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How success of Kearny Point project was key to $3M infrastructure grant for Kearny

The town of Kearny has received a $3 million federal grant from the U.S. Economic Development Administration’s Public Works program to redevelop and improve Hackensack Avenue into a high performing “green” street, seeing as the stretch of roadway serves as the primary entranceway to Kearny Point, a collection of more than 3 million anticipated square feet of coworking and flexible-use office space on 130 acres in South Kearny.

“To say that I am impressed with the local vision and the collaboration taking place here would be an understatement,” John Fleming, U.S. assistant secretary of commerce for economic development, said Thursday on site at Kearny Point. “Through your efforts, this land is being reborn as a center for the pioneering companies of the new economy, providing a flexible, modern workplace and home to a diverse community of today’s creators.”

The EDA’s investment also will be matched by $1.3 million in local funds, Fleming added.

Kearny Mayor Alberto Santos, from left, with John Fleming, assistant secretary of commerce, Hugo Neu CEO Wendy Kelman Neu and Hugo Neu Director of Development Mike Meyer.

“This is the type of true public-private partnership that the U.S. Department of Commerce and the Economic Development Administration is eager to invest in,” he said.

Fleming attributed the success of one of the largest adaptive reuse projects in the country to Wendy Kelman Neu, chairman and CEO of New York City-based Hugo Neu Corp., with the ongoing redevelopment representing an expected $1 billion in public and private investment into the site over the next decade.

Hugo Neu Corp., a recognized global leader in recycling, is the owner and redeveloper of Kearny Point.

“It is through your commitment and wisdom that this former maritime facility is being transformed into a cutting-edge, world-class innovation district and manufacturing hub,” Fleming said.

Neu said the announcement Thursday marked the celebration of an incredible milestone not only for Kearny Point but also for the long-term economic development goals of Kearny, as the funding goes toward a Tax Cuts and Jobs Act-designated Opportunity Zone.

“We would not be here today without the hard work of the many stakeholders that understand that in addressing the infrastructural needs to support growing businesses at Kearny Point, we can take critical and meaningful steps to protect and enhance our natural environment,” she said.

U.S. Sen. Cory Booker (D-N.J.) said the federal grant was a wise investment in New Jersey infrastructure.

“The modernization of Hackensack Avenue will not only safeguard the area from future storm-related flooding, but will strengthen pedestrian and biker safety and lay the foundation for the economic revitalization and improved quality of life that this community deserves,” Booker said in a statement.

According to Mike Meyer, director of development at Hugo Neu Corp., the redevelopment of the roadway will include the planting of more than 20,000 square feet of grass, plants and trees; the creation of designated paths for both pedestrians and cyclists; new street light poles; and the implementation and improvement of overhead electric services and underground gas distribution system piping.

Designed by Bohler Engineering and Arterial Design Studio, the project also will reduce flooding and limit nonpoint pollution of the Hudson-Raritan watershed by rebuilding the roadway’s underground water distribution, stormwater and sewer systems.

Kearny Mayor Alberto Santos said the roadway improvements, which are expected to be completed within a year and a half, are just the beginning.

“We will be submitting more applications and we will be able to show you results,” Santos said. “Bringing old industrial centers back to life to create more jobs should be our collective goal irrespective of state or party.

“We should be about economic growth in a responsible way that creates jobs — and Kearny Point is meeting that challenge.”

Kearny Point is the modern answer to developing the new economy, Neu said, made possible by the scrap metal trading business her late husband, John Neu, started with his father, Hugo Neu, in 1947.

Through various subsidiaries, Hugo Neu Corp. had developed more than 9 million square feet of industrial properties in New Jersey, Pennsylvania and California over its many decades in business, including the former Federal Shipbuilding and Dry Dock Co. warehouse and distribution facilities in South Kearny.

Building 78 at Kearny Point.

When Hurricane Sandy left the site under four feet of water in 2012, the Neus decided to demolish and construct newer industrial buildings for distribution and logistics purposes. But with the passing of her husband in 2013, Wendy Kelman Neu, who had been working for Hugo Neu Corp. since 1980, unexpectedly assumed complete control of the historic riverfront site.

Neu ultimately decided to partner with Steve Nislick, former CEO of Edison Properties and now chief financial officer of Hugo Neu Corp., to reposition the company to invest, build and manage innovative businesses in recycling and real estate, starting in 2015 with the renovation and construction of four floors of flexible-use office space between 200 and 3,000 square feet at Building 78, a 200,000-square-foot building at Kearny Point.

Starting at nearly $500 per month, small to medium-sized businesses now have 24/7 access not only to high-quality, scalable office space in which to grow, but also coworking space, rooftop event space, a café and bar, internet technology services, printer, scanner and copier services and package delivery and receipt services for a fraction of the cost of what they would find in New York City, Newark, Hoboken or Jersey City, Nick Shears, director of leasing and marketing for Hugo Neu Realty Management, said.

Having reached more than 95 percent occupancy within a year and a half without the use of brokers in 2017, Building 78 at Kearny Point now hosts more than 200 businesses and nearly 500 employees, Shears added, with the majority of tenants being women- and minority-owned companies.

Building 78 has proven so successful, in fact, that an annex consisting of 90,000 square feet of small flexible-use office space is currently being constructed to expand the building’s footprint by the end of this year.

