The New Jersey Economic Development Authority approved the first award under a mammoth state-run economic incentive program, NJ Emerge.
Under the agreement, approved Sept. 22 by the NJEDA at its board meeting, the $9.9 million tax break will go to Party City, which is planning to bring in 357 new employment positions and keep its 338 full-time jobs in the state, currently located in Rockaway.
Party City plans to spend $32 million to lease a 208,911-square-foot office building in Woodcliff Lake and to make a slew of improvements and updates, the NJEDA said in a Wednesday statement.
Under the agreement, the Rockway jobs and hundreds others based in Elmsford, N.Y. would be based out of this new office.
It would be able to accommodate up to 800 workers, according to agency documents, and would include such amenities as “open space, huddle rooms, conference rooms with white boards, offices, studio space for photography sessions for products and showcase items.”
The incentive will be awarded over a seven-year period. State officials estimate it could yield $35.7 million in return on investment during the lifetime of the award through a calculation called the net benefits test, which requires the economic benefit to the state be several times higher than the size of the award.
Party City had reportedly been offered a $15.7 million 10-year incentive from New York to instead set up in White Plains just north of the border, according to agency documents. Arguing that the more lucrative tax break awards, plus lower costs of doing business, meant that White Plains was a cheaper alternative, according to the state agency.
Party City will need to enter a community benefits agreement with Woodcliff Lake, which under state rules could include something like a local hiring commitment. They have six months to hammer out such an agreement.
“The project approved today shows this program’s potential to bring hundreds of good jobs to New Jersey,” NJEDA Chief Executive Officer Tim Sullivan said in a statement Wednesday afternoon.
A separate application was pulled from Wednesday’s board agenda for an undisclosed amount to Wisconsin-based financial services firm Fiserv Solutions.
NJ Emerge is part of the much larger $14.5 billion incentive program Gov. Phil Murphy signed in January as a means to chart the state’s recovery coming out of the COVID-19 recession. It offers incentives for companies looking at moving to New Jersey or considering leaving the state, by offsetting the taxes they owe.
Murphy said the Party City tax break “was exactly the type of award we envisioned”—one that would “bring good, high-paying jobs to New Jersey at a reasonable investment.”
State lawmakers rushed through a clean-up bill for NJ Emerge in June, before the program had even moved forward and begun accepting applications.
One key aspect of the clean-up was to lower the number of jobs a company needed to retain in order to qualify for state subsidies from the 1,000 full-time jobs, or 500 in some of the state’s poorest communities. That was reduced to as few as 150 full-time jobs at a minimum, meaning Party City would not have qualified for the incentives under that prior standard.
Regardless, Party City is not receiving any incentives for those retained jobs, only the new jobs, the NJEDA said in its announcement.
The issue around job-retention in exchange for tax credits was heavily scrutinized by a task force Murphy put together in 2019. The task force honed in on several companies in Camden that they said threatened to leave New Jersey, and take with them hundreds of job positions, despite no actual plans to do so—essentially abusing the incentive program.
The higher job retention thresholds were crafted in part in response to the task force’s findings, but businesses complained that many companies were left out of the new incentive program as a result.
A sister program is called NJ Aspire, also called at $1.1 billion a year and which offers gap financing to developers for projects, enabling them to put together any needed money if the funds aren’t yet available to pay for the whole project.
Editor’s note: This story was updated at 2:12 p.m. EST on Sept. 22, 2021, to include additional details regarding Party City’s NJ Emerge award and information regarding the jobs requirements of the program.