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Nearly $300 Million in Tax Breaks Awarded to 4 Companies With Close Democratic Ties Nearly $300 Million in Tax Breaks Awarded to 4 Companies With Close Democratic Ties
(32 minutes later)
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NEWARK — The backlash over New Jersey’s lucrative corporate tax incentives grew on Thursday when it was disclosed that four politically connected companies received nearly $300 million in tax breaks based on questionable claims that they would otherwise move out of state.NEWARK — The backlash over New Jersey’s lucrative corporate tax incentives grew on Thursday when it was disclosed that four politically connected companies received nearly $300 million in tax breaks based on questionable claims that they would otherwise move out of state.
The four companies all had close ties to George Norcross, a powerful Democratic leader in the southern part of the state.The four companies all had close ties to George Norcross, a powerful Democratic leader in the southern part of the state.
A state official revealed that three of the companies had indicated that they were considering moving to Philadelphia in order to qualify for tax breaks to stay in New Jersey, but in fact did not have viable offers to go there.A state official revealed that three of the companies had indicated that they were considering moving to Philadelphia in order to qualify for tax breaks to stay in New Jersey, but in fact did not have viable offers to go there.
The fourth business identified a potential relocation site in Philadelphia four days before the state approved its $40 million tax credit in 2014, the official said.The fourth business identified a potential relocation site in Philadelphia four days before the state approved its $40 million tax credit in 2014, the official said.
The revelations about those companies, which all sought to move to the city of Camden with sizable tax credits, under a 2013 law known as the Economic Opportunity Act, were made public during a daylong hearing by a panel of investigators appointed by Gov. Philip D. Murphy, a Democrat.The revelations about those companies, which all sought to move to the city of Camden with sizable tax credits, under a 2013 law known as the Economic Opportunity Act, were made public during a daylong hearing by a panel of investigators appointed by Gov. Philip D. Murphy, a Democrat.
The task force is examining whether $11 billion in economic development programs have delivered significant economic benefits or have been a boon to politically connected firms and companies.The task force is examining whether $11 billion in economic development programs have delivered significant economic benefits or have been a boon to politically connected firms and companies.
An investigation by The New York Times found that lawmakers allowed a real estate lawyer, Kevin D. Sheehan, whose influential law firm has close ties to Democratic politicians and state legislators, to edit drafts of the 2013 law that unlocked sizable tax breaks for his firm’s clients.An investigation by The New York Times found that lawmakers allowed a real estate lawyer, Kevin D. Sheehan, whose influential law firm has close ties to Democratic politicians and state legislators, to edit drafts of the 2013 law that unlocked sizable tax breaks for his firm’s clients.
The testimony on Thursday by current and former officials at the New Jersey Economic Development Authority, which oversees the tax credit programs, raised serious concerns about the law, the lack of oversight in reviewing applications and the way some tax credits were awarded.The testimony on Thursday by current and former officials at the New Jersey Economic Development Authority, which oversees the tax credit programs, raised serious concerns about the law, the lack of oversight in reviewing applications and the way some tax credits were awarded.
A former president of the authority, Tim Lizura, also acknowledged that many last-minute changes to the law were made by Mr. Sheehan. The Times found that those alterations were done without any public disclosure.A former president of the authority, Tim Lizura, also acknowledged that many last-minute changes to the law were made by Mr. Sheehan. The Times found that those alterations were done without any public disclosure.
Companies had been awarded $4.9 billion under the 2013 legislation by moving to New Jersey or remaining in the state and creating and retaining jobs.Companies had been awarded $4.9 billion under the 2013 legislation by moving to New Jersey or remaining in the state and creating and retaining jobs.
The hearing was the second held in recent months by the task force, which in April referred evidence to federal prosecutors for possible criminal charges. It is not immediately known whether the evidence might lead to charges or what might result from Thursday’s testimony.The hearing was the second held in recent months by the task force, which in April referred evidence to federal prosecutors for possible criminal charges. It is not immediately known whether the evidence might lead to charges or what might result from Thursday’s testimony.
But a member of the task force said companies could be held criminally liable.But a member of the task force said companies could be held criminally liable.
“There is real criminal exposure for companies that lie to the E.D.A.,” said Pablo Quiñones, a special counsel on the task force.“There is real criminal exposure for companies that lie to the E.D.A.,” said Pablo Quiñones, a special counsel on the task force.
For several hours, another special counsel, Jim Walden, displayed some of the specific edits of the bill on a large screen. Some changes, he noted, were intended to allow specific companies, such as Subaru of America, to claim hundreds of millions of dollars in additional tax breaks.For several hours, another special counsel, Jim Walden, displayed some of the specific edits of the bill on a large screen. Some changes, he noted, were intended to allow specific companies, such as Subaru of America, to claim hundreds of millions of dollars in additional tax breaks.
Several companies had business ties with Mr. Sheehan’s firm, Parker McCay, Mr. Walden said.Several companies had business ties with Mr. Sheehan’s firm, Parker McCay, Mr. Walden said.
