EDA Task Force member opens incentives hearing by reiterating need for consistent requirements

Strong words from attorney Jim Walden began the second hearing on state tax incentives Thursday at Rutgers Law School in Newark.

Walden, a member of the EDA Task Force created by an executive order from Gov. Phil Murphy early this year, explained the requirements that needed to be met by Economic Development Authority tax incentive applicants who were threatening to move jobs out of the state.

“You only get the money if the application over the years is a net benefit to the state,” Walden said.

That meant moving within the state, which has regularly happened, can only be approved if there is a threat to move out of state — and proof of potentially making good on the threat, such as a site selection.

“For what it’s worth, on that last point on the net benefit test, we have found some evidence that at least one important consultant was giving the same advice to program applicants,” Walden said.

He read a February 2015 memo from Biggins Lacy Shapiro & Co., which explained that showing an out-of-state location is a material piece of evidence the EDA could use toward awarding a tax credit or grant.

“Qualifying and disqualifying requirements of a multibillion-dollar tax program should be clear,” Walden said.

“And they should be clear so that they can be properly understood by business and enforced by whatever authority is responsible for vetting the applications and enforcing the rules.

“If there was an ambiguity in the rules — and, by the way, we are not taking a position on that, we don’t necessarily agree that the statute is ambiguous on this — the EDA as the administering agency really should have one interpretation, not two.”

While the task force is not charged with understanding the lack of uniformity, it is searching for how the applications were certified and what processes were used.

“Applications are submitted under penalties,” Walden said.

If an application has false statements, the grants are subject to suspension, termination and recapturing of funding or credits, as well as potential criminal enforcement.

On the latter point, Walden warned that the task force is still at an early stage in the proceedings and it remains to be seen what can and will be done.

The task force is chaired by Ronald Chen, former New Jersey public advocate and dean of Rutgers School of Law-Newark. Thursday’s group also included Walden, Georgia Winston and Milton Williams of Walden, Macht and Haran LLP, and Pablo Quinones of Quinones Law PLC.

The hearing is ongoing Thursday and will include testimony from former EDA Chief Operating Officer Tim Lizura, as well as two other witnesses. The hearing began at 10 a.m. and resumed at 1 p.m. after a lunch break.