The List: Top Ten Subsidies Meant to Spur Economic Growth in New Jersey
More than $5 billion, mostly awarded since 2010, includes nearly $2 billion for just 10 businesses or projects
In an effort to spur economic growth, New Jersey since 1996 has given $5.4 billion tax subsidies and credits to businesses.
More than $4 billion of that total has been awarded – to 252 businesses -- since since 2010,, according to a recent report by New Jersey Policy Perspective (NJPP.
NJPP contends that the goal of subsidies, distributed through various programs overseen by the state Economic Development Authority, has shifted in recent years from primarily creating new, permanent jobs to preventing the loss of jobs "at risk" of moving out-of-state.
According to NJPP, the subsidies have done little to help the state's economy -- just 40 percent of the jobs New Jersey lost during the recession have been recovered. And NJPP argues that too many millions have helped companies move from one New Jersey town to another or, in the case of Prudential, from one location within a city to another in the same city.
The 10 largest subsidies and credits add up to $1.85 billion.
Here are details of those top 10 subsidies, starting with the name of the business or project, the year in which the subsidy was awarded, the specific state program involved, and the amount of the award:
1. American Dream Meadowlands, 2013, Economic Redevelopment and Growth program, $390 million
The EDA approved its largest single award last November, less than two months after Gov. Chris Christie signed revised economic development incentive rules into law.
Reaping the benefits is the former Xanadu, begun more than a decade ago and seven years past its original expected opening date. Now under the control of Canadian developer Triple Five Worldwide, the development is supposed to have more than 3.3 million square feet of retail, restaurant and play space. The cost is estimated at almost $2.6 billion.
ERG is designed to help boost new development and recipients do not need to create new jobs, but the EDA estimates American Dream will bring 11,650 new jobs and a $1 billion benefit to the state over 20 years. Despite declarations by Christie that the project includes the "ugliest" building in the state, the multi-colored exterior of the future ski slope remains.
American Dream is not expected to open until 2016.
2. Revel Atlantic City, 2011, ERG, $261.4 million
Now in bankruptcy for the second time in its two years of existence, Revel Casino Hotel received the second largest ERG subsidy in February 2011.
Like American Dream, Revel was in the midst of construction when work halted and the state stepped in to get it back on track with the $261 million tax break.
But the $2.4 billion project fentered bankruptcy in February 2013, less than a year after its opening. Last week, the casino filed for bankruptcy protection again and told its 3,140 workers that they could be out of work within two months unless new owners are found.
On awarding the subsidy to Revel, the EDA said the project would create 5,500 new jobs and a $27 million annual benefit over two decades.
According to NJPP, Revel has, instead, lost $250 million over that time period and created only half the number of jobs projected, with a large proportion of the positions not even full-time.
3. JP Morgan Chase, 2014, Grow NJ, $224.8 million
The $76.9 million project is the most recent addition to the list of the top 10 most generous subsidies, approved by the EDA on May 16.
JP Morgan Chase is getting the $224.8 million in tax credits under Grow NJ, which is now the state's main job creation and retention incentive program, for agreeing to stay and expand in Jersey City, for a total benefit to the state of $1.1 billion, according to an EDA press release.
The company qualified for the maximum base subsidy and bonus credits as a so-called "mega project," as well as for being a transit-oriented development, for having jobs with high salaries and for being in the targeted finance industry.
The $76.9 million project will expand the financial services firm's space to more than 1 million square feet, create 1,000 new jobs and retain 2,612 at-risk jobs, according to the authority.
4. Sayreville Seaport Associates, 2014, ERG, $223.2 million
The $1.2 billion commercial development, called Luxury Point at Sayreville, was also approved on May 16, though without any fanfare.
The authority estimates it will result in 3,900 new jobs. This is an industrial site redevelopment that includes two former federal Superfund sites along the Sayreville waterfront. According to the project's website, it will include a 1.6 million-square-foot mall, 576 townhouses and 1,424 apartments, as well as a hotel and marinas on 3 miles of waterfront.
The EDA website does not include information about the estimated financial benefits of this project, as it has with older approvals.
5. Prudential Financial, 2012, Urban Transit Hub, $210.8 million
The insurance giant got a 10-year tax credit for a new $440 million, 650,000-square foot office tower in Newark.
Prudential expects to add 400 new jobs and move 2,050 existing jobs from leased space at Gateway Center to the new building under construction on Broad Street.
The EDA estimated a $304 million benefit over 20 years.
Originally, Prudential was to have received a larger subsidy for building at a different location in the city. Gateway was unsuccessful in a legal challenge of the EDA award.
The Urban Transit Hub credit program is meant to spur development in urban areas near transit hubs.
6. Goldman Sachs, 2000, Business Employment Incentive Program, $164.3 million.
The financial services firm has actually been awarded four separate grants from the BEIP, which was phased out as part of the 2013 revised subsidy programs, that amounted to a total of $169 million between 1997 and 2002, according to the EDA website. Three of the grants were for relocations to Jersey City, while the fourth was for an expansion.
The total estimated number of new jobs was 2,470 and the total project cost was $136 million.
The grants were for between 65 percent and 80 percent of the amount of income taxes withheld for employees over 10 years.
7. MMC-DB Group, 2013, Urban Transit Hub, $105.6 million
The tax credits were awarded last December for creation of 321 new jobs by April 2017 as part of a $139 million investment. That's a tax credit of nearly $329,000 per job, the second-largest among a dozen projects approved for commercial Urban Transit Hub tax credits.
It's also one of three projects to get the maximum tax credit rate of 100 percent of investments, according to a state Office of Legislative Services' EDA 2015 budget question-and-answer document.
The project is a mixed-use development – with one tower to house a medical teaching and office facility and another tower housing a hotel and conference center with parking -- on the campus of St. Joseph's Regional Medical Center in Paterson.
The EDA estimates an $80 million benefit over 30 years, a decade longer than the typical 20 years.
8. Panasonic, 2011, Transit Hub, $102.4 million.
The controversial award gave the electronics company tax credits to move jobs from Secaucus to a new headquarters about 16 miles away in Newark. City officials praised the move, while those in Secaucus bemoaned the use of state incentives to encourage a business to relocate from within its borders.
On awarding the credits in February 2011, the EDA reported Panasonic would add 250 new jobs and relocate 806 at-risk jobs in the new $126 million, 340,000-square foot facility, which opened last fall.
The EDA estimated a net benefit of $316 million over 11.25 years.
9. Verizon, 2005, BEIP, $87.8 million
The communications giant received its grant from the EDA in February 2005 for creation of an estimated 1,257 new jobs at $180 million corporate relocation in Bernards Township. Another $3 million was given to Verizon subsidiaries for locations in Union Township, Union County, and Hamilton in Mercer and Ewing, according to the EDA.
10. Pearson, 2011, Transit Hub, $82.5 million.
In September 2011, the textbook publisher got tax credits for a $90 million project that would not create any new jobs, but would keep an estimated 646 existing jobs in New Jersey.
However, as in the case of Panasonic, one municipality's gain was another's loss -- in this case, Pearson will be moving from Upper Saddle River to Hoboken this year.
The EDA estimated a $157 million benefit over 11.6 years.