Grow NJ, ERG incentive applications are still being considered

EDA CEO Tim Sullivan talking about the proposed fund.

Gov. Phil Murphy, in a recent fireside chat on his economic development plans, made it clear he feels the state’s most recent incentive programs — notably Grow New Jersey and Economic Redevelopment & Growth — were not only too generous, they were ineffective.

“The old ones, quite clearly, didn’t get it done,” he said last week at Rowan University. “And, when I say the old generation didn’t get it done, I’ll even leave aside all of the craziness that we’re reading about and has come out from the task force.

“We were 42nd, 47th and 49th in job growth, wage growth and measures of poverty eradication over the previous decade. We’re not even in the playoffs. Never mind having a shot at the Super Bowl.”

As it turns out, the state isn’t even out of the game.

ROI-NJ has learned there are 24 applications still in the pipeline — 12 Grow NJ and 12 ERG — all of which are under active review.

No Grow NJ or ERG applications will be presented to the board Tuesday during the next monthly meeting of the state Economic Development Authority, but EDA head Tim Sullivan told ROI-NJ that “a few” are likely to be presented in future meetings, even into 2020. And he said they all will have a fair chance at being approved.

“If they are able to satisfy all of the application requirements, I would expect they’ll be approved when the review is complete,” he said.

Gov. Murphy has said he is a strong proponent of incentives (calling them a tool in the toolbox). And while he would prefer his own, he wants to ensure all incentive are vetted appropriately.

Sullivan said the EDA is working to do just that.

“We’re doing a rigorous review,” he said. “We’re making sure we get the review right.”

Part of that review includes a fulfilling a provision that the incentive is a “material factor” for making the move, Sullivan said.

“There is a judgment factor,” he said. “The company has to demonstrate to us to the EDA’s satisfaction that the tax credit would be a material factor, that they wouldn’t do the project without the tax credit. That’s something I spend a lot of time thinking about it.”

Sullivan said denying an application because of this is not common, but it is not unprecedented.

“It’s a pretty high threshold to question that assertion, but we have,” he said. “Recently, there was an application where the fundamentals were so strong in New Jersey’s favor as compared to the alternative location that I and others we’re not able to be convinced that they weren’t going to do this anyway.”

Sullivan said he was confident in the EDA’s rationale.

“This was a company that was involved in distribution,” he said. “We’ve got the (New Jersey) Turnpike, the seaport, the airport and the densest consumer marketing in North America. I think they want to be here. We told them we were not comfortable bringing the application to the board, they withdrew, and they ended up doing the project anyway.

“The good news: We got all the jobs and all (the) tax revenue.”

Sullivan does not necessarily anticipate using this type of test to block applications currently in the pipeline.

“That’s a pretty rare situation,” he said. “But that’s how a well-run system should work when you’ve got the wherewithal to question and not just take at face value the assertions of these companies. In almost all these cases, those assertions are accurate and fair. But every now and again, you have to say, ‘Really — are you sure?’”

Sullivan said this check is a big part of the process.

“There’s the due diligence that’s required to make sure you understand all the issues,” he said. “There’s a handful of examples where, clearly, we didn’t have all the information at our disposal that we should have. That’s something we’re working on to improve that process and then making sure companies actually do what they said they were going to do. That’s the bulk of the issues we’re working on, the compliance and the follow-up.”

Companies in the pipeline, Sullivan said, can be confident they will get a fair shake.

“If they are able to satisfy all of the application requirements, I would expect they’ll be approved when the review is complete,” he said. “And once folks are approved, if they do what they said they were going to do, we’ll honor that obligation, as you would expect us to do.”