator has introduced a bill to pause or repeal the tax credit program, according to the sources reviewed for this article. A Senate measure mandating semi-annual reporting passed 34-2 in March. The Assembly version passed committee in June and now awaits full Assembly action. Senate Bill 731 would require utilities to develop rate structures for facilities drawing 100 megawatts or more. Neither bill pauses applications or touches the incentive pool.
The NJEDA board meets July 22. The agency has not said what the review will examine or when applications will reopen — and the towns that have already banned data centers are not waiting for an answer.
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Sources
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