According to Hugo Neu Corp. representatives, subsequent phases of the project will also involve the renovation and demolishment of older buildings on-site to create more than 3 million square feet of WELL AP-certified flexible-use office space ranging from 200 to 10,000 square feet; the construction of a gathering hall with retail and dining components; a waterfront park and living shoreline at the confluence of the Hackensack and Passaic Rivers; an outdoor amphitheater; and more than 25 acres of open space for both the tenants and the public.

The goal, Neu said, is to create nearly 10,000 jobs on site.

“But this is much larger than 130 acres,” she said. “What we hope to do here is create a model in Kearny that then will be transferable to other locations.”

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Secrets to being second-gen business owner come to light at ACG event

As president of IMG Business Advisors in Morristown, Michael Givner said he has seen his share of family business issues.

“Family dynamics can be a very challenging aspect of servicing the middle market,” Givner said while moderating a breakfast meeting hosted by the Association for Corporate Growth’s New Jersey chapter on Tuesday at the Pleasantdale Chateau in West Orange.

The four panelists, however, were all there to discuss how they overcame multiple challenges to take their companies to new heights as next-generation business owners.

“I took every single business and psychology course offered at Baruch College,” said Harvey Wexelman, CEO and president of Alwex Inc., a New York City-based independent insurance agency specializing in high net worth individuals and families. “And, once I could prove to (my father and his partner) that I knew more than them, I was given a nice long leash.”

Wexelman’s father and his business partner founded the company in 1991 after leaving their prior agency. Wexelman joined in 1993 — three years prior to his graduating Baruch College.

“I was 19 years old when I was told I had to take over the business because none of the other kids wanted to be involved,” he said. “So, I went to night school and worked every day for four years to learn the business from the ground up.”

Wexelman said he was at first challenged with taking charge of employees who felt as though he had simply had the business handed to him by his father.

“There’s that initial sort of change, when all the employees hate you because they don’t feel like you’ve earned it,” he said. “But I was told to eat what I killed and that the sky was the limit. I received a $16,000 salary when I took over the company and the only additional money I made was business I brought in.

“And, if I wanted to implement new technology or hire more people, that came directly out of my paycheck.”

Darren Slosberg, CEO of Legacy Converting in Cranbury, said he willingly accepted the challenge to transition his father’s company, Nosaj — a distributor of non-woven and paper disposable wiping products founded in 1971 — into a larger, more lucrative manufacturing company in 2007.

“But my brother and I at first wanted nothing to do with our father’s company,” he said.

Slosberg wanted to open a gym, he added. His brother, Jason Slosberg, wanted to become a surgeon.

However, upon learning that one of their father’s partners was stealing from him, the brothers stepped in to help.

“There was an opportunity for both of us to come into the business and help my father navigate the path in which to get rid of this guy,” Slosberg said.

Though their family bonds never wavered, Slosberg said many heated battles followed.

“We had defined roles, but I thought I was running the company while my brother and my father were also thinking the same thing,” he said. “But we always said, look, I’ll do it the way I want, you do it the way you want and, whichever way works best, that’s what we ultimately will go with.

“My father did a very good job at giving my brother and I the autonomy to make a lot of mistakes.”

After six years working with Nosaj, the brothers transitioned into the manufacturing and private labeling of disposable wiping products when they created Legacy Converting.

“The business has grown 12-fold since,” Slosberg said. “Though my brother and I are still 50/50 partners in the company, I run the day-to-day while he takes a year and a half to live on a sailboat in Croatia, sailing the Mediterranean with his wife and kids.

“He wants to explore and do things outside of the company now, but I still love it. I don’t want to leave. But he, too, is helping me to grow, as I figure out how to incorporate such work-life balance.”

John Conforti Jr., president of Air Group in Hanover, said his family dynamics made business more complicated due to having a third sibling involved.

“When my parents would leave for Florida for a few months, we all tried to run the business without them and ultimately it always came down to pandering for the third vote,” he said.

Conforti Jr.’s grandfather and father started the heating, ventilation, air conditioning, electrical and plumbing company for New Jersey customers in 1965.

However, in 1999 — while Conforti Jr. was working in construction as an engineer — his father merged the company with another family business.

“I called my older brother to ask him why he wasn’t putting his foot in the door and he said, ‘Where have you been?’” he said. “So, I moved back to New Jersey so that my brother, my younger sister and I could battle together with how we were going to move forward.”

The siblings would buy out the shares from the other family in 2012, only to struggle with deciding who ultimately was going to run the business.

“We get along now as well as we ever have, but there were meetings with professional psychiatrists,” Conforti Jr. said. “Aside from our own juggling act behind the scenes, though, we also had to gain the confidence of the employees who we still needed to foster a culture with, like the one that had previously been instilled.”

It was nearly four years ago that the family began to trust in each other and their clearly delineated roles, Conforti Jr. said. Even his brother-in-law has joined the business.

“In the end, the bottom line is what it is and, if the company is profitable, everyone in the family is happy,” he said.

Catherine Choi, president of Bulbrite in Moonachie, said she also quickly realized how a trio of siblings working together in a family business was not harmonious.

“For a very short period of time, my sister, my brother and I all worked in the business — and that was not good,” Choi said. “Working with my sister was great, as well as with my brother, but for whatever reason, having all three of us in the same building at the same time did not work.”

