Deborah Howlett
President
Economic Development in Hard Times:
TIFs, CAPCOs and Other Bad Ideas
EARN Conference
Milwaukee, WI
Sept. 13, 2011
“Business needs to be
hugged and loved.”
NEW JERSEY GOVERNOR CHRIS CHRISTIE
Quoted by The (Newark) Star-Ledger from an Oct. 9, 2009, campaign
appearance in East Windsor with the New Jersey Builders Association.
FOUR MAJOR NJ TAX SUBSIDIES
Business Employment Incentive Program
(BEIP)
Business Relocation and Retention Assistance Grant
(BRRAG)
Economic Redevelopment Grant
(ERG)
Urban Transit Hub Tax Credit
(UTHTC)
A SURGE IN SUBSIDIES
$822 MILLION IN LESS THAN 18 MONTHS
70 AWARDS TO DEVELOPERS
OR CORPORATIONS
$400 MILLION MORE SINCE
TWO ARE TIED TO JOBS
• BEIP and BRRAG are tied to job creation.
Job creation data is mainly left up to the corporations
to report
• BEIP $47.6 million
Diverts to the employer about 80 percent of income tax
from newly created jobs for 10 years
• BRAGG $29.2 million
Gives a $3,000 per job tax credit for new or retained
jobs (minimum) 50 employees
ERG
• A subsidy to encourage development or
redevelopment
• Developers receive up to 75% of annual
incremental increase in state or local tax
revenues
• Award can apply to 19 different taxes and may
extend as much as 20 years
• State has award $351 million in ERG grants
GAMBLING ON
REVEL CASINO
• $261.4 million ERG
grant, largest ever by
the state
• 2,000 construction jobs
• Project scaled back to about half its original size
• Front-loaded grant allowed the developer to
leverage $1.9 billion in financing from private banks
• Casinos in the worst market since gambling was
legalized in 1972
URBAN TRANSIT HUB TAX CREDIT
• Predicated on good ideas: Transit Oriented
Development and infill development
• Tax credits for businesses that locate within a
half-mile radius of transit station in nine cities
• Makes available up to $1.5 billion in subsidies
• Can carry over credits for 20 years or sell them
• First exception: Camden – Radius changed to
¾ mile from transit center, which will include
Campbell’s Soup headquarters
TRANSIT HUB
TAX CREDIT WAS
M-M-M GOOD
• Campbell’s awarded $41.2 million
in March to finish a renovation of
its Camden headquarters
• As part of its application,
Campbell’s promised to hire 45
new employees
• Three months later, Campbell’s
announced company wide
layoffs, including 130 Camden HQ
employees
• Campbell’s can keep the state
grant despite layoffs
UTHTC EXPANDED IN 2011, TOO
• To include port operations, such as Newark
airport and the Port of Camden, adjacent to
eligible cities
• To include the area of the Meadowlands
where new super mall, American Dream at
Meadowlands, is to replace foundering
Xanadu development
American Dream at the Meadowlands
• Up to $350 million in state tax credits, mainly from
increased sales tax revenues
• Up to $300 million in tax-free bonds tied to revenue
from 8,000 parking spaces
• Up to $300 million in bonds on future property taxes
• Deal struck in June but plan has been made public
CONTACT INFORMATION
NEW JERSEY POLICY PERSPECTIVE
Deborah Howlett, President
[email protected]
609.393.1145 ext 18
www.njpp.org