Holtec International, the energy technology company at the center of last year’s tax break scandal, filed suit against the New Jersey Economic Development Authority over millions of dollars in corporate tax breaks it alleges the state is illegally withholding.
The company was awarded a $260 million tax break in 2014 under the Grow New Jersey program, – paid out over 10 years – with the first $26 million payment issued to Holtec in 2018 for taxes it paid the prior year.
In a 27-page suit filed on March 20 in Mercer County Superior Court, Holtec is demanding that New Jersey pay the $26 million it is owed in 2019 for taxes paid the year prior.
The EDA last year said it was slowing down hundreds of tax break payments, including to Holtec, to scrutinize whether those businesses are actually complying with their agreements.
Holtec, along with several other tax break recipients where South Jersey political powerbroker George Norcross is an executive, has received significant attention by state investigators.
According to the suit, Holtec borrowed against the yearly tax credit amount – $26 million – and is required to transfer the annual incentives to the lenders, described in the suit as “qualified purchasers.”
“To avoid being in breach of its own contractual obligations, Holtec was thus forced to make cash payments of approximately $26 million to these purchases,” the suit reads. “Unless the EDA is forced to comply or reverse its position, Holtec will [continue] to be significantly hanged on an annual basis.”
Holtec alleged that in its attempts to set up meetings with the EDA and address any outstanding issues, the agency instead gave the company the runaround.
Related reading: Camden striving
An NJBIZ series examining redevelopment in the city
“[T]he EDA shocked us by arbitrarily failing, without explanation, to act on our 2018 tax credits,” reads an accompanying statement from Holtec. “Fourteen months have elapsed without a logical reply from EDA to our queries. Even a tentative meeting accepted by EDA was subsequently cancelled; perhaps it is hard to be totally unresponsive face-to-face.”
Holtec also alleged in the statement that it was the victim of “bitter infighting between the state’s politicians” which “degenerated to the point where personal feuds outweigh sensible public policy.”
That “infighting” played out last year in feuds between Gov. Phil Murphy on the one hand, and South Jersey Democrats and Norcross, who holds executive positions at companies that won a combined hundreds of millions of dollars in tax credits, on the other. Norcross currently sits on Holtec’s board of directors.
The EDA on Tuesday evening declined to comment on the suit.
According to a task force Murphy convened to scrutinize Grow NJ, which expired on July 1, 2019, Holtec Chief Executive Officer and President Kris Singh did not disclose on the company’s tax break application that the company was barred from doing any work for the federal government.
However, in 2010 it was banned for 60 days from any federal contracts, following a bribery scandal with the Tennessee Valley Authority in the early 2000s.
“At the time of Holtec’s EDA application in 2014, the company was not subject to debarment… The question did not specify whether the debarment needed to be active to be responsive, or whether any past debarment would also be responsive,” the suit adds.
And the task force, in a January report, alleged that Philip Norcross, brother of George and chief executive officer at the law firm Parker McCay, put a provision into the 2013 tax break legislation at the behest of Holtec, which allowed its tax break award to balloon from $50 million to $260 million.
Editor’s note: This article was udate at 9:28 a.m. EST on April 1, 2020 to clarify language in the 13th paragraph, beginning “According to a task force Murphy convened …”