Her younger sister, Choi said, has since happily left the business to pursue other life goals, while her younger brother remains as chief strategist to the leading manufacturer and supplier of innovative light source solutions.

“My father immigrated from Korea to New York City to start this business in 1971,” Choi added. “But, because we have a rule that we must work outside of the family business before we can join, I graduated from college, got my MBA and worked out in Hollywood for eight years.

“Then, when I and the business were turning 30, my dad asked me to coffee and said, ‘No pressure, but I’m turning 60 — if you’re interested in coming into the business, now would be the time. If not, I will plan for the next phase, which may include selling.’

“Then he went on to say how he had come to this country empty-handed, without speaking English and without a dollar in his pocket. So, I joined.”

Choi said that, while she worked her way through the company for eight years before becoming president, she, too, struggled with company culture once her father handed over the baton.

“The success of a second generation and generations beyond that has a lot to do with the first generation, I think, and their willingness to be open minded,” she said. “I think a lot of business owners say they are ready to pass the baton, but they hold on to the other end of it for a really long time. Sometimes, I can tell by the look in my father’s eyes that he might want it back, but he very clearly and truly gave over the business to me when he did.”

When an employee asked her how to address a problem, however, Choi said she was taken aback by Choi’s response.

“I said: ‘I don’t know. You’ve been here longer than me. What do you think?’ And she struggled with that, because my dad had made all of the decisions for 30 years,” Choi said. “But Andrew was not the boss anymore.”

Choi said she then set out to redefine Bulbrite’s culture.

“I hired a culture consultant to help us retain the core values that my father’s business was built on, such as integrity and building relationships with partners, but I also wanted to put my own spin on it, too, to encourage our employees to take ownership, to learn and to grow — just like I had.”

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EDA investment has been part of watershed transformation of Camden — and wasn’t that exact purpose of Economic Opportunity Act?

(Editor’s note: This op-ed originally appeared on NJ.com. It is reprinted here with permission.)

There’s another round of “dog pile on the rabbit” occurring in New Jersey. In this case, it’s politicians and the media bashing the how the Economic Development Authority has been doling out tax credits to businesses connected with South Jersey political leader George Norcross — the rabbit, it would seem, at the bottom of this particular pile of dogs.

I’ve sat and watched this with incredulity, because it appears that everyone so scandalized by the Economic Development Authority’s actions seems a bit clueless about the law itself, and what its intentions were.

A primer:

What was the intended purpose of the Economic Opportunity Act?

The bill was designed as a mechanism to help bring economic development to South Jersey, specifically creating set-asides for the eight southern counties, especially Camden. Why? As Matt Friedman (then with NJ.com, now with Politicoreported in 2013, state Senate President Steve Sweeney (D-West Deptford) noted that in the “last incentive bill … almost 97 cents out of every dollar went to Jersey City and Newark. If something isn’t done, South Jersey won’t see any of it.” At that point, $211 million had gone to Prudential for its headquarters in Newark. Honeywell received $40 million to move five miles from Morris Township to Morris Plains, and on and on.

But the geographical inequities in state funding weren’t limited to the Economic Development Authority: Millions of dollars of Casino Reinvestment Development Authority money had gone to North Jersey pet projects. CRDA money was taken from needy Atlantic City and used to help build a museum to Yogi Berra (who I love, but that’s beside the point) on my Montclair State University campus (which I also love, but is also beside the point) in one of the most affluent communities in the state (which is the point). The EOA was designed to address some of these historic inequities.

Who supported it?

In short, almost everyone. OK, not everyone. A total of seven legislators in both houses opposed the measure, with the lone Republican opponent in the Senate citing his support of the free market system rather than government subsidies as his motivation for opposition. The point is that sometimes, in politics, deals are made. Through logrolling, one legislator supports a bill that doesn’t matter to her in order to gain support of a measure that will benefit her constituents. It’s not pretty, but it’s how politics is done. And the overwhelming majority of the state Legislature supported the set-asides for South Jersey.

Why Camden?

When this legislation was drafted, Camden was the poorest city in the nation. Its unemployment rate was approaching 40 percent, nearly half of its families lived below the poverty line, and the average income was about $26,000 (compared with a statewide average of over $70,000 at the time). And, unlike most of the state, the damage to Camden’s economy hadn’t been caused by the Great Recession. Rather, Camden had witnessed decades of abandonment by industry and outmigration by residents.

So, what’s the deal with the George Norcross ‘connections’? 

He’s the most powerful unelected man in the state, and, by all accounts, the Camden native envisioned Camden’s transformation. Should it be surprising that companies that want to do business in Camden are “connected” to him, or, heaven forbid, he convinced companies to locate in Camden? Is there something illegal about that?

At the height of his power, could you imagine development in Newark’s North Ward in which the principals didn’t go kiss Steve Abudato Sr.’s ring? Or major development in Union City where Brian Stack wasn’t tangentially involved? If a company is looking to secure tax incentives, wouldn’t it be reasonable that they contract with a law firm that specializes in securing these incentives?

In watching the recriminations of companies connected to Norcross, I couldn’t help but ask, “So what?” Should business leaders with “connections” to Norcross be precluded from receiving the tax incentives? Is there something illegal about having a connection to the man? Are these people who are so incensed new to politics? To New Jersey? Do they not understand how spheres of influence work?

