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Big businesses mean big benefits to Newark

Impact of new buildings for Panasonic, Prudential seen in 'multiplier effect'

Keeping jobs in the state may be the most lauded benefit of New Jersey’s corporate incentive programs. But that is hardly the only benefit.

In 2011, Panasonic Corp. of North America was awarded a $102.4 million tax credit from the state to relocate its headquarters to Newark from Secaucus. The electronics giant settled into its refurbished Brick City digs in 2013.

Since the move, New Jersey Transit has enjoyed an estimated $550,000 annual bump in revenue from Panasonic employees, according to the rail agency.

On a typical workday, a little more than 57 percent of Panasonic employees use mass transit to get to work.

This contrasts with a 4 percent transit share estimated for travel to the previous Secaucus site, and 26 percent among all commuters that work anywhere in downtown Newark. Panasonic has more than doubled typical transit usage to work in downtown Newark.

Between mass transit use and employees carpooling to work, Panasonic is estimated to have reduced weekday vehicle miles traveled among its employees by nearly 50 percent.

Peter Kasabach, executive director of New Jersey Future, a Trenton-based smart growth advocacy group, said it was an example of how the state’s corporate incentive programs reward companies for moving into weaker market sites that have existing infrastructure.

 

“The greatest value in Grow New Jersey and the ERG program comes from corporations (that) are taking advantage of these programs to move into urban or town centers because they are adding to the vibrancy of the communities,” Kasabach said. “That has a real multiplier effect.”

Another Newark example is the new Prudential tower on Broad Street. The insurance company was awarded a $210 million incentive to significantly expand in its hometown in 2012. When the EDA evaluated the Prudential project, it was put through the standard “net benefits test,” which measures the potential economic output, including property tax, construction costs and increased activity to local businesses.

“That is the easy stuff to identify, but there were other benefits to this project that we couldn’t have identified upfront,” said Timothy J. Lizura, president and chief operating officer of the Economic Development Authority.

Those benefits include Prudential leading the charge for the revitalization of nearby Military Park. In addition to taking a leadership role in getting the park project up and running, the company contributed $10 million to the cause.

According to Lizura, the Prudential project attracted the New York-based L&M Development to put together a redevelopment project for the old Hahne & Co. building, which lay vacant for decades.

“These new projects are connecting the university district with the downtown and we’ve got Whole Foods looking at moving in to the area,” Lizura said. “These investments completely change the fabric of the area’s investment platform.”

Kasabach agreed: “Job creation and retention argument is a good soundbite, but the real value in these urban areas is having the corporate presence there making investments in that location,” he said.

E-mail to: dariam@njbiz.com

Daria Meoli

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