We’re waiting for the anti-incentive crowd to jump on the General Electric news.
The news where the company will reimburse the state of Massachusetts $87.4 million after acknowledging it will not bring 800 new jobs to Boston and it will not even build the campus it promised to construct on a 2.7-acre site.
It’s the news that is the poster child for Incentives Gone Wild.
And, thankfully, it could never happen in New Jersey.
That’s right — it couldn’t happen here.
So said Ted Zangari, who not only is the real estate chair at Sills Cummis & Gross, he’s what every politician, policy wonk and think tank leader wants to be ever since Gov. Phil Murphy’s audit of the Economic Development Authority came out: an actual expert on incentives.
In New Jersey, companies never get money up front, Zangari said.
“Grow New Jersey does not prepay you,” he said. “The state would not give you the money before you’re building was built.”
That’s the way it always has been.
He pointed to two awards that were similar in size to GE’s incentive to move to Massachusetts — and were given to companies of the same stature: Panasonic ($102.4 million) and Goya Foods ($82 million).
Both companies received awards through the Urban Transit Hub program. And both have yet to receive their full award. Why? They haven’t fulfilled all of their promises yet. They are both still working toward it.
“They didn’t get the money until they opened, had the jobs and then the payout is over 10 years,” he said “So, I don’t know what silly incentive they had with GE where they get the money up front.”
And if your New Jersey project goes south — as GE’s has — you don’t get a penny.
Just ask the original owners of the building that was once called Revel.
They were given a $261.3 million Economic Redevelopment Grant, or ERG. They never got a penny.
The property opened, but infamously closed shortly thereafter, falling far short of any requirements needed to get the award.
Ironically, the big winner in that failure was the state of New Jersey.
“They never got a penny, and, while it didn’t last long, the state got a ratable on the books, 1,000 construction jobs or whatever it was for a two-year period,” Zangari said. “The building is now occupied, and it didn’t cost the state a dime.
“The state is ahead of the game by far.”
It’s nice to complain that New Jersey gives away money that could be spent on education, infrastructure and social services to rich companies that don’t need it.
The problem is: That’s not the way incentives work. (See the look on certain New York City politicians after they learned they didn’t suddenly have an extra $3 billion once they ran Amazon out of town.)
Zangari finds such misinformation maddening — mostly because the people making the claims are often totally uninformed.
Of course, he knows the only people who really need to know the truth in New Jersey are starting to learn it.
Zangari was pleased with the recent legislative hearings on incentives, where developers Gene Diaz and Ron Beit gave a lesson in “Incentives for Dummies” to the legislators in attendance.
“They understand it better after the daylong hearing,” Zangari said. “I know that most, if not all, legislators walked away from that saying, ‘This is a great program and EDA does a good administrating it.’”
The same can’t be said for those who gave GE $87.4 million to move to Boston.
But that’s not our problem. And it could never be our situation.