Have you been to Camden lately?

Since the EDA’s investment, the poverty rate is down 5 percent, the unemployment rate is down 8 percent, the high school graduation rate is up 20 percent, and the crime rate is down nearly 60 percent. There have been improvements in public safety and green spaces to encourage Subaru, Holtec International and the Philadelphia 76ers’ employees to stay in town; the Eds & Meds anchor institutions — Rutgers University and Cooper University Hospital — have expanded their downtown footprints; market-rate housing is being built for millennials who are increasingly seeing Camden as desirable. A hotel is opening.

I am not claiming that all of these indicators are a direct result of the EDA investment exclusively, but, clearly, the investment has been part of a watershed, systemic transformation of the city of Camden, what the Wall Street Journal characterized as “a development boom.” And isn’t that exactly what the purpose of the Economic Opportunity Act was?

Brigid Callahan Harrison is professor of political science and law at Montclair State University, where she teaches courses in American government. A frequent commentator on state and national politics, she is the author of five books on American politics. Like her on Facebook at Brigid Callahan Harrison. Follow her on Twitter @BriCalHar.

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This year’s budget battle starts early, as Sweeney blasts Murphy

Let New Jersey’s tax incentive programs run out with a replacement?

State Senate President Steve Sweeney thinks that would be a horrible idea. But he’s not afraid to call Gov. Phil Murphy’s bluff on the issue.

“He’s the governor — and, if he wants to see the economy really slow under his watch, that’s up to him,” Sweeney (D-West Deptford) said.

Sweeney was speaking after making remarks at a forum sponsored by Garden State Initiative on Thursday night in New Brunswick.

Most of his thoughts were the same as they’ve been for months — he pledged to not support the millionaire’s tax and to fight to make state employees pay a greater share of their health care benefits.

A new wrinkle, however, came with the incentive programs, currently under attack.

Sweeney, looking for comprehensive reform on so many issues, put incentive reform in Murphy’s lap.

“We put a committee together to look at what kind of incentive program we could put in place,” he said. “But, if he wants to be the state with no incentive programs with what’s going on and businesses start moving out of here, he can explain it. He’s the governor.”

Sweeney repeated his calls to lower the cost of government in the state.

He does not want to do so, however, with total giveaways to big business. In fact, he brought up how he not only supported raising the Corporate Business Tax, he wanted to do so more than the state did last budget season.

“Last year, we raised the CBT,” he said. “(Murphy is) the one that fought us on raising the CBT and actually had us reduce the amount of CBT. He fought me over taxing the C-corps, who were the real benefactors of the Trump tax cut.

“You know, companies went from 35% (taxes) down to 21%. They were the people that got more money for doing nothing. So, why am I going after people that are making so much money and I’m taking it away from them rather than focus on the corporations?”

Sweeney said he knows he was right for one simple reason: He didn’t hear a lot of objections.

“You didn’t hear a whole lot of hollering, because how do you holler when you’ve got so much more money for doing nothing?” he said. “That Corporate Business Tax is going to come in almost double what we projected. And if we hadn’t done the Corporate Business Tax and we had just done the millionaire’s tax, we would have a deficit right now.”

Sweeney’s disagreements with Murphy did not stop there.

Sweeney said he plans to counter the state’s EDA Task Force hearings with some of his own.

“We’re going to form a committee on Monday to examine the (Economic Development Authority) tax incentives and allow everyone to come to speak, unlike what Gov. Murphy’s panel is doing,” he said. “Right now, if you want to defend yourself, you only can submit in writing — you’re not given the opportunity to submit publicly like they’re doing.

“I’m a believer — like when we do budget hearings and we do hearings in Trenton — both sides get to present in front of you. So, we’re going to allow everyone.”

Sweeney said he’s open to modifications.

“We’re going to figure out what’s wrong with the EDA, what’s right with the EDA and how do we fix the EDA,” he said. “I agree these payments are too rich, but it’s because our state isn’t such a bad place with tax policy.

“People don’t want to come here unless you’re putting big tax incentives in front of them.”

If you thought you would have to wait until the end of June to see the real budget battles begin, think again.

The fight is on now. Sweeney said he’s not backing down.

He said he has no choice.

“This state is in serious financial trouble,” he said. “And if we don’t start fixing things now, it’s going to be too late.”

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University Place, transformative project on Jersey City’s West Side, celebrates another milestone

They brought 10 shovels to the ceremonial groundbreaking.

They didn’t have enough.

Generations ago, that may have led to a cliché joke about Hudson County. Wednesday morning, on the West Side of Jersey City, it represented just how many officials from top companies, as well as higher education and governmental agencies, are working together to start the second phase of the transformational University Place project.

This groundbreaking was for the start of Rivet 2, which will feature 199 residential units and approximately 10,000 feet of service-oriented ground retail.

File photo
A rendering of the University Place project in Jersey City.

The unit follows the success of Rivet 1, a 163-unit luxury apartment building that opened last summer and already is more than 80 percent full.

The two buildings are part of a master plan that calls for an eight-building live-work-play (and learn) destination that will feature more than 1,000 residential units, 120,000 square feet of retail, a state-of-the-art performing arts center (which will house the Joffrey Ballet School — coming over from New York City), cafes, three upscale restaurants and plenty of green space.

