The overhaul of New Jersey's corporate tax incentive programs a year ago has boosted job creation in manufacturing, forced competing states to take notice and boosted development in urban and Southern parts of the state, speakers at a forum on the revamp said Tuesday.
Jay Biggins, executive managing director of Princeton-based BLS Strategies, a corporate site selection consultant, said the amount of money available has clearly shown itself to be a "differentiator" in New Jersey's effort to compete for jobs and investment with other states.
"You are talking about incentive amounts that are by and large significantly exceeding the competition," he said. "I think they are having their intended effect and that is that it is a fundamentally irresponsible decision [by site selection company executives] not to take New Jersey seriously."
"We are working with clients now that would not have considered New Jersey but for the incentives," Biggins added, saying the overhauled program has a "shock and awe kind of impact" in the industry.
Biggins spoke, along with six others, at a forum organized by NAIOP NJ, a commercial real estate trade group, to mark the first anniversary of the overhaul, known as New Jersey Economic Opportunity Act. The overhaul legislation won bi-partisan support in passing last year, and was strongly backed by Governor Christie as a key to strengthening the state's economy.
The crowd of about 100 people at the event in Edison, including developers, owners, investors, asset managers and brokers, was a larger crowd than usual at NAIOP events, Michael G. McGuinness, NAIOP New Jersey's CEO, said.
"Today's packed room speaks volumes about the effectiveness of this incentives approach," he said.
The impact of the revamped programs on the state economy is uncertain, in part because the projects supported by the incentives have yet to begin, and are phased in over a 10-year period.
Critics say incentive programs are a poor use of taxpayer money because they reward companies for expanding in, or moving into, the state when they probably would have done so anyway.
New Jersey's recovery has lagged the nation's, and the state jobless rate of 6.5 percent is higher than the national rate, of 5.9 percent, and that of all but 16 other states. The state has recovered fewer than half the jobs lost during the recession.
Dan Breen, an executive vice president business and economic incentives for JLL, a nationwide commercial real estate firm, said that although the interstate competition is "intense," Pennsylvania - which has for years touted its cheaper cost of doing business than New Jersey - has gotten "complacent."
"Now they are worrying," said Breen, assessing the impact of New Jersey's incentives overhaul. "And so is Delaware, and so is New York City."
Since December, New Jersey has awarded more than $1.7 billion in 81 awards under the program. Awards are usually tax credits that enable the companies to reduce their future taxes if they meet certain job creation or retention, and investment, goals.
The changes were designed to streamline the programs and enable smaller businesses to benefit from them, and to target specific areas of the state - among them Paterson and Passaic - and particular industries.
An executive for Cranbury-based Systech said told the gathering that his company was persuaded to stay in New Jersey - a more expensive option than moving to Pennsylvania - in part because an $11.7 million grant from EDA meant staying in New Jersey was financially feasible.
Companies awarded tax breaks for projects in North Jersey include Sandy Alexander Inc., a Clifton communications company awarded $12.7 million, and Frontage Laboratories, awarded $2.4 million to expand its Secaucus laboratory.
Tim Lizura, CEO of New Jersey Economic Development Authority, which administers the incentive programs, said the effort to stimulate jobs in certain areas and sectors has clearly worked.
Before the bill passed, about two-thirds of the awards went to the northern part of the state, and the remainder to the south. Now the balance is about 50-50, he said. About 40 percent of the tax credits awarded since the program changes were enacted have gone to manufacturers, he said.