The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.
June 15 – New Jersey would offer $164.2 million in tax credits for 10 years to a Voorhees, N.J.-based water utility if it agrees to keep existing jobs in the state and build its new headquarters in Camden, the state's development authority decided at a board meeting June 9.
The New Jersey Economic Development Authority (EDA) approved the potential tax breaks for American Water Works Company, Inc., in exchange for consolidating 596 jobs from five existing offices into a newly constructed 250,000 square-foot facility in Camden, one of the state's most distressed municipalities.
In addition to making a minimum capital investment of $20 million within three years, the company would need to add an additional 100 jobs, according to an EDA Board memo the agency e-mailed to Bloomberg BNA June 15. The gross benefit to the state over 35 years would be more than $294.8 million, according to EDA estimates.
American Water is the largest publicly traded water and wastewater utility company in the U.S., with 6,400 employees providing services to 15 million people in 47 states and Ontario, Canada, according to the company's website. The EDA is an independent state agency with a mission that includes revitalizing communities through redevelopment and administering tax incentives to retain and grow jobs, the agency's website says.
“In addition to a new headquarters in Camden and the addition of 100 new jobs in New Jersey, the approval of this project is about retaining 600 New Jersey jobs that are at risk of being relocated to Pennsylvania,” EDA spokeswoman Virginia Pellerin told Bloomberg BNA in an e-mail June 15. The company has indicated that the tax credits would be “material” to their decision of where to relocate, she added.
American Water currently has employees spread across five different office sites in southern New Jersey, primarily in Voorhees, Mt. Laurel and Cherry Hill, according to company spokeswoman Denise Venuti Free. This does not include employees who work for New Jersey American Water, who would not be included in any potential move, she told Bloomberg BNA in an e-mail June 15.
American Water has still not made a final decision but is “very pleased” with the outcome of the EDA board meeting, Free told Bloomberg BNA.
“This has been a very competitive application process and we want to thank the New Jersey Economic Development Authority for approving our application and for their vote of confidence in the value American Water brings to the city of Camden and the state of New Jersey,” she said. “We are excited about the prospect of consolidating our corporate offices into one headquarters, and this is an important step in our decision making process.”
Yet at least one policy analyst questioned whether the potential benefits were worth the cost.
Gordon MacInnes, president of nonprofit think tank New Jersey Policy Perspective, says the state's economic development policy focuses too narrowly on tax breaks to corporations at the expense of public needs.
“In exchange for $164 million, American Water Works—which posted $1.5 billion in profits over the past 4 years—would shift 596 jobs from one part of New Jersey to another while adding 100, at the steep cost to taxpayers of $236,000 per job,” MacInnes wrote in a blog post June 9. “When considering only jobs that are new to the state, the per-job cost rises to $1.6 million.”
As of June 8, before the American Water Works deal was approved, New Jersey had approved $5.5 billion in business tax breaks since January 2010, compared with $1.2 billion for the entire previous decade, MacInnes wrote. “[E]very dollar of the corporate subsidies being approved in record numbers today is a dollar stripped tomorrow from the true building blocks of a strong economy, like maintaining high quality schools and roads and strengthening small business development,” MacInnes wrote.
In addition to the American Water project, the EDA's board on June 9 also approved a $16 million credit over 10 years for a Manhattan-based jewelry manufacturer, Frederick Goldman, Inc., to move to Secaucus, N.J., instead of New York; and $27.6 million credit over 10 years to entice a wholly-owned subsidiary of Serta Simmons Bedding, SSB Manufacturing company, to create a manufacturing facility in Carteret, N.J., rather than expanding its existing facility in Pennsylvania.
To contact the reporter on this story: Leslie A. Pappas in Philadelphia at email@example.com
To contact the editor responsible for this story: Cheryl Saenz at firstname.lastname@example.org
For a discussion of Investment and Employment Credits in New Jersey, see 1470-2nd T.M., Credits and Incentives: MO Through OK, at 1470.11.B.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)