Amid criticism that the tax incentives offered to companies relocating to or remaining in Camden benefitted only a small group of insiders, government officials insist that the city is actually on the mend. And they can point to some supporting evidence.

But even if Camden is, in fact, rising – as its boosters contend – policymakers must still grapple with what comes next. How can state and local funds best be deployed to ensure that the city continues to rebound and, just as important, that the fruits of the recovery are shared widely?

Start with some of the evidence. A January 2019 study by the Philadelphia-based consultant firm Econsult Solutions stated that $2.5 billion of state and private investments into the city – $1.4 billion of which was from tax credits – produced an economic impact valued at $4.2 billion.

“Camden is seeing marked improvements in the health, educational and social well-being of its residents for the first time in nearly half a century,” the study found.

The city’s K-12 graduation rate increased from 49 percent in 2012 to 69 percent in 2018, while its drop-out rate fell from 21 percent in 2012 to 10 percent in 2017, according to the study, which cited data from the Camden School District.

Camden’s economic development, the study continues, is owed in part to the “Eds and Meds” sector of health care and higher education. Institutions such as Rutgers University, Cooper University Health Care, the Cooper Medical School, Rowan University, Camden County College and the Virtua and Lourdes Health Systems made up 40 percent of the jobs in Camden, according to the study.

And despite a 10 percent decline between 2004 and 2017 in employment, the Eds and Meds sector continued to see job growth, the study adds. By 2014, the Eds and Meds sector was bringing in $2.4 billion of economic development to the city, on top of another 11,000 projected jobs in the next decade, according to the study.

In another study, the Camden Higher Education and Health Care Task Force 2017 Housing Survey, researchers interviewed 1,258 students, faculty and staff at the nine higher education institutions in Camden to gauge their opinion of the city’s “renaissance.”

Those nine members are the CAMCare Health Corp., Camden County College, the Cooper Medical School of Rowan University, Cooper University Hospital, the Lourdes Health System, Rowan University, Rutgers-Camden, the Rowan University and Rutgers-Camden boards of governors and Virtua Camden.

Twelve percent of the respondents were Camden residents and 88 percent were not, according to the study, which was also prepared by Econsult Solutions.

Half of respondents said that they felt the housing stock was “slightly better” than five years ago, although 31 percent said there was no change. Likewise, 51 percent said the housing stock would only be “slightly better” a decade down the road.
Still, 28 percent of respondents were optimistic that housing in the city would be “significantly better” in 10 years.

Forty-five percent of residents said they felt the city was “slightly better” than it was 10 years ago, while 20 percent said they felt the city was much better off. Twenty-three percent of respondents said that they felt no different about the city.
Nearly half of the respondents – 49 percent – think that the city would just be “slightly better” in the next decade; 32 percent think the city will be “significantly better” in 10 years.

Lyneir Richardson, who heads the Rutgers University Center for Urban Entrepreneurship and Economic Development in Newark, contended that the mere perception that Camden’s economy is doing better would in turn drive further development.

“Even if the deals take a long time to get done, what you want to know is that there are announcements, early sort of structuring of transactions, that ‘this is the plan, here’s the credible developers that are at the table’,” Richardson said.

“We want to hear more real deals, credible developers, investable transactions, people lining up with projects … even if they’re multi-year … you want to say that the right people are at the table,” he added. “If development is ever going to be tangible, it starts with projects being at the table.”

Contentious incentives

That’s where the future of the state’s corporate incentive program comes in New Jersey’s tax incentive debate is split into three levels: The first is how to expand the state economy, the second is how to redevelop local communities, and the third is how to ensure businesses are playing by the rules and that no one is cheating or unfairly benefitting from the system.

Critics of Grow NJ and the Economic Redevelopment and Growth program have highlighted a lack of focus on local redevelopment – both programs have no community benefit requirement.

The Economic Opportunity Act spells out several bonuses available to developers looking to located their projects in one of the so-called Garden State Growth Zones. Bonuses are also available for projects to locate in one of the state’s transit, disaster recovery, tourism projects, or one of the state’s distressed municipalities, which lack grocery stores or health care services. The EOA allows local governments to create local ERG grants and in those cases, impose certain community benefits requirements. In practice, such provisions have been mainly voluntary.

“We give money to large corporations run by rich people … that’s exactly what the defense was at the Senate hearing of American Water – ‘oh we give our people Martin Luther King Day off, oh we give backpacks’ – that’s charity. I’m not interested in charity,” said Sue Altman, state director of the progressive activist group New Jersey Working Families, one of the most vocal critics of the tax incentive program.

In September, Perth Amboy Mayor Wilda Diaz complained that local officials were left out of a $12.1 million Grow NJ tax break agreement for Gourmet Nut to move several operations to the central New Jersey city, home to about 52,000 residents.

