Murphy accepts resignation of EDA board chair, calls for other members to step down

Gov. Phil Murphy has accepted the resignation of New Jersey Economic Development Authority board chair Laurence Downes, as well as called for five other board members to step down.

“As first a member and later chairman of the board of the New Jersey Economic Development Authority, Larry Downes has been integral to achieving the state’s economic vision,” Murphy said in a statement.

“His knowledge of New Jersey’s fiscal needs is unmatched and as one of the chief architects of our economic master plan, Larry was an essential component of the state’s economic growth throughout his tenure on the board.  I am grateful for not only his leadership of the NJEDA but also for his support and his friendship.  I wish Larry well as he continues his stewardship of one of New Jersey’s most trusted public utilities.”

Downes said he agreed to offer his resignation after speaking to the governor.

“After speaking with the Governor, I’ve agreed to offer my resignation as Chairman of the Board of the Economic Development Authority (EDA),” Downes said in a statement provided by the governor’s office.

“The EDA is now at a critical juncture, as the administration and legislature reexamine its function in line with the Governor’s vision for economic growth and development.  The Governor has expressed his belief that in the current climate, a new board will be more effective to carry out the EDA’s mission, and I fully agree.  I am proud of the work we have accomplished, and appreciate the dedicated efforts of the EDA staff.  I am thankful to Governor Murphy for this opportunity to serve New Jersey and contribute to economic growth and job creation.”

The calls, first reported on NJ Advance Media, come amid increased scrutiny of the EDA’s incentive programs and the role past administrations have allegedly played in unfair practices.

Just last week, a grassroots activist group called for such an ousting, including blaming the EDA’s inefficiencies on board appointees of prior administrations. The group comprised of about 50 organizations including the Latino Action Network, New Jersey Policy Perspective and a significant number of unions. NJPP was listed twice on the letter provided to ROI-NJ.

NJPP spokesman Louis DiPaolo said the letter signifies the understanding that the new administration has been focusing on righting past wrongs, but the board — comprised of some holdovers from prior administrations — needs to change.

“Over the last year and a half there have been some internal and administrative changes in how awards have been processed and what has been given out and what the rates of success are and how they are being graded internally,” he said. “A lot of the board have been mainstays, some of them, for the past 15 years. These are folks who have been there from the beginning … and have kind of been derelict in their duties making sure that the EDA is representing the best interest of New Jersey and statewide economic development.”

Downes, the EDA’s board chair, was originally appointed to the board by Gov. Chris Christie in 2017, and named board chair by Gov. Phil Murphy, and Louis Goetting and Bill Layton were appointed by Christie the same year.

Business leaders said the call last week for the resignation of the board was over the top.

“There has been no decision made or anything beyond a couple of hearings,” said Michael Egenton, executive vice president of the New Jersey Chamber of Commerce.

“They don’t know which individual might have been involved with a certain company. Just to say anybody appointed by Chris Christie needs to be terminated is wrong. We haven’t even seen what the legislature is going to do (with testimony from the hearings). We need some kind of incentive program, that’s without a doubt.”

DiPaolo said it is simply about ensuring the integrity of future of incentives remains intact.

“It’s an escalation in demand, but its simply a matter of good government and accountability,” he said. “There’s nothing normal about what’s happened at the EDA and as the legislature looks to re-up these programs as they sunset at the end of the year. The only way to regain the public’s trust is to ensure transparent and accountable leadership and that can’t happen if these people remain at the helm. The best indicator of future behavior is past behavior, and given all the news that’s come out, it would be totally inappropriate for these people to continue leading the EDA.”

Tom Bracken, president of the New Jersey Chamber of Commerce, who knows Downes professionally and personally, said he is shocked by the governor’s actions.

“He is one of the most dedicated public servants that we’ve had from the standpoint of taking on different organizations in New Jersey…in addition to being the CEO of his utility (New Jersey Resources),” Bracken said.

“Larry is the kind of guy you want to have more of in your state because of the integrity he has, the work ethic he has and the dedication he has to our state.”

The spotlight currently shining on the EDA could give potential replacements pause about their future at the organization, Bracken said.

“The EDA is a vital part of our state, it has to survive, it has to thrive, it has to make our state competitive with other states” Bracken said. “Does it need to be tweaked? Yes it probably does. But, to me, there is still very limited information and reason for the massive change all the inquisitions that have happened on the EDA. I haven’t seen very many details on exactly what is very wrong, other than some anecdotal and whistleblower statements.”

Michele Siekerka, president and CEO of the New Jersey Business and Industry Association, also said Downes’ resignation was uncalled for.

“Larry Downes is unquestionably one of the most respected business leaders we have in New Jersey and we commend his service,” Siekerka said.

“We have concerns about the impact that the investigations are having on the state’s business climate. As we’ve previously stated, it is important for the governor’s task force to verify any identified deficiencies on how the tax incentive programs have been administered. And we have agreed with Governor Murphy that a strong emphasis be placed on the effectiveness and oversight of EDA’s tax incentive programs.”

Siekerka also noted that the questions surrounding the EDA could affect the state’s already troubled business climate.

“However, we also need to recognize the chilling affect this messaging and the misinformation that has been cast can have on our businesses, as well as the problematic situation that certified projects are being placed in,” she told ROI-NJ.

“We really need transparency in the investigation because you run the risk of the good actors – which are the overwhelming majority – being dragged down by a bad actor. This is exactly what we don’t need when we struggle so much to compete in New Jersey. It is because of our status as an outlier in the nation for the cost of doing business that these incentives are so critical in the first place.”