For Sue Henderson, president of New Jersey City University, it is a perfect marriage of public and private interests.

“This is bringing together a real live, work and play space with a higher education and an arts component,” she told ROI-NJ. “That’s why we are calling it University Place. It is going to be a place to be — a place where the city can grow.

“As an anchor institution, you are supposed to be reaching out to your community and being part of the city. You want to be in and of your city.”

Jersey City Mayor Steve Fulop is certainly grateful for her exuberance.

“When you think about the transformation that’s taking place on the West Side, we’re lucky to have NJCU as an anchor,” he said. “They are very proactive, thinking about development, and we want to be partners with them.”

Many others do, as well.

The development partners were led by Hampshire Cos. (Jon and Jimmy Hanson), Claremont Cos. (Richard Sciaretta) and Circle Squared Alternative Investments (Jeffrey Sica).

They see the potential, too.

“The successful leasing of Rivet 1’s retail and residential components is a strong indicator that our vision for Jersey City’s west end is shared by residents and businesses alike,” Sciaretta said.

Rafael Perez, chair of the NJCU board of trustees, thanked them, and all of the other contributors, including Freeholder Bill O’Dea and Strategic Development Group CEO Tony Bastardi.

“The university is not equipped to do this (by ourselves),” he said. “This is a partnership.

File photo
The Rivet 1 building at Jersey City’s University Place development.

“It’s gratifying being here today — after many years — knowing what it takes to make these projects come to fruition.”

Fulop, who thanked Ward A Councilperson Denise Ridley and Ward B Councilperson Mira Prinz-Arey, along with Council President Rolando Lavarro, said the day’s event marked another day forward in the town.

Fulop, in fact, already was looking forward to future groundbreakings, including ones for Bayfront, the transformative 100-acre project one block over that is gearing up to start.

“If you think about what this place is going to look like five years from now, it’s going to be entirely different,” he said. “The RFP for the first four buildings of Bayfront should go out later this month.”

Together, he said, they will have great impact — and symbolism.

“I think the two will really complement each other,” he said. “The fact that the first Rivet is ahead of schedule is only going to serve us on Bayfront. For the people who are skeptical about whether the market can support it, or people want to be here, Rivet is a testament to a fact that it’s ‘Yes.’

“This is becoming just another Jersey City community that is changing.”

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Legitimacy of EDA Task Force questioned by lawyers representing George, Philip Norcross

A team of six top lawyers representing George Norcross, Philip Norcross and their business interests questioned the legitimacy of the task force Gov. Phil Murphy set up to look into allegations of abuse by the Economic Development Authority in the administration of the state’s tax incentive programs, in a six-page letter that was released late Monday.

The letter, which was sent by email and hand-delivered to the New York City offices of special counsel James Walden, questioned the authority of the task force and complained about the inability of “targets” of the hearings to provide a counterpoints or statements against witness and whistleblower statements. The letter registered complaints against Walden and the committee chair, Ronald Chen:

“On behalf of our respective clients, we write to object to the unlawful process you are conducting on behalf of the Task Force on the Economic Development Agency’s Tax Incentives. For the reasons set forth herein, the Task Force’s chair, Mr. Chen, lacks statutory authority over the Economic Development Agency, which is an independent authority not subject to the gubernatorial powers set forth in N.J.S.A. 52:15-7.

“Moreover, the arbitrary restrictions you imposed on our clients’ rights to respond to false accusations against them denies each of them the opportunity to exercise their First Amendment rights as well as their right to publicly confront accusers within the same public forum. Given your stated intention to publicly adduce ‘adverse’ evidence against our clients, these restrictions are particularly noxious. We therefore demand an opportunity to submit a public presentation to the Task Force at its next scheduled hearing.”

The letter was signed by Chris Porrino, Michael Critchley Sr., Herbert Stern, William Tambussi, Michael Chertoff and Kevin Marino.

The letter was in response to the most recent meeting of the task force, held last Thursday, when incentives given to companies that relocated to Camden were heavily criticized.

Jersey City-based World Business Lenders, which also was under scrutiny, previously complained about not being able to respond to allegations against it.

The letter cites a statute that allows the governor to investigate the management “by any state officer of the affairs of any department, board, bureau or commission of the state. It does not extend to independent authorities like the EDA.”

The EDA was created by statute in 1974, the letter said, and is in “but not of,” the Department of the Treasury.

Neither the Governor’s office nor the task force had an immediate response to the letter.

Earlier Monday, Chen responded to a similar line of questioning from Camden County officials about the validity of Chen running the task force since he, Chen, is a professor at Rutgers University, which has benefitted from the state’s tax incentives.

“The governor has full constitutional and statutory authority to investigate any entity within the Executive Branch, including the EDA, either by himself or through a delegate,” Chen said in a statement.

“If anyone wishes to challenge that authority, they should bring an appropriate action in court and we are ready to defend it vigorously.”

Last week, Critchley questioned the validity of Walden, a lawyer in New York, being appointed special counsel and practicing law in New Jersey.

See a copy of the letter, addressed to Walden, below.

