Companies facing legal, regulatory trouble still received N.J. tax breaks, staffer says

Companies that had been sued for workplace issues or were facing regulatory penalties still routinely received tax incentive awards from New Jersey, according to one of the top legal officials at the state’s Economic Development Authority.

Marcus Saldutti, senior legislative officer at the regulatory body, made the comments Thursday during the fourth public meeting of a task force set up to look into the state’s $11 billion tax break system.

Although the EDA has the power to block companies facing legal or regulatory trouble from receiving tax breaks, Saldutti said he never suggested it.

“I have not recommended any disqualifications on any recommendations made to our board,” he said.

The task force investigation was spurred on by Gov. Phil Murphy, who wants to reshape two key tax incentive programs that expired earlier this year. Top Democrats in the legislature encouraged him to re-up the programs as is.

Testimony during Thursday’s meeting highlighted what has long been a sticking point in the debate over the generous tax incentive programs: oversight.

Saldutti testified that the existence of legal issues with a company would not necessarily disqualify it from receiving a tax incentive. But he did not specify what kinds of legal matters, or how many, would impede a firm’s ability to obtain an award.

The task force also gave a presentation on Elwyn, the nonprofit health care and human services firm that was awarded a $39.5 million tax break earlier this year through the state’s Grow New Jersey program.

According to task force attorney Avni Patel, the company answered “no” to various questions about past or pending legal and regulatory matters on its 2018 application for a Grow New Jersey award.

Yet the company had been found in violation of federal law after a complaint was filed in 2010 with the Pennsylvania Bureau of Special Education, Patel said. She added that Elwyn was also named in two civil lawsuits after it filed its application but before its approval and did not disclose the fact to the EDA, even though it was required to.

Christina Fuentes, the EDA staffer reviewing Elwyn’s application, flagged several omissions for Saldutti, who later responded that the application was “good to go.”

“It’s unclear what the standard of review was considered as to Elwyn’s application and what the standard of review is for the EDA across all legal disclosures,” Patel said.

In a statement emailed by Jeremy Sunkett, Elwyn’s vice president of corporate real estate, the company said it had disclosed that it had been in legal proceedings that arose “in the ordinary course of business” but which did not have an effect on the nonprofit.

“During the application review process, Elwyn worked in good faith with its tax credit application counsel and EDA staff to provide supplementary information regarding specific litigation matters identified by the EDA underwriter,” the statement continued. “Elwyn did not intentionally omit or withhold any information from the EDA and remains committed to being transparent with both the EDA and the task force.”

A spokeswoman for the EDA issued a written statement saying “The NJEDA takes seriously the concerns related to specific Grow New Jersey applications that were voiced during [Thursday’s] Task Force hearing. We will conduct a thorough review of these projects as we are doing of others about which questions have been raised in recent months.”

In July, WHYY reported that the delivery firm goPuff had omitted federal labor violations from its successful application for a $39 million tax break through the Grow NJ program.

The company later told the EDA in a letter that the finding by the federal Department of Labor did not meet the definition of a “legal proceeding” and was therefore not required to be disclosed in the application.

As of this week, the EDA was still reviewing goPuff’s response.