Report Says Program Provided Big Benefits To NJ Political Boss

A task force appointed by Gov. Phil Murphy concluded a lack of scrutiny by the Economic Development Authority (EDA) cost the state hundreds of millions in tax incentives — all to possibly benefit businesses connected to South Jersey power broker George Norcross.

The task force released its first report on Monday night, June 18, the latest episode in a series of battles between the governor’s office and his Democratic colleagues in Camden County.

In its report, the task force highlights tax incentives given to five companies connected to Norcross in which the EDA rewarded too much money in tax incentives to companies that mislead them in their applications. In some cases, the task force claims those companies should’ve been denied incentives outright.

Norcross is the Chairman of the Board of Trustees for Cooper Health System, the executive chairman of Connor, Strong and Buckelew and a member of the Holtec Board of Directors, all companies that benefit from the tax incentives.

He has accrued political influence despite never being elected to office. He has been closely aligned with most governors over the past two decades, both Democrat and Republican.

"In the end, the McGreeveys, the Corzines, they're all going to be with me. Not because they like me, but because they have no choice," Norcross was once recorded as saying on tape, as reported by Philadelphia magazine.

He and State Sen. President Steve Sweeney are childhood friends. Read more here: Troubles Surrounding NJ’s ‘Most Poweful Unelected’ Man?

In the report, the task force attempts to show a connection between Norcross and his family and the tax incentive program. It reiterates statements made in previous public hearings that Phillip Norcross had a hand in shaping the tax incentive program in order to benefit his brother's companies, writing:

The Task Force has received evidence and information demonstrating that, during this period when EOA 2013 was before the Senate, certain special interests became involved in the drafting process—namely, the Parker McCay P.A. law and lobbying firm based in Mount Laurel, Hamilton, and Atlantic City, which drafted large swaths of the bill in various respects that appear to have been intended to benefit the firm’s clients. Based on evidence and information in possession of the Task Force, Philip A. Norcross, Parker McCay’s Managing Shareholder and Chief Executive Officer, and Kevin D. Sheehan, another partner of the firm, both worked on the drafting of the bill. Among other apparent intended beneficiaries of Parker McCay’s drafting work was the Conner Strong & Buckelew insurance brokerage firm, headed by its Executive Chairman, George E. Norcross, III—the brother of Philip A. Norcross. Several years after EOA 2013 was enacted, on March 24, 2017, Conner Strong & Buckelew was approved for an $86 million award to relocate its offices to Camden. An award of that size would have likely been impossible if not for stautory amendments that Parker McCay played a pivotal role in incorporating into the legislative design.

The Task Force has received two Microsoft Word draft versions of the bill, both dated June 21, 2013—one draft dated several hours earlier than the other one—with revisions in “track changes” mode. The metadata in these documents appear to attribute many, but not all, of the revisions in the bill to Mr. Sheehan of Parker McCay. In addition to this metadata, other documents and information in the Task Force’s possession further corroborate that Mr. Sheehan, with the potential influence of Mr. Norcross, drafted these changes to the bill.

That same day, then-Governor Chris Christie, then-Mayor Dana Redd, and others hosted a major press conference announcing the Camden waterfront development at the Camden Aquarium. George Norcross attended the event. At the event, a reporter for NJTV News asked Mr. Norcross, “It’s been reported that you’re going to put $50 million into the project, is that true?” He responded, “It’s absolutely true. I committed to do this when I was trying to persuade one of the biggest real estate concerns in the country to become part of this effort, and we all thought that was going to be a credible act, and we’re putting our money where our mouths are, and we’re looking forward to being a part of it.” Press coverage around that time indicated that CSB, TMO, and NFI were expected to relocate to the new Camden development.

Given the statements a year earlier that the very companies applying had “committed” to Camden, the Task Force believes that these applications should have been scrutinized, particularly given the size of the awards at stake. Indeed, despite his instruction to Mr. Rosenfeld to defer to Mr. Sheehan’s numbers about at-risk jobs, Mr. Lizura indicated during this interview with the Task Force that he instructed his team to pay particular attention to the applications because they involved companies related to Mr. Norcross. Mr. Lizura did not, however, identify any particular steps he asked the team to take to scrutinize the applications, and the Task Force has found no evidence of any. In any event, Mr. Rosenfeld, after re-running the test based on Mr. Lizura’s instruction, said: “With the at risk jobs, they both get to about $88.8M in net benefit . . . .” The final awards were granted based substantially on that calculation.