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Ex-employee testifies financial firm used false info to obtain incentives

World Business Lenders recently made a splash in the New Jersey business sphere by aggressively pursuing legislation to govern its operations and creating a partnership with the Statewide Hispanic Chamber of Commerce of New Jersey to help minority small businesses overcome obstacles of access to capital.

But, on Thursday in Newark, WBL made headlines for a different reason: A former employee said the company used false information to obtain and then sell a Grow New Jersey tax credit — which rewards companies for creating and retaining jobs in New Jersey with tax credits ranging from $500 to $5,000 per job.

In her testimony at the second EDA Task Force hearing, Kerrie-Ann Murray said her company made a sudden move from New York City to Jersey City in 2016, and hired and fired about 80 people just to meet the requirements of the Grow NJ tax credit it was awarded for its move.

WBL, in a statement provided to ROI-NJ, vehemently denied Murray’s allegations, saying they came from a disgruntled former employee.

“Before today, World Business Lenders conveyed to the Task Force on the Economic Development Authority‘s tax incentives that there were numerous and serious reasons to believe Kerrie-Ann Murray would not testify truthfully,” the statement said.

“We are bitterly disappointed that the task force has, nevertheless, allowed Kerrie-Ann Murray to provide her biased and unreliable testimony without also allowing World Business Lenders the opportunity to have a witness testify. Kerrie-Ann Murray is a disgruntled former employee of WBL.”

Murray’s allegations are noteworthy.

Doug Naidus, center, is CEO of World Business Lenders.

When it was located in New York, WBL had 80 employees, and needed to hire 100 to 125 more in a two-month timespan, between May and July 2016, after the staff knew it was moving to Jersey City.

Murray said staff were instructed to create a relationship with the New Jersey Department of Labor & Workforce Development to fill the positions, and in that process also benefitted from DOL incentive programs to encourage hiring of individuals on welfare, who live in specific zones, or are veterans, and the company was also reimbursed for half of the hourly wage per employee it hired from a certain pool of unemployed individuals.

WBL then hired the more than 100 people, paid them $10 per hour and created a new department to cold-call small businesses to see if they were interested in and qualified for a loan.

“It wasn’t a role or positions that the company previously used,” Murray said.

“The company does subprime lending, if I can say that, so you would have to be very experienced in sales, experienced in selling, experienced in getting borrowers to actually borrow money at the high percentage rate.”

Murray also told the task force members that the company kept a monthly spread sheet, entitled Grow New Jersey, which tracked the number of employees. It included information such as employee names, positions, hours worked, annual salaries and earned pay per month.

If an employee didn’t meet the full-time hours, managers were asked for reasons. If no reason was provided, Murray said, the company would backfill the hours as paid time off, or PTO.

That went on for about six months, and, in January 2017, the entire department was eliminated.

When employees who were left asked why, they were told it was because the tax credit had been sold.

In a recent interview with ROI-NJ, WBL CEO Doug Naidus said there is a cold-calling department whose operations matched those described by Murray.

The statement also addressed the tax credit being sold, and the rehiring of the cold-calling department.

“In accordance with the Economic Opportunity Act, WBL voluntarily sold (and was not forced to sell) its tax credit for 2016,” according to the statement.

“Under the Act, this is a permissible practice employed by many companies across the state. The reasons for WBL’s decrease in payroll in 2017 is one that would be familiar to anyone who follows industry trends. In the second half of 2016, the fintech credit bubble began to deflate, which led to downsizing across the industry. WBL was forced to reduce its payroll count the following year, even as many of our competitors went out of business altogether. Since then, our industry has recovered and we have begun to hire again.”

But Murray also told the task force Thursday that other falsified information was used to boost the jobs numbers, such as keeping an employee on the payroll even though they had already been terminated while in New York, and the severance pay was kept on the books, just to help maintain the needed number of employees for the grant.

From July to December 2016, Murray said, staff were instructed to, despite constant turnover, maintain a minimum of 225 employees.

The statement from WBL does not address this claim. Instead, it claims Murray was responsible for falsifying information.

“During 2016, Ms. Murray reported incorrect employee headcount information to WBL’s chief financial officer, which was intended to be sent to the Economic Development Authority,” the statement said.

“Ms. Murray proceeded to argue her incorrect data was, in fact, correct despite being proven wrong by management employees. In the end, the numbers submitted to EDA for 2016 exactly match the payroll numbers from ADP, the company’s payroll provider. This well-documented data is clear, transparent and unimpeachable.”

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EDA Task Force member opens incentives hearing by reiterating need for consistent requirements

Strong words from attorney Jim Walden began the second hearing on state tax incentives Thursday at Rutgers Law School in Newark.

Walden, a member of the EDA Task Force created by an executive order from Gov. Phil Murphy early this year, explained the requirements that needed to be met by Economic Development Authority tax incentive applicants who were threatening to move jobs out of the state.

“You only get the money if the application over the years is a net benefit to the state,” Walden said.

That meant moving within the state, which has regularly happened, can only be approved if there is a threat to move out of state — and proof of potentially making good on the threat, such as a site selection.

“For what it’s worth, on that last point on the net benefit test, we have found some evidence that at least one important consultant was giving the same advice to program applicants,” Walden said.

He read a February 2015 memo from Biggins Lacy Shapiro & Co., which explained that showing an out-of-state location is a material piece of evidence the EDA could use toward awarding a tax credit or grant.