Mr. Sheehan did not register with the state as a lobbyist for the Economic Opportunity Act, and his firm told The Times that its work on the legislation did not amount to lobbying.Mr. Sheehan did not register with the state as a lobbyist for the Economic Opportunity Act, and his firm told The Times that its work on the legislation did not amount to lobbying.
“Parker McCay was asked by policymakers, including those in the Legislature, to review this legislation and offer input and suggestions on ways it could be strengthened to help Camden and other localities in South Jersey, which have historically lost out to North Jersey in receiving economic benefits from the state,” the company said in a statement on Thursday.
Beside his work on the bill, Mr. Sheehan also helped the four businesses who were considering a move to Philadelphia — Cooper Health System; Conner Strong & Buckelew; the Michaels Organization; and N.F.I. — assemble their tax credit applications, Mr. Walden said.Beside his work on the bill, Mr. Sheehan also helped the four businesses who were considering a move to Philadelphia — Cooper Health System; Conner Strong & Buckelew; the Michaels Organization; and N.F.I. — assemble their tax credit applications, Mr. Walden said.
Cooper Health was awarded nearly $40 million in tax credits to relocate to Camden. It submitted an application on Nov. 7, 2014, and stated that none of its employees were at risk of losing their jobs and wrote “TBD” in response to a question about whether it was considering leaving the state, according to a copy of its application shown during the hearing.Cooper Health was awarded nearly $40 million in tax credits to relocate to Camden. It submitted an application on Nov. 7, 2014, and stated that none of its employees were at risk of losing their jobs and wrote “TBD” in response to a question about whether it was considering leaving the state, according to a copy of its application shown during the hearing.
The next month, a Cooper Health executive told the state that it had located a property in Philadelphia. Four days later, the Economic Development Authority approved its tax credit submission.The next month, a Cooper Health executive told the state that it had located a property in Philadelphia. Four days later, the Economic Development Authority approved its tax credit submission.
A Cooper Health spokesman said on Thursday that the company was truthful in its application and had hired more employees than it had proposed. A representative for Conner Strong & Buckelew said that suggestions made during the hearing were inaccurate and that the company was seriously considering a move out of state to consolidate its offices.A Cooper Health spokesman said on Thursday that the company was truthful in its application and had hired more employees than it had proposed. A representative for Conner Strong & Buckelew said that suggestions made during the hearing were inaccurate and that the company was seriously considering a move out of state to consolidate its offices.
The building that Cooper Health eventually moved into had been owned by the Economic Development Authority, according to records obtained by The Times. The agency sold the site in late December 2014 to a nonprofit organization, which sold it that same day to a real estate investment group, documents show.The building that Cooper Health eventually moved into had been owned by the Economic Development Authority, according to records obtained by The Times. The agency sold the site in late December 2014 to a nonprofit organization, which sold it that same day to a real estate investment group, documents show.
Intersecting nearly every piece of the testimony on Thursday, even though their names were rarely mentioned, were the Norcross brothers.Intersecting nearly every piece of the testimony on Thursday, even though their names were rarely mentioned, were the Norcross brothers.
Parker McCay’s chief executive is Philip Norcross, whose brother is George Norcross, an insurance executive at Conner Strong and the chairman of the board of trustees of Cooper Health System.Parker McCay’s chief executive is Philip Norcross, whose brother is George Norcross, an insurance executive at Conner Strong and the chairman of the board of trustees of Cooper Health System.
A third brother, Donald Norcross, is a former Democratic state senator who represented Camden and had been a sponsor of the 2013 law; he is now a United States representative.A third brother, Donald Norcross, is a former Democratic state senator who represented Camden and had been a sponsor of the 2013 law; he is now a United States representative.
Conner Strong, the Michaels Organization and N.F.I. submitted tax credit applications on the same day in October 2016. They collectively sought $245 million to relocate together to a new 18-story tower on the Camden waterfront. Without the tax credit, they were considering moves to office towers in Philadelphia, the companies claimed.Conner Strong, the Michaels Organization and N.F.I. submitted tax credit applications on the same day in October 2016. They collectively sought $245 million to relocate together to a new 18-story tower on the Camden waterfront. Without the tax credit, they were considering moves to office towers in Philadelphia, the companies claimed.
But by the time they applied for the credits, the offers to lease space in Philadelphia had expired, according to David Lawyer, an official with the Economic Development Authority who had reviewed the applications for the task force.But by the time they applied for the credits, the offers to lease space in Philadelphia had expired, according to David Lawyer, an official with the Economic Development Authority who had reviewed the applications for the task force.
The companies later submitted new leases, but those offers should also have raised red flags, Mr. Lawyer said.The companies later submitted new leases, but those offers should also have raised red flags, Mr. Lawyer said.
The companies had proposed new lease configurations in Philadelphia, with far different office layouts that had employees scattered on different floors, he said.The companies had proposed new lease configurations in Philadelphia, with far different office layouts that had employees scattered on different floors, he said.