Home>Governor>EDA Task Force’s final report largely ignores Norcross

Ronald Chen, a Rutgers University Law professor, is a former New Jersey Public Advocate

EDA Task Force’s final report largely ignores Norcross

Third publication focuses on abuses by North Jersey firms, consultants

By Nikita Biryukov, July 09 2020 1:00 pm

The task force convened by Gov. Phil Murphy to investigate the handling of tax incentive programs administered by the Economic Development Authority issued its third and final report, marking an end to an investigation that thrust the governor into an extended conflict with South Jersey powerbroker George Norcross.

Unlike other reports issued by the task force, the one released Wednesday lent little attention to Norcross or his firms.

Though the investigative body provided further information about a questionable $260 million tax incentive award presented to Holtec International, where Norcross sits on the board of directors, the kingmaker was not mentioned once in the 110-page report.

The only mention of the family name came in passing when the task force said Philip Norcross, the powerbroker’s brother, represented Holtec while it was seeking an award from the EDA.

Holtec, the report says, claimed it was considering constructing a nuclear power plant outside of Charleston, South Carolina, on a plot of land it would receive free of charge. The task force found no evidence to support that claim, which contributed to the firm’s award, which was the second largest in the state’s history.

Instead of continuing to thrum on Norcross and the firms connected to him, the Thursday’s report focused on deficiencies in the EDA’s process.

The authority, it said, sometimes made awards under GROW NJ and the Economic Redevelopment and Growth Program without having or requesting required documents.

The report also said that some EDA officials had improperly close relationships with consultants who frequently represented firms seeking awards from the authority.

Those consultants, the task force said, often sought out locations in other states that would satisfy the requirements for at-risk jobs needed for larger awards despite firms already being committed to moving to a New Jersey location.

The report lent a great deal of focus to Blue Hill Plaza, a New York corporate park not far from the New Jersey border.

Blue Hill Plaza was frequently used as a prospective location by North Jersey firms seeking tax incentives.

The location was used so often that one real estate brokerage firm warned a client that Blue Hill Plaza “has been used as a stalking horse by companies in NJ who are seeking incentives from the State of NJ, but have no plans on leaving the State.”

The panel further found that the EDA did not always examine whether an ERG tax incentive was actually a factor in a firm’s decision to a given project.

The program lacked written policies, procedures and training for the employees that administered it. It often did not verify project costs or capital investments, instead taking firms at their word, a practice the task force said risks improper awards.

“Some of these deficiencies still raise concerns regarding the unnecessary expenditure of taxpayer funds to incentivize projects that may have occurred regardless of the grant,” the report said.

In its final set of recommendations, the task force urged greater training and oversight for the EDA’s tax incentives, further urging caps to offset volatility the awards create in the state’s budget process.

The task force referred to authorities applications made by Conner Strong & Buckelew, Creative Management Services, Holtec International, Key Food Stores Co-Operative, Lonza America Inc., NFI, Rainforest Distribution Corp., Safilo USA, Sandoz Inc., TDAF I – Pru Hotel Urban Renewal Co., LLC, The Cooper Health System, and The Michaels Organization, LLC.

The task force declined to say which of those firms’ applications were forwarded to law enforcement.

Murphy was less than thrilled about the report’s findings, though it largely confirmed concerns he’s held for more than a year.

“I ordered this review 18 months ago based on the troubling findings in a report issued by our independent State Comptroller.  I knew then that our system of corporate tax incentives was not producing the promised jobs, but I had no idea of the ugly reality waiting to be uncovered,” he said. “This administration will not tolerate fraud or self-dealing and we will ensure that every dollar of taxpayer money is spent wisely and effectively. Moving forward any incentives offered must produce the number of promised jobs for our state.”

Chen said the task force spent $7 million of the $11 million budgeted for their mission, though the state may recover a little more than $11 million from voluntary tax incentive clawbacks.

The task force will transfer its gathered records to the state over the next two months, though it is unclear whether those documents will be subject to the Open Public Record Act.

This article was updated with comment from Murphy at 2:48 p.m.

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