“Qualifying and disqualifying requirements of a multibillion-dollar tax program should be clear,” Walden said.

“And they should be clear so that they can be properly understood by business and enforced by whatever authority is responsible for vetting the applications and enforcing the rules.

“If there was an ambiguity in the rules — and, by the way, we are not taking a position on that, we don’t necessarily agree that the statute is ambiguous on this — the EDA as the administering agency really should have one interpretation, not two.”

While the task force is not charged with understanding the lack of uniformity, it is searching for how the applications were certified and what processes were used.

“Applications are submitted under penalties,” Walden said.

If an application has false statements, the grants are subject to suspension, termination and recapturing of funding or credits, as well as potential criminal enforcement.

On the latter point, Walden warned that the task force is still at an early stage in the proceedings and it remains to be seen what can and will be done.

The task force is chaired by Ronald Chen, former New Jersey public advocate and dean of Rutgers School of Law-Newark. Thursday’s group also included Walden, Georgia Winston and Milton Williams of Walden, Macht and Haran LLP, and Pablo Quinones of Quinones Law PLC.

The hearing is ongoing Thursday and will include testimony from former EDA Chief Operating Officer Tim Lizura, as well as two other witnesses. The hearing began at 10 a.m. and resumed at 1 p.m. after a lunch break.

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Norcross responds to reports on tax incentives in Camden

The state’s tax incentives were criticized again Wednesday after two scathing news reports revealed the influential role South Jersey Democratic power broker George Norcross and his allies played in the Economic Opportunity Act of 2013 — the law that revamped the state’s incentives to what they are today.

In a statement Wednesday afternoon, Norcross reiterated a sentiment he and others in Camden have expressed before: Without the tax credits, Camden would not be seeing the influx of jobs and general attention from the business community that it has in recent years.

“As one of the foremost champions of Camden’s renaissance, I join with other Camden leaders to thank WNYC Radio for its lengthy story detailing the massive undertaking to help rebuild Camden’s future,” Norcross said in the statement.

“While much of the story has previously been reported by other outlets, this was the first effort to compile all of the hard work that went into getting the city on its current path forward. The story reported that there is at least $1.6 billion of new private sector investment in a city that was, on its good days, merely ‘struggling.’ Now, government statistics reveal that jobs and graduation rates are up, while crime, unemployment and poverty are down.”

The story highlighted Camden’s overwhelming success in obtaining more than $1 billion in awards, as well as securing the largest tax break in the state, which was awarded to manufacturing company Holtec, according to the joint report from WNYC and ProPublica.

Holtec’s CEO came under fire last year for negative comments about the Camden workforce.

He also told ROI-NJ at the time that the plant in Camden “is costing us millions right now.”

Norcross said the turnaround story Camden currently tells is due to the tools it was given through tax incentives to help boost the economy.

“In its reporting, WNYC highlighted the legislative back-and-forth that reformed the Grow NJ program in 2013 to ensure that Camden, America’s poorest and most dangerous city, was given the tools it needed to attract the private investment needed to rebuild the city’s tax base,” Norcross said.

“But even with the surge of interest and investment in Camden, the record is clear: Over the last two decades and, until recently, Camden and South Jersey have received just a small percentage of the state’s economic incentives, while companies like Goldman Sachs, UPS, Siemens, Forbes, JPMorgan, Prudential, Panasonic and Verizon received eight- and nine-figure tax credits for locations in North Jersey. The $1.6 billion for Camden projects identified by WNYC is just a fraction of the $5 billion recently committed to Amazon if it would move to Newark.

“The fact that private investment is returning to Camden is no accident — it was planned and fought for. As WNYC and other media outlets have reported, the commitment to rebuilding Camden’s future began years ago and focused on the city’s three biggest challenges: improving public safety, reforming education and bringing jobs and economic investment to the city. While the work is not done, by all accounts the city is making real progress. That’s why, when President Barack Obama toured the city, he praised it as a ‘symbol of promise for the nation.’

“As the WNYC story makes clear, this dramatic change wasn’t due to luck or happenstance. It is the product of thoughtful planning and hard work by many people over the course of almost a decade. We are not nor will we be deterred from realizing the full potential of this great city for its residents and businesses. Camden is truly rising.”

Meanwhile, a New York Times article revealed that a lawyer associated with Norcross’ brother’s law firm had influence in crafting the bill, although he was not a lobbyist.

Gov. Phil Murphy released a statement in response to both articles Wednesday afternoon.

“I am deeply troubled by the findings outlined in both the WNYC report this morning and the New York Times story this afternoon,” he said. “Coupled with what we already know about how the tax incentive program operated over the past six years, I believe now more than ever in the importance of the task force I commissioned.

“Until we’ve taken a good hard look at the entire process, I don’t believe we can be sure that all taxpayer money has been properly spent and accounted for. If there was fraud in this program, I expect the task force will uncover it and those individuals will be held accountable.

“Given the breadth of these findings and those so far reported by the task force, I believe anything short of a total revamp of the tax incentive program is a disservice to the hard-working taxpayers of New Jersey.”

Tom Bracken, CEO and president of the New Jersey Chamber of Commerce, said that all the negative stories about the tax incentives will affect the future of the Economic Development Authority, which has been the target of a recent onslaught of negative news, including an ousting of its board chair by Murphy as well as an audit by the Office of the State Comptroller highlighting problems with the very incentives in Wednesday’s news reports.

