TRENTON, NJ — A searing report released Monday evening by a task force to investigate the state economic development programs showed that "special interests" were behind the central incentive legislation and influenced hundreds of millions in tax credits.
It was issued just minutes after a superior court judge in Mercer County denied a request from attorneys for South Jersey political boss George E. Norcross III, along with other Camden firms, to halt the report's release. The Democratic powerbroker sued Gov. Phil Murphy about a month ago, resulting in the delay of the third public hearing originally planned for June 11.
Dan Fee, a spokesperson for Norcross, said in a statement after the court decision that "we will continue this litigation in an aggressive manner to protect our rights."
Companies with ties to Norcross and his brother Philip, CEO of law firm Parker McCay, are much the focus of the nearly 80-page report from the task force appointed by Murphy.
The report reiterated that the firm "appeared to have had a significant impact on the design of the Grow NJ statute," which was "dramatically expanded" through the Economic Opportunity Act of 2013 to favor projects in Camden. Evidence obtained by the task force made clear that Philip Norcross and Kevin D. Sheehan, fellow partner at Parker McCay, drafted significant legislative changes with the intention of benefiting the firm's clients.
The bill was co-sponsored by another Norcross brother, Donald Norcross (D-NJ 1), and cleared by the New Jersey Economic Development Authority under former Gov. Chris Christie.
Of $11 billion issued statewide, some $1.6 billion in tax incentives have been granted for investment in Camden, awards that were "far in excess of what would have been possible in other parts of the state," the report read.
"Certain aspects (of the program) design are difficult to justify from a rational policy perspective and can be understood only as the result of a process in which certain favored private parties were permitted to shape the legislation to their benefit—and further, in some cases, to disfavor potential competitors," the report read.
The task force also concluded that the EDA did not have procedures set up for proper vetting of companies seeking credits, failing to catch misstatements that would have led to application rejections or "a significant reduction" in award amounts.
As evidenced in the report, many companies affiliated with George Norcross made assertions during the process of applying that were not verified, "even when relevant information was readily available."
A quick search online, the report said, would show that Norcross insurance brokerage Conner Strong & Buckelew, The Michaels Organization, and NFI — recipients of a combined $245 million in tax credits — committed to move to Camden more than a year before claiming in an application that they were considering options in Pennsylvania.
"Had the EDA’s employees found this information, the EDA may have found these applications materially misleading, and denied an award on that basis," the report read.
But at a minimum, the agency "should have calculated these awards based only on new jobs moving to Camden from outside the state," which would have reduced the total credits to the three companies by more than $70 million.
There's also the case of Holtec International, which was approved for a $260 million Grow NJ award in 2014 (and earlier this month saw a freeze on that tax break). Holtec had been debarred by the Tennessee Valley Authority, but in its application, the company said that was never the case. George Norcross serves on the board of directors.
The task force said that such a debarment would have been grounds for the application to be denied, though no evidence was found that the EDA discovered that fact.
"To date, our investigation has uncovered no evidence that the EDA intentionally ignored
this information, but the failure to have strict guidelines for such research made these lapses possible," read the report.
Alongside the report were four dozen exhibits laying out award application documents and email correspondence between EDA officials and company representatives.
The series, in part, revealed how Cooper Health System, another tax credit recipient examined, misled officials about relocating out of state.
Chaired by George Norcross and represented in the lawsuit against the governor, Cooper received close to $40 million in incentives in December 2014 to move office jobs from existing locations in Cherry Hill and Mount Laurel to Camden.
Cooper said in its initial application that no jobs were at risk of leaving New Jersey and it was not a consideration. A later claim about out-of-state relocation to Philadelphia resulted in a quicker EDA approval.
"Had the EDA calculated Cooper Health’s award based on its initial representation that no jobs were at risk of leaving the state," the report read, the award would have been approximately $7 million.
The supposed Philadelphia site caught the attention of the task force, by way of emails weeks before the approval.
Andrew Bush, vice president of real estate and facilities for Cooper, sought out a term sheet on Nov. 25 for a "credible" location that matched one described in the company's Grow NJ application submitted a week earlier. He reached out to Jon C. Sarkisian, executive vice president at the real estate brokerage CBRE, with thoughts toward the Centre Square building at 1500 Market St.
"Given that this building is within the CBRE family – can you get me a term sheet for 120k sf? Quietly? No probability of us moving to Center Sq, so I don’t want to make too much noise. I need a full service number of $24/sf or less to make the numbers work," the email from Bush read.
"The obvious reference is that Mr. Bush was asking Mr. Sarkisian to provide a sham term sheet that could be supplied to the EDA as evidence of its bona fide intent to relocate outside New Jersey, when in fact Cooper Health had no such intention,"
The report notes that the task force has referred "a number of applicants for suspension or termination of their tax-incentive awards or obtained voluntary termination." The total amount of the grants at issue exceeds $500 million.
Acknowledging that its investigation is still ongoing, the task force listed nine early recommendations for the present and future of EDA programs, with an emphasis on transparency and fairness in design.
The state's controversial tax incentive programs are set to expire June 30. Democrats in the Assembly voted for an extension, and the Senate will likely reach the same result. But Murphy is seeking a complete overhaul of the incentives package.