EDA supporters, feeling state audit was overly harsh, fight back

By Tom Bergeron
Trenton | Jan 10, 2019 at 7:10 am
Editor’s Desk

The question was asked of me:

“What was the biggest business ‘win’ in the state of New Jersey in 2018?” the person asked.

The answer followed quickly and affirmatively — and well before I could get a word out:

“Newark making the final 20 of the Amazon (second headquarters) sweepstakes. And that doesn’t happen without the work of the EDA in the past 10 years.

“Look at the incredible growth in Newark and the incredible growth in Jersey City — that doesn’t happen without the EDA. You don’t think Amazon recognized that?”

I can’t remember who said it — it was one of a half-dozen conversations I had on background Thursday following the release of a scathing audit that Gov. Phil Murphy said suggested the Economic Development Authority may have wasted $11 billion.

But I do know that no one wanted to openly criticize a report that said exactly what the governor hoped/wanted it to say.

New administrations can adjust incentives however they like: That was a theme of many conversations.

Mike McGuinness, the CEO of the New Jersey chapter of NAIOP, the commercial real estate development association, stressed that idea, too.

McGuinness was willing to put his name on comments. And willing to say he thinks everyone needs to slow down and put things in perspective.

“From a quick reading, it really seems that the focus has clearly been on managerial administration of the program, as opposed to the substance,” he said. “And, quite honestly, I think anything dealing with the public policy matter, which is the substance of the incentive programs as to who gets it, what parts of the state, what types of jobs, is always ripe for discussion.

“I think it is a good time for the Legislature, for the Governor’s Office, for the private sector to discuss with one another what’s trending, what’s happening out there, what are the obstacles, what are we running into?”

The obstacles are there, from the chaos that is the federal government and a yet-to-be-determined impact from an uncertain tariff policy.

These items, combined with an uncertain perception of whether New Jersey is business-friendly, makes for a pivotal time for courting companies to the state.

“I would caution the administration and the Legislature that, don’t forget, we’re sort of under a magnifying glass,” McGuinness said. “The industry investors are certainly watching what’s happening here in New Jersey. We just need to be careful.

“I think over the next several months, before these programs expire, I think it’s a great time to revisit some of those public policy issues that have made it into the last iteration of these incentive programs.”

McGuinness, however, politely defended how the EDA has done its work.

“I did notice that some of the comments dealt with how the EDA exercised its authority and its discretion,” he said. “And I will say, in fairness to the EDA, the law does allow EDA to have substantial discretion in implementing the program.”

And the New Jersey EDA, McGuiness said, has built a reputation that far exceeds how it was portrayed in the audit.

“I would also want to be sure to say that the EDA, for decades, has been an incredibly credible organization that many governors have trusted to do the right thing,” he said. “I don’t think anybody would argue that the work that Caren Franzini put into the organization was anything but spectacular.

“She basically built the EDA up to be a national model that has been recognized in other states.”

Anyone who has been involved in business and politics in the last 25 years knows this truth: You always want to be aligned with the work of the late, great Caren Franzini.

Perhaps that’s why some were upset to see the EDA portrayed as it was.

Murphy didn’t hold back.

“The ineffectiveness of how the state’s tax incentive programs were structured and managed has now been laid bare for the eyes of New Jersey taxpayers, and a full accounting of how as much as $11 billion was squandered is now required,” he said.

According to Murphy, “That money just flowed from taxpayer pockets into a black hole.”

Others saw it a little differently.

“Look at Camden,” one source said. “What does Camden look like today if it weren’t for the EDA?”

As for the ability to check and verify all of the data, two responses were common:

  1. The EDA does not have the power to verify everything;
  2. If someone feels companies are lying to the EDA, those complaints should be referred to the Attorney General’s Office.

Where does the state go from here?

That’s really the question.

Murphy acknowledged incentives are needed — and his team, headed by Tim Sullivan at the EDA, is working to modify what is out there while coming up with new programs.

And if those new programs eliminate some of the bigger packages, some said the state will go into its biggest battles without its biggest hook.

“Long Island City is the same as New Jersey in every way,” one person said. “And we lost out (for Amazon’s HQ2), despite the fact we had a much bigger incentive package. What does that say?”

It was another question I could not answer.

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