“It’s a very difficult situation, because there are so many people taking shots at the EDA,” Bracken told ROI-NJ on Wednesday.

“And a lot of stuff that is being aimed at the EDA is anecdotal and has very few facts.”

Bracken said that, in its 42-year history, the EDA has done its fair share to help promote business in New Jersey and kept the state competitive.

“We need to take a pause and we need to take the time to do the EDA programs correctly,” he said.

Bracken also referred to recent news that lawmakers are trying to extend the current programs in order to take a longer time to work on the new programs that Murphy outlined in his economic vision in November.

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‘Credibility issue’: Zoffinger, longtime power broker, says EDA upheaval puts N.J. in bad light — one it caused itself

George Zoffinger has served on approximately a dozen boards across the state — and across the globe.

He’s overseen the Economic Development Authority and the New Jersey Sports and Exposition Authority — and he’s the current chairman of the New Brunswick Economic Development Corp.

He’s worked — in some capacity — for every New Jersey governor since Jim Florio, who appointed him commissioner of commerce and economic development.

So, he knows a thing or two about how agencies and government are supposed to operate. And he’s not happy about what he sees going on in connection with the EDA.

“It pains me to see what has happened at that organization,” he told ROI-NJ.

Zoffinger is talking about Chairman Larry Downes stepping down at the request of Gov. Phil Murphy — a request other members of the EDA who were appointed by former Gov. Chris Christie have not complied with so far.

He’s talking about a scathing audit — the parameters of which have been called into question.

He’s talking about the efforts of outside groups calling for a complete overhaul of the EDA for reasons some feel are based more on politics than performance.

“It’s not necessary, I guess is the way I would put it,” Zoffinger said. “We’ve had so many good people that have dedicated their life to it and have done some really positive things for the economic development of the state.

“And, now, because people didn’t agree with some of the things that were done during the Christie years, they’re basically throwing the baby out with the bath water.”

Zoffinger was on a roll.

“I know Larry Downes very well,” he said. “I’ve worked with Larry. I’ve been on the board of New Jersey Natural Gas for 20 years. I’ve seen him. And I know the kind of person he is. And all Larry wanted to do is to make a positive contribution, and he’s done that.

“To make him a scapegoat because you don’t agree with some of the policies that were undertaken at the time, in my opinion, is really wrong. So, it’s really pretty bad to see what’s happening there.”

Zoffinger did offer some praise for Kevin Quinn, who was named to replace Downes on Friday morning.

Quinn is the founder of the Genki Advisory investment firm in Short Hills and, like Murphy, a former Goldman Sachs executive.

“It could be a good first step,” Zoffinger said. “He seems to be a qualified guy.

“As long as the turmoil doesn’t continue, I think it’s a positive thing. But if they’re going to fight over the four board members, then that will be the focus of the place. They won’t be focusing on what they should be focusing on, which is economic development.”

Regardless of what happens going forward, Zoffinger knows it won’t go perfectly. He’s been around the block enough times to know that no agency is like that.

But, he said he has confidence in the EDA. He said he’s never lost it.

“You’re always going to have situations where people try to game the system,” he said. “You’re always going to have that. But in the case of the EDA, over the years, to my knowledge, it’s always been very difficult to game the system. They basically have so much backup, not only the paperwork, but the constant scrutiny they are under.”

Zoffinger said the problem is an age-old one in the state.

Because the governor — whoever it is — has so much power, few people are willing to challenge the office, he said.

“The governor’s position is so strong, people will not buck it,” he said. “They won’t fight against it. If the governor’s position is to do just about anything — we gave away Giants Stadium (when I was at the sports authority) because the governor wanted to do it.

“People in New Jersey have this aversion to bucking what most governors say. It’s really sad, because some really good people maybe could have made some of the policies (better), but we don’t do that in New Jersey.”

This will lead to a bigger problem, Zoffinger said.

How many others will want to serve the state?

“They’re going to ask, ‘What’s going to happen when somebody else comes along and they don’t like them because Murphy appointed them,’” he said. “We’re going to throw them out for no reason — or because some conservative groups or some liberal groups or some other groups say that they should?

“When people say, ‘We’ve got to get rid of all these people,’ what do they mean get by, ‘these people’? These are people. You got to look at the person and see what’s this person all about.”

Why would people — or, more importantly, big companies — want to settle here? And who is going to help them?

“Larry is a really good guy who brought real stability to that organization,” Zoffinger said. “Now you put the whole organization into an upheaval.

“Now, what’s going to get done while these people fight over whether they’re going or staying, right? I would say, ‘Nothing.’”

Zoffinger said it’s necessary for the state to clean up the mess. He hopes Quinn can do that.

“You have to make sure that people understand their responsibilities and you have to stop the personal attacks and the rancor that seems to be around the organization,” he said. “Because, if you don’t, they will never be able to have the credibility necessary to be able to do that job.

“That’s really what it comes down to. There’s a credibility issue right now that has to be addressed, and it has to be addressed by competent people. Hopefully, some stability or some kind of positive reaction will take place instead of fighting.

“So, if a company wants to come to New Jersey, they know that they could deal with the people that are there versus people that have been asked to leave.”

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