N.J. loss seen from Camden tax deals

New Jersey could lose close to $100 million from tax incentives that have drawn big businesses to Camden in recent months, according to a report by an advocacy group.

The report was to be published Tuesday by the New Jersey Policy Perspective, a liberal-leaning think tank that has been highly critical of the $631 million in tax breaks that the state Economic Development Authority has awarded since late 2013 to companies that agree to relocate to Camden.

The study, based on an analysis of data provided by the EDA, warns that that although the tax credits awarded to those companies through the Grow New Jersey program are spread out over 35 years, the businesses could leave Camden after 15 years without having to pay back anything - at a cost of $97 million to taxpayers.

And compared with similar deals elsewhere in New Jersey, the subsidies awarded to companies moving to Camden have largely involved moving jobs from one part of the state to another, rather than creating jobs or otherwise investing in the area, said Jon Whiten, deputy director of Policy Perspective.

"These companies are getting a good deal," Whiten said. "So the state should be holding them accountable for more than they are. Without that, all we're left with is lost tax revenue and the hope that these companies will do the right thing."

The Grow New Jersey program is part of the 2013 Economic Opportunity Act, a law championed by U.S. Rep. Donald Norcross (D., N.J.) when he was a state senator, that helps employers that invest in struggling cities and allows the broad use of tax incentives to lure employers to Camden.

Before 2013, such subsidized projects needed to deliver a benefit of 110 percent of the subsidy's value over the years that the company had to keep those jobs in the state. Now, the projects need only break even over 35 years, the report says.

Since 2013, energy company Holtec has been awarded $260 million to move from Marlton to Camden, and defense contractor Lockheed Martin has received $107 million and Subaru has received $118 million, each to move from nearby Cherry Hill. The 76ers received $82 million to build a training facility on the waterfront, and five other companies have received multimillion-dollar incentives.

One of the most recent deals involved $6 million awarded to the nonprofit organization Volunteers of America Delaware Valley, which indicated in a proposal that it would use the money to defray the cost of moving its office from Collingswood to Camden. As an organization that does not pay taxes, the only possible use for the credits would be to sell them to another company on the secondary market, Whiten said. Cooper University Hospital, another nonprofit, of which Norcross' brother George E. Norcross III is the chair, received $40 million in tax credits.

Camden leaders and politicians have said the deals are paving the way for Camden's transformation from the state's most impoverished city into a bustling business center with a thriving workforce. State officials have said the deals could produce $988 million in benefits from income and sales taxes and economic ripple effects.

According to data provided to Policy Perspective by the EDA, the companies would bring in far less if they meet only the contractual obligations of the deals. Holtec, which has said it would employ 3,000 at its facility within five years of opening, is only required to keep 395 jobs there, which would generate just $155,000 to the state over 35 years.

Additionally, the report notes that there are few ways of measuring how effective such subsidies have been.

The report recommends placing caps on spending for such subsidies, as well as modifying the law so that companies must prove they can benefit the state financially over the same period in which they get the tax incentives.

Many Camden leaders have also said they are troubled that the companies are not required to invest in the city. Members of Camden Churches for People have sought since 2014 to bring a petition before City Council asking that the city demand pledges of local job creation, unemployment resources, and more. The measure has repeatedly been tabled.