Diaz told NJBIZ that if city officials were involved in talks with the food company and the Economic Development Authority, local hiring would have been more robust.

EDA officials contend that situations such as that in Perth Amboy arose because Grow NJ lacked any requirements for local input or community benefits as part of the application process.

“The Murphy Administration and the NJEDA are committed to equitable, inclusive economic development, and believe that working closely with community leaders is crucial to the creation of a stronger and fairer economy that benefits all residents,” EDA spokesperson Virginia Pellerin said in a statement to NJBIZ.

In September, the EDA released a controversial analyses showing that out of 25 projects lured to Camden County via corporate tax breaks, only 26 percent of construction jobs on those sites went to county residents and only 2 percent went to city residents.

The EDA examined a total of 1,098 construction jobs for the analysis. EDA Chairman Kevin Quinn said that 76 percent of the construction jobs went to state residents.

Camden officials disputed the findings, arguing that out of those 1,098 construction jobs, a higher total of 194 went to city residents.

Quinn cautioned that the analysis was limited in scope. The study relied on reports that construction contractors working on EDA projects must submit, which include the zip codes of those on the payroll for the construction projects. The data were derived from payroll reports at the midpoint of the 25 construction projects, Quinn added. The EDA lacks the authority under the 2013 law to force tax break recipients to hand over hiring data such as demographics or place of residence.

“These numbers speak to what we have said all along – that any incentive program must contain assurances that awards will benefit not just large companies, but also local residents and the communities in which they live,” Gov. Phil Murphy said in response to the study.

Kris Kolluri, the chief executive officer of the Cooper’s Ferry Partnership, and local officials were not impressed by the report.

“What we don’t need is half-baked, half-finished, tilted, biased reporting or analyses that say that something is wrong when in fact we can show it is right,” Kolluri said.

But both critics and supporters of the incentives also argue that the local redevelopment component left something to be desired.

Marc Pfeiffer, assistant director of the Bloustein Local Government Research Center at Rutgers, described those efforts under the EOA programs as borderline “nonexistent.”

“There has not been a focus in employing local residents and creating private sector opportunities for residents,” he said. “State government has never been very good at doing that.”

Proposals drafted by Murphy and former senators Ray Lesniak and Joseph Kyrillos include greater assurances that local communities and their labor pools will benefit from incentives.

Under the Murphy administration’s proposal, the EDA would be able to require a community benefits agreement between the developer and local governments. That would include “training, employment and youth development and free services to underserved communities in and around the community in which the qualified business facility is located.”

Local residents would have the opportunity to attend public hearings to share what they think the community needs, and a state-level separate committee would oversee the agreement and years later gauge whether it actually benefited the local area.

Moreover, the Murphy administration’s proposal allows for the EDA to consider the benefit to the community as a criteria on a business’s tax break application.

Lesniak’s proposal calls for a $500 bonus per year per job created – on top of the base incentive amount – for entering such an agreement. That agreement can include efforts to bolster a local career center, job and apprenticeship training, a partnership with a local high school or community college, the development of local infrastructure or other needs local communities identify.

George Norcross, at his Nov. 18, 2019 appearance before lawmakers, maintained that “most of the EDA tax credit awardees in the city of Camden” signed those types of community benefits agreements with the city.

“These are the types of things that should be included in any future legislation,” Norcross said. “Because the most important thing that can happen in a city like Camden or some of the other challenged cities and communities in our state is opportunities for employment, and most importantly for training.”

Both Lesniak’s and Murphy’s proposals include various incentives and requirements for hiring local residents. Murphy’s plan adds $800 a year per job to the base amount awarded for companies that spend at least a quarter of its expenses going toward a new facility, on vendors within 10 miles of the new location.

Another $800 each year would be added for businesses that hire at least a quarter of New Jersey residents who live within a half mile of the new site, and another $800 for businesses where at least 25 percent of their employees are New Jersey-based hires that live within 10 miles of the new site.

Businesses could earn an additional $400 for financing industry-specific training programs or educational institutions, or $800 if such centers are within 10 miles of the new business site.

The film tax credit program, as outlined under Lesniak’s proposal, calls for the requirement of diversity hiring plans in order to employ more women and people of color.

Applicants will have to show whether they intend to enter training, education and recruitment programs in coordination with local universities and labor unions, and will be encouraged to hire state residents.

Both proposals call for specific bonuses that go toward the construction and development of grocery stores within so-called “food deserts.”

When the building stops

Michael Lahr, a research professor at the Rutgers Economic Advisory Service, who testified at a legislative hearing on tax incentives in September, said it was problematic how few employees of the new Camden facilities might actually live in the city.

“None of those people will live in Camden,” he said. “Very few.”

