Hefty Tax Breaks for New Growth Zone Surrounding AC Airport on Cards

As Atlantic City’s gaming business sags, legislators propose lucrative tax incentives to lure industries to area around nearby airport

Atlantic City International Airport
There’s been an ongoing effort over the last few years to diversify the Atlantic City economy in response to the sagging gaming industry, and the state has stepped in by offering lucrative growth-zone tax incentives to lure businesses to the seaside resort.

Now lawmakers are considering extending those tax breaks to attract more economic activity around nearby Atlantic City International Airport, which is located just outside Atlantic City in a region of the state that has also continued to face economic struggles, including high jobless and foreclosure rates.

Only Atlantic City and four other communities in New Jersey are formally designated by the state as growth zones, a category that provides businesses that choose to locate there the ability to get some of the most lucrative economic-development tax breaks the state can offer. The others are Camden, Trenton, Passaic, and Paterson.

A bill that advanced out of legislative committees yesterday in both the Assembly and Senate would create an additional growth zone in the immediate area surrounding the airport, which is located in Egg Harbor Township in a part of Atlantic County where local officials are trying to establish a technology-cluster centered on the aviation industry.

The bill has the support of state business groups, as well as local officials and business leaders who are trying to better leverage a Federal Aviation Administration tech facility that is already located at the sprawling airport and remains one of the region’s largest employers.

Looking for economic comeback

“There is no legislation right now that is more important to the overall economic comeback of Atlantic County than this bill,” said Assemblyman Vince Mazzeo (D-Atlantic).

For decades, casino gambling was the dominant industry in Atlantic City, as the resort enjoyed a regional monopoly that helped to generate prosperity for the surrounding communities in Atlantic County. But in recent years, increased competition from gambling attractions that have opened in neighboring states like Pennsylvania and New York have put intense pressure on Atlantic City, and a total of five casinos have closed there since 2014.

In the wake of that decline, Gov. Chris Christie, a two-term Republican, has tried to make revitalizing the seaside resort a top priority. Christie and lawmakers have encouraged local officials to pursue an economic-development strategy that emphasizes industries that are unrelated to gambling. And in 2014, he signed legislation that added Atlantic City to the list of communities that have been formally designated as growth zones, allowing the state to offer significant tax incentives to businesses willing to create jobs and invest in the resort. Christie also enacted a measure last year that led to a state takeover of city finances and other government operations that remains in effect today.

But even as Christie and lawmakers have been emphasizing a revitalization within the city, the surrounding region in Atlantic County has continued to struggle. The county’s unemployment rate remains well above the state’s overall jobless average, and the home-foreclosure rate has also been among the highest in the nation in recent years.

One-mile radius of airport

The legislation seeking to create a new growth zone surrounding Atlantic City International Airport would allow the state tax incentives to be offered to businesses that locate within a one-mile radius of land around the airport and the FAA center. The growth-zone designation would also include the airport itself and the FAA facility.

SARTIP Aviation Research Center
Local officials testified in Trenton yesterday that there is already some momentum building as the FAA is working on an initiative to update air-traffic control technology, which is expected to generate new possibilities for support businesses and startups linked to ongoing research and development. Nearby Stockton University also broke ground earlier this year on a planned research and technology park.

Joseph Kelly, president of the Greater Atlantic City Chamber of Commerce, suggested the proposed growth zone would take advantage of regional assets that may go largely unnoticed by policymakers who aren’t from the South Jersey region.

“Sometimes we lose sight that we have an FAA center at the airport that’s employing 4,000 people,” Kelly said. “I don’t know if you always hear that about Atlantic County in light of what you sometimes hear about the casino industry,” he said. “We do have that technology that is going on out there.”

New industry, good-paying jobs

Mazzeo, who is a primary sponsor of the legislation, also pointed to the research facility that Stockton is working to develop while saying the envisioned aviation-technology cluster could be a “real driver in bringing a new industry and good-paying jobs to our area.” And Assemblyman Chris Brown (R-Atlantic) pointed to a recent trip that lawmakers took to Israel, where they saw how much that country has economic development through encouraging startups and new technology.

“With the FAA technical center serving as a lead facility in the development of American drone technologies, this is a prime opportunity for us to be able to expand and grow, and in order to do that, these are the kind of economic incentives that will be necessary,” said Brown, who’s offered to co-sponsor the measure on a bipartisan basis as it moves forward.

As part of an overhaul of state economic-development tax incentive programs in 2013, the state established what is known as the Grow New Jersey program to help generate more economic development in the wake of the Great Recession. Administered by the state Economic Development Authority, companies that promise to create or retain jobs in New Jersey can earn tax credits worth as much as $5,000 per job, with bonus credits worth up to $3,000. The most generous credits are available to businesses located in the five growth zones.

Spend the money differently?

The incentives are not direct grants as they are sometimes portrayed, but credits on future tax liabilities that companies have to earn by meeting certain benchmarks. Still, they’ve been criticized by liberal groups who’ve argued that the state should be using the billions of dollars in pledged tax breaks to make broader investments in the state and its economy, including in transportation infrastructure and higher education.

But the incentive programs also have their fair share of bipartisan support, and they’ve been credited with helping to spur major redevelopment in Camden, with companies like Subaru and the Philadelphia 76ers deciding to open new facilities within that city’s borders in recent years.

In addition to establishing the new growth zone around the airport outside Atlantic City, the bill that was approved yesterday would also extend some of the incentives that have been used in Camden to the other locations.

“This is good legislation, it’s good not just for the 2nd District, but it’s good for the state,” Brown said.