Some news stories in the past month have really put a point on the desperate need for incentives reform in New Jersey.
Exhibit A is First Data, the company that was approved for nearly $6 million to move up a flight of stairs in the Jersey City high-rise where it already leases space. The second item is Hill International, which announced last week it’s leaving its Marlton headquarters for what it insists is a better location in Philadelphia.
In the case of First Data, an Atlanta-based payroll processing firm, the incentives are a reward for not leaving for New York, where it also has offices. But First Data already is getting an economic incentive for relocating from New York — it’s saving a boatload in rent by bringing 74 employees out of the priciest addresses on the planet in favor of the much-cheaper Sixth Borough.
Meanwhile, Hill reportedly spoke with Trenton about incentives offerings as it considered leaving, but the Garden State was unable to compete with Philly, which offered the global construction risk management company a $4.5 million package to relocate.
We know the Economic Development Authority has a stringent test it applies to each applicant that seeks tax credits to come to New Jersey, or expand or relocate here. Unless certain criteria, like job creation, are met, and a solid return on investment is projected, that company is shown the door, but it seems as though the test is in need of updating.
If executives came to the EDA needing a financial reason to relocate from New York to Jersey City, the agency should simply present them with the potential savings in rental rates, and welcome them home. That’s about the limit of aid we should be providing there. Jersey City doesn’t need the help. Other cities, like Newark and Camden, desperately do.
There’s a limited amount of dollars for incentives, so credits must be handed out only to the most worthy of projects. While the state will likely get a positive ROI on the credits it awarded to First Data, there are many companies that also could generate positive economic benefits by simply relocating. Hill has put a painfully blunt point on that.
There are plenty of deserving companies with ambitious desires to grow in New Jersey. We need to be sure future awards take them into account.