TRENTON - The New Jersey Economic Development Authority on Tuesday approved $118 million in tax incentives for Subaru of America and an additional $40 million for Cooper Health System to relocate their operations in Camden.
The health system, whose Cooper University Hospital already is a major presence in the city, intends to move 353 back-office jobs from Cherry Hill and Mount Laurel to Federal Street in downtown Camden and add 19 new jobs in the city, according to the application made to the EDA.
Camden Mayor Dana Redd, who attended the EDA board's meeting, said the projects would help Camden return to its former glory as an economic hub of South Jersey.
"We look forward to a long and lasting relationship," she told Subaru of America president and CEO Thomas Doll. "Thank you for believing in Camden."
The amount in tax credits awarded to Subaru is the second-highest for a Camden project this year, after the $260 million that energy company Holtec International received in the summer under the Economic Opportunity Act.
The 76ers received $82 million in tax credits to build a practice facility on the Camden riverfront, and defense contractor Lockheed Martin was awarded $107 million to move 250 employees from its location in Moorestown.
The credits, spread over 10 years, are conditional on the companies' creating or saving at least 250 jobs in the city and remaining in Camden for at least 15 years.
The law was created to encourage companies to invest in the poverty-stricken city, but critics have noted that the deals announced thus far have largely involved the relocation of high-paying jobs from elsewhere in South Jersey with no strategies aimed at addressing the city's chronic unemployment.
"Awarding profitable corporations billions of dollars mostly to shift jobs around New Jersey is not a job-creation strategy," said Gordon MacInnes of the New Jersey Policy Perspective, a liberal-leaning think tank. "It's a feel-good gimmick."
Cooper employs more than 4,600 people in New Jersey and has been on a growth spurt, with recent affiliations with Rowan University and the MD Anderson Cancer Center.
The ratings agency Standard & Poor's assigned an investment-grade rating to new Cooper debt, noting that "the rating reflects Cooper's solid business position [and] increasing profitability."
In the application submitted to the EDA, Cooper said the 353 jobs it would move to Camden were at risk of being moved out of state if the credits were not granted.
Companies applying for tax incentives must submit an analysis showing that they have scouted other potential locations. Holtec, for example, told the authority that without the credits, the company would build in Charleston, S.C.
Cooper spokeswoman Lori Shaffer said the health system considered "various" locations, including Philadelphia, before submitting the application.
"This opportunity, plus the importance of bringing as many Cooper employees together to continue to improve the quality of care we provide, was the best option," she said.
Subaru, too, considered moving across the river. On Tuesday, Doll said the tax incentives were a major factor in the company's choice to stay in South Jersey.
Subaru will consolidate its offices in Cherry Hill and Pennsauken into one building that will hold its 500 employees, a move that the company hopes will be completed by the end of 2016.
The company pledged to add 100 jobs over the next two to three years to its new facility, which will be built at the site of the former Sears building in the Gateway Office Park, near Campbell Soup Co.'s headquarters near the Admiral Wilson Boulevard.
The company will become the first anchor tenant of an area that Campbell has for years been hoping to transform. Campbell had the former Sears store demolished after buying the 13-acre property in 2012, and appointed developer Brandywine Realty Trust as the developer this year.
Doll said Subaru has grown rapidly over the last five years, with sales on track to reach a record high of 500,000 vehicles in 2014. In addition to the planned 250,000-square-foot headquarters, the company also will build a 70,000-square-foot training and engineering center.
"We are very proud to be part of the revitalization of Camden," he said after the EDA board's decision.
With a 10-year tax abatement available under the law, Subaru will for years also pay a fraction of the property taxes it pays in Cherry Hill.
The company paid $537,000 in taxes this year to Cherry Hill, officials said, making it the township's 19th-highest taxpayer. Campbell pays about $100,000 on the vacant land that Subaru plans to buy and build on, according to the company.
Before Tuesday's meeting, the EDA had approved a total of $1.84 billion in business tax subsidies to companies in New Jersey under the Economic Opportunity Act. With Subaru and Cooper, $630 million has gone to Camden projects.
NJ Policy Perspective has cautioned that if the companies green-lighted for Camden should decide to leave the area after the tax credits expire in 10 years, taxpayers would be forced to make up the lost tax revenue.
"New Jersey's leaders need to recognize the tax subsidy shell game for what it is and instead turn their attention to investing in what works," said MacInnes, "the public assets, like schools, safe communities and modern, efficient transportation networks, that are the true building blocks of a prosperous state economy."