Cooper Health System ended up receiving $40 million in tax incentives after it claimed that it was considering relocating out of state.

The task force said the EDA accepted this claim without scrutiny, despite Cooper’s initial application materials that said it wasn’t considering moving out of state and there was no risk of any jobs leaving New Jersey.

Based on its initial claims, Cooper should’ve received just $7 million in tax incentives, the task force concluded. It was one of a number of episodes illustrating the EDA’s failure to do its due diligence that the task force highlighted in its report.

Holtec said it had never been disbarred when submitting its NJ Grow application, even though the task force said a “simple internet search” showed that Holtec had been disbarred by the Tennessee Valley Authority. That action by Tennessee Valley Authority would’ve been enough for the EDA to deny Holtec’s application; instead, EDA awarded Holtec a $260 million NJ Grow award, the task force found.

Connor, Strong and Buckelew is one of three companies that requested tax incentives to choose Camden over Pennsylvania. However, the task force said it found in another “simple internet search” that Connor, Strong and Buckelew, The Michaels Organization and NFI had all committed to moving to Camden a year before submitting their application. If the EDA had known that, it could’ve denied the applications for being misleading.

“At a minimum, armed with this information, the EDA should have calculated these awards based only on new jobs moving to Camden from outside the state, and the awards to these three entities combined would have been reduced by over $70 million,” the task force said in its report.

The task force said the EDA didn’t intentionally ignore readily available information before rewarding tax incentives, “but the failure to have strict guidelines for such research made these lapses possible.”

George Norcross opposed the release of the report, and he is calling the task force an “illegal exercise of the governor’s power,” nj.com reports. A superior court judge ruled the public has a right to know what’s in the report, and Norcross’s attorneys vowed to keep fighting.

“Each of these companies has only ever requested a fair hearing and it is clear that was never going to happen with the governor’s task force,” Daniel Fee told nj.com.

Murphy put this task force together following a report from the State Comptroller that warned of a severe lack of monitoring and oversight over past awards — as well as thousands of promised jobs that couldn't be substantiated.

Democrats in Camden County said Murphy and the task force are relentlessly attacking businesses in Camden County, and called Murphy "hypocritical" following a report that shows Murphy lobbied in favor of tax credits for Goldman Sachs back in 2003.

“The task force should not be misunderstood as disagreeing in any way about the desirability—indeed the necessity—of the state finding ways to encourage substantial reinvestment and growth in Camden, and in helping it meet the substantial challenges that it faces,” the task force said in its report. “Reinvestment in Camden has rightly been a priority for governors from both major political parties for decades. But as laudable as that end is, it does not necessarily justify, without any question or limitation, every conceivable means to accomplish it.”

The task force said it also discovered some instances in which tax credit beneficiaries submitted inaccurate information or fell out of compliance after receiving credits, whether intentionally or not. Some of those companies may have their awards, which total over $500 million, suspended.

The task force said it will continue its investigation. It has made recommendations to ensure the EDA has access to the sufficient information in the future, as well as the power to withhold all or part of an award to a company that has failed to meet its requirements. The EDA would also have to implement written formal policies and procedures governing its programs, and make sure its staff is trained accordingly. It would have to use a special firm with experience to conduct background checks for applicants and their affiliates and executives.

It also proposes enacting legislation to:

• Ensure tax incentives are applied without favoring special interest groups;
• Make sure lobbyists for businesses seeking tax incentives are properly registered;
• Refrain from providing draft EDA regulations to individuals outside the process outlined in the New Jersey Administrative Procedure Act;
• Make sure tax incentives result in a net gain for the state or explain why they don’t; and
• Ensure the language in any new legislation and in implementing regulations more clearly determining eligibility for tax incentives.

It has also implemented an accelerated re certification program companies can use to show they have been and remain in compliance with all requirements. So far, 53 companies have made use of this program, according to the task force.