Lesniak said the next logical step in boosting a city like Camden is to train the workforce and provide affordable housing. His legislation lists a myriad of bonuses for the development of such housing and stricter requirements outlining the set amount of affordable housing that must be included in residential and mixed-use projects.

“The foundation has been set and now you have to build on that,” Lesniak said. “Now you have to have job training programs and continue to redevelop neighborhoods with affordable housing.”

To that end, city and county officials pointed to a program they unveiled in late October – Camden Works – with the goal of connecting city residents with job-training and locally available employment in the private sector and nonprofit industries.
Camden Works will be co-chaired by Norcross and American Water President and Chief Executive Officer Susan Story, who will step down in April.

It will be financed by Cooper University Hospital, where Norcross is board chair, insurance company Conner Strong & Buckelew, where he is executive chairman, homebuilding company The Michaels Organization and trucking logistics company NFI.

Camden Works will target four key demographics in the city, according to a 15-page report on the new program: city high school graduates, residents returning from incarceration, local college graduates and displaced homemakers.

The report points out that there is little centralization for employee recruitment and placement within the city — local nonprofits have no way to ensure that the people they train are hired by companies within Camden, and residents have few ways to actually learn about job opportunities.

To that end, the new program would rely on six nonprofits: Cooper’s Ferry Partnership, the State of New Jersey NAACP, the Camden County Workforce Development Board, the Latin America Economic Development Associations, the Center for Family Services and HopeWorks.

“We have to continue to work hard with job-training,” Camden Mayor Frank Moran told NJBIZ. “Any future incentive that’s offered from the state that impacts the city has to have good job-training with it… the resources, to get folks that are here, so that we can really impact folks.”

Different parties, such as businesses and labor unions, “opened up opportunities to Camden residents,” the mayor added.

“Many built everything that you see on the waterfront and throughout the city, and then subsequently went on with the contractors because they were great employees. They may not be working here, but they reside here and had an opportunity.”

The Senate tax break panel, where Norcross appeared in November, unveiled a Feb. 7, 18-page report detailing what a new incentive program should include in order to benefit local neighborhoods. The recommendations include a community benefit provision.

“The benefits can include jobs for local residents, workforce development, dedication of open space, service contracts, affordable housing, childcare centers, public access to health and recreational facilities, and educational agreements,” the report reads.

Businesses could also be required to enter agreements on workforce training. And businesses could receive bonuses for investing in vacant or nearly abandoned suburban office parks, moving to specific economically distressed cities, and investment in infrastructure.

Persistent problems, uncertain future

Despite the studies purporting to show how life in Camden has improved in recent years, critics maintain that the city remains mired in many of same problems that have plagued it for years.

Stephen Danley, an associate professor of public policy and administration at Rutgers-Camden, cast doubt on whether any equitable development came from the build-up of the city.

“A lot of subsidies and frankly a lot of the different policies, Eds and Meds … folks are frustrated because they don’t feel like it’s touching their community,” he said.

Danley authored a September 2018 study titled “They’re Not Building It for Us: Displacement Pressure, Unwelcomeness, and Protesting Neighborhood Investment.” The report examines that phenomenon in Camden and more broadly, the issue of gentrification.

“Our findings show how exclusion and ‘unwelcomeness’ created by the development of white spaces is conceptualized by residents as being distinct from the impact such exclusion has on future displacement,” reads the study’s abstract.

“Residents internalize that exclusion from white spaces, dampening their support and increasing their resistance for new development,” the study continues. “We point to an opportunity to address fears of gentrification not only through economic means but also by focusing on issues of access and exclusion in urban space as a direct response to such residential fears.”

All of which makes the current debate over the future of redevelopment generally and tax incentives in particular so important. State and local officials have an opportunity to learn from the past and fashion a better approach.

Sheila Reynertson, a senior policy analyst at the progressive think tank New Jersey Policy Perspective – which has been critical of Grow NJ and ERG and supported several of Murphy’s recommendations – questioned the local benefit of the previous incentive regime.

“I think if you look at the awards themselves, and question whether they had the multiplier effect … essentially a businessman does a lot of trickle down where you hope the corporations start to use local services, local suppliers and small business,” she told NJBIZ. “I don’t think that was part of the equation when choosing this corporation.”

Reynertson said a community benefits component must be written into law as part of the new incentives. Because such a provision was absent from the previous programs, the city and state missed the boat for that kind of local redevelopment.

“They already have the supply chain, they already have the business which they work with on a regular basis. They aren’t required to do this part of the application process,” she said. “It wasn’t a requirement, it wasn’t built into the formula, it’s not going to happen.”

Relying on promises and good intentions is not enough. The law, the rules and the people enforcing them all have to be on the same page with the same goal in sight: more equitable redevelopment.