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EARN Conference Milwaukee, WISept. 13, 2011
Economic Development in Hard Times:TIFs, CAPCOs and Other Bad Ideas
Deborah HowlettPresident
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“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.
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FOUR MAJOR NJ TAX SUBSIDIES
Business Employment Incentive Program (BEIP)
Business Relocation and Retention Assistance Grant (BRRAG)
Urban Transit Hub Tax Credit (UTHTC)
Economic Redevelopment Grant (ERG)
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A SURGE IN SUBSIDIES
$822 MILLION IN LESS THAN 18 MONTHS
70 AWARDS TO DEVELOPERS OR CORPORATIONS
$400 MILLION MORE SINCE
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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 millionDiverts to the employer about 80 percent of income tax from newly created jobs for 10 years
• BRAGG $29.2 millionGives a $3,000 per job tax credit for new or retained jobs (minimum) 50 employees
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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
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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
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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
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• 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
TRANSIT HUB TAX CREDIT WASM-M-M GOOD
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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
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• 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
American Dream at the Meadowlands
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CONTACT INFORMATION
NEW JERSEY POLICY PERSPECTIVEDeborah Howlett, President
[email protected] ext 18
www.njpp.org