Category Archives: Economic Development Authority

As A Matter Of Fact…New Jersey Offers Goya $80 Million to Create Nine New Jobs




October 24th, 2011 | Published in NJPP Blog: As a Matter of Fact …

Imagine you are a New Jersey job seeker (one of 418,000 unemployed in the state as of September, 2011, according to the state Department of Labor and Workforce Development) and you read in the news that a firm will be getting a state subsidy to hire 175 new workers. You would be thrilled to see those new job opportunities in the state, right?

But, in the case of Goya Foods, Inc., only nine truly new jobs are being created.

Nine.

Of the other 166 “new” workers, 66 would be moved from Goya’s location in Bethpage, New York and 100 already work for Goya as contractors based in Secaucus, according to documents from the state Economic Development Authority (EDA). So these “new” workers are actually existing employees.

Those 100 current contractors may be counted as new workers because they will be converted to direct payroll employees or become part of a professional employer organization (PEO). The National Association of Professional Employer Organizations describes PEOs as enabling “clients to cost-effectively outsource the management of human resources, employment benefits, payroll and workers’ compensation.” Counting current workers as new workers might be technically correct under the subsidy law — but it just doesn’t make sense.

The state’s tax subsidy for these nine new workers is being offered under the newly revised Urban Transit Hub Tax Credit (UTHTC) statute. It is intended to provide an incentive to a firm by lowering its state corporate business tax obligation so that a company will make capital investments in buildings in urban areas near transit and create jobs.

Earlier this month, the EDA approved the $80 million-plus UTHTC for Goya Foods. The company would get that tax credit for building a new 600,000 square foot headquarters/distribution center in Jersey City, a half-mile from the Jersey City PATH station. Aside from the 175 “new” workers, 316 current Goya workers would move to the new facility from Secaucus. Goya’s current headquarters in Secaucus would be converted to a manufacturing facility and 53 jobs would be moved there from elsewhere in Secaucus, but would not be part of the $80 million subsidy.

Further, Goya is to benefit from the expansion of one of the state’s Urban Enterprise Zones to include the part of Jersey City where Goya plans to relocate, according to the Jersey Journal. Urban Enterprise Zones offer companies a host of tax benefits. The company is also seeking a 20-year property tax abatement for its new headquarters/distribution facility in Jersey City, which would lower the firm’s property tax bills; the Jersey City Council will vote to introduce the measure this week, with final approval to possibly come in the second week of November.

But that all may not be enough to keep Goya in New Jersey, according to EDA documents.

New Jersey is competing with New York state, because Goya is also considering moving North Jersey workers to an 892,943 square foot site in Suffern, New York, in Rockland County. No public information was provided by the EDA about the subsidies that may have been offered by the state of New York to woo Goya.

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Filed under As a Matter of Fact, blog, Economic Development Authority, Goya Foods, Jersey City NJ, New Jersey Department of Labor and Workforce Development, New Jersey Policy Perspective, tax abatements

As A Matter Of Fact…We’ve got a situation: NJ taxpayers snookered


September 26th, 2011 | Published in NJPP Blog: As a Matter of Fact …
By Sarah Stecker

Do a quick Google search and you will find over 170 citations on New Jersey giving out what has been dubbed the “Snooki Subsidy.” That is a reference to the decision on September 14 by the state Economic Development Authority (EDA) to give a $420,000 film tax credit to the production company, 495 Productions Inc., which produced the first season of MTV’s reality show “Jersey Shore.” Following a public uproar, the governor said a few days ago he is considering blocking the film tax credit for that show.

Try a second Google search and you will find but 29 articles on the state’s decision to give a subsidy worth as much as $82 million to Pearson, Inc., so the publishing company will move its workers in Upper Saddle River to a new building in Hoboken. The subsidy comes from the state’s Urban Transit Hub Tax Credit, which is meant to create new jobs in the cities by encouraging companies to invest capital in urban areas near transit stations. To qualify, a company must bring in a minimum of 250 jobs. The credits are then deducted from the company’s state corporate tax obligation.

People in New Jersey are expressing more outrage over a relatively small, half-million dollar subsidy for a reality show than they are over tens of millions being given to a global corporation simply to shift existing jobs about 27 miles within the state.

New Jersey has decided to award Pearson the subsidy even though the company has decided to move about a third of the firm’s existing New Jersey workforce to New York City, where it stands to collect up to another $50 million in tax subsidies. In the end, by playing New Jersey off New York, Pearson could collect more than $130 million in subsidies from two states for just moving jobs around the region.

Not even Snooki is that brazen.

Several questions come to mind about the Pearson subsidies. First, and foremost: How important were the subsidies?

Perhaps the New York City location is attractive enough without the subsidies. EDA certainly seemed to think that on September 14 as reflected in its summary of the Pearson grant:

The alternative site option[to New Jersey] is 330 Hudson Street in Lower Manhattan, New York which is proximate to where Pearson has current operations and is desirous from both the talent pool with the skill sets the company seeks combined with the co-location of certain related business and editorial activities within facilities to enhance collaboration and productivity.

It turns out that assessment was accurate. Pearson will move more than 600 workers to 330 Hudson Street, according to an announcement by the company September 19. Clearly, the company wanted to take advantage of that local labor pool and the opportunity for current staff to be close to one another. Those seem like core business reasons to move operations.

