I miss the late, great Al Koeppe, who passed away way too soon in 2016.
Many knew him as a hall-of-fame executive who not only ran two of the state’s biggest companies (Bell Atlantic and Public Service Enterprise Group), but also played a key role in the economic development in the state through his leadership roles at the Newark Alliance and the New Jersey Economic Development Authority.
It’s a rare leadership double play that hasn’t been matched since.
I knew Koeppe as an unabashed cheerleader for the state who felt it was his duty to call a then-uninformed editor about the basics of the state’s incentive packages after he felt a story I wrote didn’t properly explain the incentives game. Companies don’t get their tax breaks until they hold up their end of the bargain, he said. And they never get a blank check up front.
Koeppe, to whom I had never spoken previously, lectured me in a way that reminded me of my father: He didn’t need to raise his voice to make his point.
It was the start of a wonderful relationship (chronicled here).
I thought of Koeppe last week, when it was announced that Amazon was asking for its first incentive from the state of Virginia ($152 million) despite halting some of the work on its famed HQ2 project in Northern Virginia.
As you recall, the HQ2 project was the great prize in economic development back in 2018 — one that helped put Newark on the national/international map simply for being what some considered a surprise finalist (even though Newark more than had the necessary attributes to be there).
Some quickly took to social media to say Newark and New Jersey had dodged a bullet when Amazon chose not to accept the state’s package of incentives, which are believed to have been worth as much as $7 billion. An astonishing amount to be sure.
Opponents of incentives saw Amazon’s desire for an incentive from Virginia despite the slowdown (a logical move in this hybrid workplace era) as an example of how corporate incentives don’t work and only benefit the company that receives them.
U.S. Rep. Alexandria Ocasio-Cortez (D-N.Y.), who almost single-handedly led the push to keep Amazon out of New York City (the other co-winner in the contest) certainly attempted to take a victory lap on the news, saying it proved incentives were a one-sided deal for the company that received them.
Koeppe would have made the case that Amazon’s slowdown proved the opposite.
In New Jersey, after all, it’s possible to get an award — but not get the award.
The famed Revel casino/hotel/resort/spa/magnet for the new Atlantic City could have collected as much as $323 million in tax credits from the state in an award given out in 2011. It never got a penny.
American Dream, which has the potential to earn $390 million in tax credits from an award in 2013, still has yet to receive a dollar (though that may change soon).
If you want to argue that incentives are given out to the wrong areas for the wrong projects in the wrong sectors with the wrong requirements for attainment, have at it. It’s an economic development discussion worth having.
If you want to show examples of how some incentive awards don’t seem to be worth their total? That’s fair, too. It’s not a perfect system.
But if you want to argue that all incentive programs are one-sided and should be discontinued — and that Amazon’s slowdown proves that — folks with the same mindset as Koeppe would disagree. The state’s ever-strong “net benefits” test is a reason why.
Just imagine if Newark had won the grand prize — a piece of Amazon’s HQ2 project. An announcement that, for starters, would have lifted the business reputation of the city and state in a manner that could never be equaled.
Even if Amazon only produced half as much real estate and half of the jobs it promised to create, the city and the state still would have benefited greatly. And it may not have cost the state a penny. That’s a pretty good deal.
Amazon’s slowdown in Virginia isn’t an example that incentives don’t work. It’s an example that shows they do.