TO:                         Members of the Senate Select Committee on Economic Growth Strategies

FROM:                   Christina M. Renna, Senior Vice President, CCSNJ

DATE:                    July 29, 2019

The Chamber of Commerce Southern New Jersey (CCSNJ) is honored to have been invited to offer testimony on a topic that is of major economic importance to the South Jersey region and to our State; that is, the New Jersey Economic Development Authority’s (NJEDA) Grow New Jersey Assistance Program and the Economic Redevelopment and Growth (ERG) Program. Thank you for the opportunity to weigh in on these programs that we believe have been highly effective in attracting and retaining businesses in our State, none more successfully than in Camden City.

In 2014, the Economic Opportunity Act was amended in a very important way – it focused on providing incentives, and therefore economic opportunity, in distressed South Jersey municipalities including Camden and Atlantic City. This change led to long overdue, much needed, and unprecedented economic growth in the South Jersey region. In recent weeks and months, questions have been raised over the effectiveness of the tax incentive programs and whether the “return on investment” is real, or whether it exists at all. As the voice of the South Jersey business community in Trenton, we can tell you the answer is unequivocally “yes.”

Incentives have done the job they were meant to in the City of Camden. Prior to the creation of Grow New Jersey and the ERG, only three projects in Southern New Jersey qualified for tax credits and no businesses in Camden received benefits. Camden was in desperate need of these incentives to serve as a spring board for jobs and growth, which is why the CCSNJ strongly supported the initial legislation.

As a matter of fact, according to NJEDA data the original Grow New Jersey program awarded $525 million to companies in New Jersey - $0 of which went to Camden City. Once the program was changed to include Camden during the Christie Administration, Camden saw $1.49 billion be awarded to businesses moving or retaining jobs in Camden. However, noteworthy is that the $1.49 billion in Grow New Jersey-related investment only represents 29 percent of all the overall Grow incentives allocated in New Jersey over the entire history of the program – the other 71 percent went to other parts of the state, most of which was not in Southern New Jersey. Since Governor Murphy took office, those percentages have generally stayed the same with approximately 28 percent of all incentive awards going to Camden; only 21 percent of which that have been given out to date.

Today, approximately thirty companies have located or plan to locate to Camden and are eligible to receive $1.5 billion in tax credits over a ten-year period. These companies represent at least $1.3 billion in capital investment in Camden and locating hundreds of jobs in the City. Further, the NJEDA has certified that these companies have already created or retained more permanent jobs per year than initially committed --with 627 jobs being the minimum required and just under 2,000 jobs delivered.

In addition to the capital investment that has vastly improved the landscape of and brought more people and resources to the City, these corporations and businesses created an environment that provided needed certainty for other businesses to open or expand their operations in Camden. Some recent examples are:
  • the groundbreaking of the first hotel to operate in Camden in more than 50 years – The Hilton Garden Inn – which will open in late 2020 and will create 75 new jobs in Camden;
  • the opening of two restaurants on the Camden waterfront by famed Philadelphia chef Michael Schulson in fall of this year;
  • the May opening of the Camden Arts Yard, and bar and restaurant with Food Network Star Aaron McCargo as head chef, which is creating 55 new jobs; and
  • the opening over Memorial Day weekend of Flying Fish Beer Garden at Adventure Aquarium.

These businesses add to the attractions available to visitors and residents, as well as provide opportunities for employees of new businesses to stay in the City after hours.

Additionally, the companies that have relocated to Camden are generously supporting nonprofit organizations and Camden’s schools, including: the Camden Schools Foundation, Center for Family Services, Habitat for Humanity, Hopeworks, Respond Inc., Girls Inc, Kipp Norcross and Whittier Schools, Cathedral Kitchen, Joseph’s House, Covenant House, the Salvation Army KROC Center, UrbanPromise of Camden, Ronald McDonald House, LUCY Outreach, and Boys & Girls Club of Camden – nearly all of which are active members of the CCSNJ.

However, the incentives and the resulting economic growth are just part of the story – other challenges needed to be addressed before businesses and people would come to Camden. Strong partnerships, cooperation, and collaboration among all levels of government were needed to address the socio-economic issues that are important to businesses and residents, including building a strong K-12 education system, strengthening public safety and improving the physical and economic health of Camden residents. Over just a six-year period (2012 -2018), unprecedented change has taken place in Camden:
  • the crime rate dropped by 59 percent;
  • K-12 graduation rates increased by 40 percent, with a 69 percent graduation rate;
  • drop-out rates were reduced by half, from 21 percent to 10 percent;
  • poverty rates fell five points;
  • $55 million invested in improvements to Camden parks;
  • unemployment declined from 17.8 percent to 9.7 percent (an astounding 45 percent reduction);
  • and the percentage of residents with no access to health insurance dropped from 21.7 percent to 16.5 percent.

Camden’s experience is a powerful example of how successful these tax incentives are for the City, its businesses, and residents.

The need for incentives in our State – which is among the most expensive places in which to do business – is undeniable. Programs like Pennsylvania’s “Keystone Opportunity Zone”, Delaware’s low cost of living and favorable business tax climate make the fight to attract and retain businesses in our region even more difficult.

New Jersey’s long-time reputation as an unfriendly and costly place to do business has only been exacerbated by the recent passage of a $15 minimum wage, a paid sick leave mandate on employers, the expansion of New Jersey’s Paid Family Leave Act, and a restrictive and confusing equal pay mandate. These mandates come on top of the fact that New Jersey has the highest property taxes in the nation, highest Corporation Business Tax in the nation, the second highest top marginal personal income tax rate in the nation and a slew of other taxes and fees that add greatly to the cost of doing business. Doing away with these programs - or imposing restrictive caps on the amount of tax incentives for which businesses can be eligible - will greatly hamper or remove the most effective tool in attracting and retaining business in our state.

However, the CCSNJ encourages the Legislature to consider incentivizing businesses that utilize goods and services provided by businesses located in the city in which the incentive was awarded. To that end, we recommend State government provide funding to build a “marketplace” database of registered small and minority-owned businesses that include the goods or services they provide, as well as the goods and services being sought by businesses in the city. Such a “marketplace” would be used by businesses to identify potential vendors and for small businesses to see the goods and services companies in the city are seeking.

Further, we recommend including language in legislation that would provide applications for the New Jersey Department of Labor and Workforce Development (LWD) training grants that serve Camden residents be fast-tracked. Improving access to training will better-position local applicants for the jobs being created by companies locating there.

Lastly, the CCSNJ believes a rigorous evaluation of all incentive programs by the Legislature is needed and essential to assuring New Jersey’s return on investment is meaningful and legitimate.

As the State nears the June 30 expiration date of Grow New Jersey and the ERG, the CCSNJ supports reasonable changes that result from a thorough assessment of the existing programs (as opposed to a complete overhaul that includes caps on incentives) with an emphasis on consistent oversight, use of metrics, and a predictable process in the NJEDA when awarding incentives. The CCSNJ recognizes that doing so will likely require extending the current programs for an additional six months.

The CCSNJ appreciates the opportunity to share our thoughts with the Assembly Commerce and Economic Development Committee on these programs that are critical to continued economic growth in New Jersey and look forward to an ongoing dialogue with the Legislature and the Administration about these proposals.