The New Jersey Economic Development Authority announced Wednesday morning that it has cut awards to 82 companies approved under the Grow New Jersey Program by a combined $342.7 million since Gov. Phil Murphy took office.
That sounds great. And it shows the EDA is doing its due diligence (we’ll explain). But don’t be confused, this does not mean:
- That the state coffers suddenly gained $342.7 million (they did not);
- That 82 companies suddenly owe the state money (see previous bullet; this is not a clawback);
- That this is some type of repudiation of the controversial Grow program (the rules and regulations did not change);
- That this all happened overnight (some of these figures come from actions taken years ago).
What it means is this:
- From the time companies received a Grow award (some go back as far as 2014) to the time they certified for the award (for some, that’s 2018), the EDA reduced the amount being awarded to these 82 companies by $342,668,620;
- In most cases, it means the company did not meet the job requirement it had pledged to meet and, thus, its award was reduced by a percentage of the original amount;
- This is real savings: It represents $342.7 million in tax credits the state does not have to issue (it means a lot more tax money will be coming in during the life of the Grow program).
Why is all this coming to light today?
The dollar total was released in conjunction with a second report from the Office of the State Comptroller.
In 2018, the OSC was tasked by the Governor’s Task Force on NJEDA Tax Incentives to identify significant issues at the EDA related to incentive project approvals and oversight. It released an initial report in 2019 — which included 21 recommendations.
This second report detailed whether those recommendations have been implemented (almost all have been implemented completely — or close to the recommendation).
According to the EDA, these steps include more formal data-sharing practices with the Department of Labor & Workforce Development and the Department of the Treasury/Division of Taxation to ensure that tax credits are only disbursed to companies to the extent they meet their commitments for job creation and retention.
As a result of the recommendations made by the OSC and the task force, the NJEDA now conducts a rigorous, annual review of more than 400,000 jobs associated with various programs. It is from those reviews that the $342.7 million reduction in awards were determined.
In a nutshell, the EDA not only is giving out awards, it is being diligent in its checks to see all that was promised was delivered.
EDA CEO Tim Sullivan said he was pleased to see the OSC recognized the efforts by the EDA.
“Since the OSC’s initial report, the NJEDA has worked hard to resolve the issues raised in the report and has reinforced its commitment to being a best-in-class steward of taxpayers’ resources to ensure the programs we administer benefit New Jerseyans and our communities,” he said. “While we continue to make improvements and adapt to the changing economic environment, we are proud of what we have accomplished during Gov. Murphy’s administration.
“We also appreciate the OSC’s recognition that the NJEDA has addressed the most significant issues raised in its prior report.”
The EDA has made a number of critical organizational changes, including appointing a chief compliance officer, creating the Division of Compliance and Program Management, reorganizing its front-end program teams to ensure a more transparent staff recommendation and decision-making process, and procuring an additional independent, external compliance auditor, among other changes.
Forty-six of the 82 companies to have their award reduced at time of certification had it reduced by more than a million dollars.
The biggest reduction came in the award given to Eastern Metal Recycling, which was given a $252.7 million award on Sept. 10, 2015, in conjunction with its pledge to move to Camden and increase hiring, among other things.
The total would have made the award the second-highest ever given out in the Grow program.
When the company certified for its first payment on March 2, 2020, the award was reduced to $131.6 million — a reduction of $121.6 million — because the company did not meet all of the agreed-to requirements.
Only four other companies had their award reduced by at least $10 million at time of certification.
Here’s a look at that list, arranged by the year in which the incentive was certified.
2018
- Accurate Box Co: $1,450,000
- Conopco: $4,916,250
- GBT: $1,905,000
- Century 21 Department Stores: $4,400,000
- LTC Consulting Services LLC: $12,880,000
- Nice Systems Inc.: $4,047,400
- Philadelphia 76ers: $2,478,733
- Quality Packaging Specialists International LLC: $2,550,000
- Soundview Paper Holdings LLC: $4,348,923
- TR U.S. Inc. and Subsidiaries: $2,598,750
- WallachBeth Capital: $1,100,000
2019
- Atlantic City Contact Center: $31,267,025
- Corporate Synergies: $2,420,000
- Direct Energy: $3,740,000
- Jaguar Cars/Land Rover North America: $3,257,500
- Medidata Solutions Inc.: $1,150,000
- SS&C Technologies Inc.: $1,920,000
- Tokio Marine North America Inc.: $7,425,000
2020
- Allergan Inc.: $15,744,360
- BAYADA Home Health Care: $1,592,500
- Broadridge: $1,382,500
- CareKinesis Inc.: $2,249,940
- Eastern Metal Recycling: $121,161,623
- F & S Produce Co.: $6,478,200
- H&M: $1,933,750
- iCIMS: $7,705,000
- Independent Chemical Corp.: $2,077,500
- Kuehne + Nagel Inc.: $1,137,500
- Marsh & McLennan Cos. Inc. & Marsh Inc.: $3,330,000
- Nestle HealthCare Nutrition Inc.: $9,195,000
- Nuts.com: $6,190,000
- Princeton Tec: $10,692,288
- Quest Diagnostics Inc.: $3,750,000
- Schenker Inc.: $2,380,900
- Hackensack University Medical Center: $2,965,000
- Sharp Electronics Corp.: $1,988,750
- Siemens Healthcare Diagnostics Inc.: $6,654,000
- W & W Jewelers Inc.: $3,420,000
- York Risk Services: $1,761,010
2021
- Ardagh Glass Inc.: $2,642,500
- CP Residential GSGZ: $2,953,892
- Gourmet Nut Inc.: $1,100,000
- Konica Minolta Business Solutions USA Inc.: $6,808,660
- The Michaels Organization: $1,110,314
- VNO Wayne Town Center: $3,857,849
- Yoland Corp.: $1,473,749
The complete list is available here.
