Citing Camden example, N.J. Sen. looking to clamp down on tax breaks

Montgomery County housing firm Roizman Development Inc. is set to receive just over $13 million worth of tax breaks from the state of New Jersey for a 175-unit low-income housing remodeling project in Camden.  What’s unusual is the company has owned the building for the past 20 years,  and owes New Jersey over $6 million worth of loan payments, according to a report by the AP.

Now state Sen. Nicholas Scutari (D-Linden) says enough is enough, proposing legislation that would ban tax breaks for companies that still owe the state money.

 

“It kind of flies in the face of common sense, doesn’t it?” said Scutari. “We can’t keep giving people discounts when they haven’t paid what they owe.”

Under Scutari’s bill, a company that owes back taxes won’t be eligible for future credits until it squares with the state, and it’s set to come before the state legislature in early May.

But to the broader point, business projects in Camden have received nearly $630 million worth of discounts over the past year, which may sound like good news for the city, but might not necessarily turn into the great benefit it proposes to be.

“Many times, legislators or executive branch officials rush to offer incentives without clearly indicating what are the anticipated and expected outcomes,” said Gwendolyn Harris, who studies tax incentives and is executive director of the Walter Rand Institute at Rutgers University – Camden.

She says incentives work, if they go to businesses that can feed into each other and the community, and they account for things like long term tax payments, or jobs.

Last year, Holtec International, which manufactures nuclear reactor parts, received $260 million for relocating 160 jobs and promising to add 235 more to Camden. In July, Holtec CEO Krishna Singh told Newsworks that he expects the company will add 3,000 jobs within five years.

“The application says 400 jobs before your tax credit begins, so of course we committed the minimum amount,” Singh said in July. “We wouldn’t commit to what we really expect to do because we want the credit to begin.”

Similarly, the car manufacturing company Subaru received $118 million relocate its plant roughly 10 miles down the road, from Cherry Hill to Camden. The Philadelphia 76ers got $82 million from New Jersey last year to relocate their practice facility to Camden and will bring 250 jobs, though a NewsWorks article in June reported that 200 of those jobs were already filled by team administrators, players and staff currently working in Philadelphia.

As is the case with Holtec International, these businesses must provide a certain number of local jobs in order for their tax incentives to kick in, but beyond that there is little stipulation more Camden jobs will be created.

Asked repeatedly to comment on how many Camden residents will actually get hired because of these incentives, Mayor Dana Redd declined to comment.

Whether it’s possible for a government to spend too much to attract businesses, Harris is quick with an answer, “yes, definitely,” though whether that’s the case in Camden she couldn’t say yet.

“It’s one of the things that’s happened in any number of areas across the country, a decision to build a highway to nowhere, with the prospect of ‘if we build it they will come,’ and though it brought people in, the amount of debt the municipality or state incurred never really reaped the benefits, ” said Harris.

“It needs to be planned out very carefully, and people need to be realistic about what the objective is. Sometimes its local revenue, sometimes it’s jobs, and sometimes it’s public relations if you will,” she added.