Saturday, December 20, 2014

N.J. pays hoagie-roll baker $14M not to move to Pa. (Update)

Liscio's accepts subsidy to stay in glassboro

N.J. pays hoagie-roll baker $14M not to move to Pa. (Update)

File: Liscio´s Bakery gave away free loaves of bread at South Philly Review´s fifth annual Pizza Olympics, in Philadelphia, on Thursday, July 18, 2013. (Stephanie Aaronson /Philly.com/File photo)
File: Liscio's Bakery gave away free loaves of bread at South Philly Review's fifth annual Pizza Olympics, in Philadelphia, on Thursday, July 18, 2013. (Stephanie Aaronson /Philly.com/File photo)

(Adds points from Liscio's Chad Vilotti in third paragraph) The New Jersey Economic Development Authority has agreed to give up to $13.5 million over 10 years to Liscio's Italian Bakery, Glassboro, under the Grow NJ tax credit program to keep the company from pulling out of New Jersey and moving to an alternate site in Delaware County, Pa.

From EDA's statement: "Liscio’s Italian Bakery, Inc. was approved for Grow NJ support of up to $13.5 million over 10 years to advance the wholesale bakery’s major expansion project in Glassboro that will help improve its production capacity and operations to keep pace with demand. Under the project, Liscio’s Italian Bakery would retain 176 existing jobs at risk of leaving New Jersey and create 71 new, full-time jobs at the new manufacturing facility, which would have a net benefit to the State estimated to be $25 million over the 20-year period required under the law."

Where was Liscio's going if New Jersey taxpayers hadn't stepped in with $13.5 million? To Boothwyn, according to Liscio's application for EDA money. UPDATE: Liscio co-owner Chad Vilotti confirmed Boothwyn, and Pennsylvania, are cheaper than Glassboro and New Jersey several ways: Workers' compensation; property taxes; state minimum wages; and proximity to Liscio's major markets, in Philadelphia and elsewhere outside Jersey, without having to pay Delaware River Port Authority tolls or extra gas. The Grow NJ program is all about adding jobs, which Liscio plans to do, Vilotti added

New Jersey had previously funded Liscio's rival, Omni Baking Co. of Vineland, which is partly owned by Amoroso's, the Philadelphia bakery that competes directly with Liscio's.

As noted by NJEDA here, Vineland-based Omni "benefited from tax-exempt bonds in 2008, finalizing $9.1 million in financing to build an addition to its Vineland plant, refunding the outstanding balance of an EDA-issued 2001 bond and acquire new production equipment and acquire new production equipment to meet increased production goals resulting from a new contract with the Amoroso Baking Company of Philadelphia. Omni plans to add 145 jobs” under terms of the 4.7%, 15-year bonds purchased and resold to investors by Brown Bros. Harriman.

Why is NJEDA financing competitors? And why should taxpayers have to shore up the hoagie-roll industry, anyway? Aren't there banks in the state?

NJEDA papers show that Liscio's grant, which depends on the bakery actually saving the promised jobs, fulfills state Grow NJ program requirements. And that the Omni financing met federal tax exemption requirements.

Also according to NJEDA: "Another South Jersey manufacturer approved for Grow NJ support is Stoncor Group Incorporated, trading as Stonhard," which makes plastic floors. "Stoncor Group’s Grow NJ award of up to $9.9 million over 10 years encourages the company’s acquisition of a vacant 132,223-square-foot building in Pennsauken, instead of exercising a lease-purchase option on its 11.5-acre manufacturing-distribution campus in Ft. Wayne, Indiana.

"If Stoncor chooses New Jersey, the company’s new Pennsauken location will house 85 Stoncor employees that were at risk of leaving the State and 75 new, full-time employees. The project would have an estimated net benefit to the State of $25.2 million over 20 years."

Also, "a Grow NJ award of up to $9.1 million was approved for Sandoz Inc to encourage their relocation to Plainsboro, New Jersey over a location in Pennsylvania." The generic drugmaker's grant " is tied to the company’s retention of 292 existing New Jersey jobs at risk of leaving the State as well as the creation of 70 new, full-time jobs, and the project would have an estimated net benefit to the State of $147.1 million."

(For more on this story, including an interview with a South Jersey baker who hasn't applied for state EDA money and doesn't like that his taxes are funding his rivals, check my column in the business section of Monday's Philadelphia Inqurier - Feb. 17).

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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