A second question might be why officials and taxpayers in New Jersey are unhappy about giving $420,000 to subsidize Jersey Shore production, but seemingly glad to divert up to $82 million in taxpayers’ money to a successful publisher which didn’t even keep all of its employees in New Jersey?

While Jersey Shore certainly is a questionable place to invest taxpayer dollars, investing tens of millions to keep a few hundred jobs in Hoboken rather than lower Manhattan is an unwise investment on a far greater scale. And, it greatly undermines the state’s ability to provide important services to all residents.

MM Note: Earlier today Governor Christie stripped Snookie and the rest of her Jersey Shore pals of the $420K tax subsidy that they enjoyed during their first season of production.

Officials in Seaside Heights and those in the film industry testified at a committee hearing last week stating that tax incentive was well worth it because it brings millions of dollars and additional jobs to the state.

So was this just another example of the the Governor being penny foolish and acting tough without realizing the the potential consequences of his actions just make himself look better to his Republican friends that are courting him to run for President next year? Maybe

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Filed under Economic Development Authority, film industry, Jersey Shore, MTV, New Jersey Policy Perspective, Snookie, tax subsidies, Urban Transit Hub Tax Credits

As A Matter Of Fact…Financing the American Dream

August 16th, 2011 | Published in NJPP Blog: As a Matter of Fact …

By Sarah Stecker, Policy Analyst

Last month, in order to facilitate a deal that the state had already cut, Governor Christie signed a bill significantly expanding two programs that provide tax subsidies for developers, the Economic Redevelopment and Growth grant and the Urban Transit Hub Tax Credit.

One section of the bill (S2972/A4161, P.L. 2011, c. 89) changes state law for the benefit of a single developer, the Canadian firm Triple Five Group. The deal made by the state, worth up to $350 million in tax breaks on the company’s more than $1billion investment, enticed Triple Five to resurrect the five-year-old, on-again-off-again eye sore previously known as Xanadu. The developer rebranded the half-finished mega mall as the American Dream at Meadowlands and said that in addition to “high-end” retail the mall would include an indoor ski slope, skating rink and a wave pool. The state estimated that upon completion the project would generate a whopping 35,000 permanent jobs.

The change in the law was required because Triple Five was not eligible for the grant the governor had promised many months earlier. Even though significant parts of the state – up to 80 percent of the municipalities – were eligible to host an ERG project, the area of the Meadowlands where the development was taking place was not covered by the original legislation.

The final grant amount to Triple Five depends on an analysis by the Economic Development Authority of the American Dream proposal. ERG grants can total up to 20 percent of a developer’s investment and can be paid out for up to 20 years as a portion of the tax revenues attributed to the project.

Another section of the bill amends state law requiring residential developers to produce affordable housing units in addition to market-rate units as a condition of receiving Urban Transit Hub Tax Credits. The change means developers will no longer have to put aside 20 percent of the residential housing they build for low and moderate income people. The law was meant to provide developers an incentive at the same time it would address the dire lack of decent, affordable housing in many areas of New Jersey. Municipalities now will make the decision about how much low-income housing – if any – will be included in a project.

The law also now allows developers to use any unused credits to reduce the developers’ taxes for up to 20 years from when the credit was given. At the same time, the new law increases the tax credit available to 35 percent, up from 20 percent, if a residential developer builds any housing in one of nine mass transit-accessible cities designated under the Hub law.

The change to the Urban Transit Hub Tax Credit illustrates the good that public subsidies could do (incentivize transit-oriented development) versus the risk of corporations abusing these tax breaks.

For instance, the Urban Transit Hub Tax Credit is available to corporations as well as residential developers. Campbell Soup, located ¾ of a mile from the Walter Rand Transit Center in Camden, received a $41.2 million credit in February of this year to renovate its headquarters, including more than $6 million to furnish the refurbished office space. In its application for the credit, Campbell’s officials said they would bring 95 workers to the city as a condition of the award. Four months after the grant was awarded and made public, Campbell’s announced it would lay off 130 of the 1,200 workers at its headquarters in Camden.

The layoffs are unlikely to jeopardize Campbell’s state subsidy because the Urban Transit Hub Tax Credit is aimed primarily at supporting capital investment. To qualify, companies must invest more than $50 million in capital improvements and employ at least 250 full-time workers. Campbell’s is complying with the law, but the state’s taxpayers might rightly raise the question of why they are subsidizing the company’s newly renovated headquarters even as Campbell’s increases the state’s unemployment rate.

New Jersey is providing hundreds of millions of dollars in tax subsidies to corporations, developers and businesses in the hopes of stimulating the state economy and creating private sector jobs. But there is a policy trade-off and it is evident in this single piece of legislation. The Administration, abetted by leaders in the Legislature, is choosing corporations over individuals: high end retail over low-income housing; renovating corporate suites over rebuilding public schools. That is short-sighted. The long-term policies of a prosperous state must address the needs of its citizens, not just its corporations.

The state Economic Development Authority expects to approve rules implementing the new legislation at its September Board meeting.

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Filed under Affordable housing, As a Matter of Fact, developers, Economic Development Authority, ERG grants, Gov. Chris Christie, New Jersey Policy Perspective, Triple Five, Urban Transit Hub Tax Credits