The state’s Economic Development Authority is reviewing $10 million of tax incentives it awarded to California-based GLTC Partners LLC in 2014, following revelations that a company it contracted for a senior housing project in Trenton allegedly cheated workers out of wages for the project.
Tri-County Real Estate Co. – which GLTC contracted to handle the construction and renovation of the Trenton East and West Apartments – will have to pay back $170,000 of wages it did not pay to laborers and carpenters, according to an Aug. 9 statement from the state Department of Labor and Workforce Development.
In addition, Tri-County will have to shell out $30,000 in fines and other fees, according to the DOL
The Trenton senior housing project had an $18.6 million price tag, for which GLTC won a $4.7 million grant in 2014 under the Economic Redevelopment and Growth gap financing program.
GLTC also won a $6.7 million ERG grant for another senior housing project in Trenton, where the price tag was pinned at $25 million.
The two grants were part of the residential ERG program, which provides gap financing to residential projects across the state. A second version of ERG provides incremental gap financing for nonresidential, commercial projects.
“We are reviewing the potential implications of the NJDOL’s findings for GLTC’s ERG,” said EDA spokesperson Jake McNichol.
Under a bill approved by Acting Gov. Sheila Oliver last week to ramp up penalties for wage theft by employers and protections for workers, the employer and the contractor are jointly responsible and liable for wage and hour violations which the contractor commits.
But the measure does allow for the business to recover losses incurred because of wage and hour laws the contractor brokered, and vice versa. Even still, that provision has made business advocates uneasy, worried that employers could be on the hook for unknown violations.
“Labor compliance issues fall under the state’s authority, and we commend the commissioner’s efforts to ensure that all who do work in our capital city are paid in full for their services,” Trenton spokesperson Connor S. Ilchert said in a statement to NJBIZ.
Representatives for Tri-County and GLTC did not return requests for comment.
ERG was one of the state’s flagship economic incentive programs, as were the Grow New Jersey corporate tax breaks, up until their expiration on July 1. Since the expansion of ERG and Grow NJ in 2013, the state has awarded over $1 billion and $4 billion respectively.
Both programs have fallen under intense scrutiny by the Murphy administration.
A task force that Gov. Phil Murphy put together has presented allegations and evidence that the programs were crafted to benefit politically connected businesses and individuals.
The Murphy administration and legislative leadership have butted heads over what incentives the state should adopt next. He has repeatedly pushed for a set of five new programs, capped at $400 million a year. Lawmakers want to extend ERG and Grow NJ for at most a year while they hash out the next set of incentives, but Murphy has vowed to squash any such extension of the current program.
Still, Murphy told reporters at an unrelated event at Nokia Bell Labs in Murray Hill last week that legislative leadership and the administration are engaged in talks on a stopgap tax break program, but he declined to elaborate on the specifics of those talks.