Task Force Probe: Grants Stimulate Business (and More!) in New Jersey

Today's EDA hearingg on tax incentives in Camden at the War Memorial.

TRENTON – The fourth hearing of the governor’s task force looking into the state’s tax grant program commenced at 10 a.m. Thursday. By that time, the big news of the day about the grant program already had occurred in the form of a Philadelphia Inquirer story about a reported federal investigation into how the incentive program is unfolding in Camden.

Specifically, the story detailed how the state Economic Development Authority, which awards the aforementioned grants, sold a building it owned to a Camden non-profit, which in turn sold it to two south Jersey investors. Cooper Health, which occupied the building in question, used state tax credits to pay its rent, the story reported.

The alleged cozy relationship among the state grant program, the city of Camden and the politically-influential Norcross family is the main reason the task force was created. A recent state comptroller’s report suggested that billions of dollars in grants may have improperly been doled out.

Compared to the news reverberating outside, Thursday’s hearing in the War Memorial was a bit low-key.

The main topic of discussion concerned a firm with a very unlikely New Jersey name – Rainforest Distribution Corp. A distributor of organic food and beverages, the company secured $2.4 million in tax incentives to relocate from Queens, N.Y. to Bayonne. To qualify for the incentives, the company needed to show it had considered relocation sites outside of New Jersey. You can understand why. Tax credits make sense if they convince a firm to move to New Jersey; if they plan to move here anyway, why do they need incentives? In this case, a site in Orangeburg, N.Y. was the company’s out of state location.

However, as the hearing ensued, it became obvious that Rainforest never actually considered the Orangeburg site as a viable location. The task force also discovered that one of the e-mails between the company and the EDA appeared to be “back-dated” to presumably suggest that the New York site was being considered before the EDA application was made.

Later in the day, the task force itself presented the experience of a company called Elwyn, a health care and human services non-profit, that moved to Camden with help from a nearly $40 million tax incentive grant.

The upshot here was that the EDA apparently ignored some obvious red flags about the company’s background. For example, it was brought out that Elwyn failed to disclose on its application that it had been accused of violating federal employment law, which, of course, is a pretty serious matter.

As an overview, where are we going here?

The task force’s mission seems to be to document wrongdoing in the tax grant program. For the governor, this would be a win politically, given the fact power broker George Norcross is a political foe. However, let’s keep in mind that a Senate committee, which has shown much more support for the EDA grant program, also is meeting.

If you try to remove the politics here – assuming that is possible – there are two descriptions of the program, both of which popped up at the hearing.

One is that the grants stimulate business in New Jersey.

To demonstrate that point, Alexander Ridings, the CEO of Rainforest, said that since moving to Bayonne, his company has expanded staff and operations.

But then there’s the need to make sure the incentive program is run properly and without political interference.

As the task force put it, the state’s goal should be to help companies that “we legitimately want to incentivize to come to New Jersey.”

And judging from Thursday’s Inquirer story, the federal government may agree.

For more, please go here.

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