Panasonic mulls $100M move to Newark
State agency approves tax credits, leaves Secaucus fuming
by E. Assata Wright
Reporter staff writer Hudson Reporter
Jan 16, 2011
Secaucus officials said they were blindsided Tuesday when they learned a state economic development agency has approved an application from Panasonic to take advantage of a tax incentive program if the company moves from Secaucus to Newark.
Under the program, Panasonic, which currently leases a 1 million square foot site at 1 Meadowlands Parkway in Secaucus, would receive incentives worth more than $100 million through New Jersey’s Urban Transit Hub Tax Credit if it moves to Newark.
It’s a deal the company would not get if it remains in Secaucus, since Secaucus is not eligible under this tax incentive program.
For Secaucus, Panasonic’s departure would mean the loss of roughly 850 jobs and a likely hit to property taxes generated from the 1 Meadowlands Parkway site.
The town is unhappy that the state, through its Economic Development Authority (EDA), would approve a tax incentive that attracts business to some municipalities at the expense of others.
“Realistically, how can Secaucus compete when the company’s been offered $102 million in tax credits to move to a city that’s practically next door?” asked an angry Secaucus Mayor Michael Gonnelli last week.
Misuse of business retention program?
At the heart of this controversy is whether or not the state is misusing the Urban Transit Hub Tax Credit and forcing New Jersey municipalities to compete with one another to attract business.
Mayor Gonnelli and Town Administrator David Drumeler insisted last week the tax credit is really meant to attract out-of-state companies to settle in New Jersey. But occasionally, they argue, the credit is used to lure tax-paying companies away from one city and toward another where the company can get away with paying less money in taxes. In other words, the credit creates an unlevel playing field among municipalities.
Signed into law by former Gov. Jon Corzine in 2008, the Urban Transit Hub Tax Credit Act gives tax credits to certain companies that employ at least 250 full-time workers and build or rent office space in or near nine designated urban transit communities. The law specifically identifies those nine urban transit hubs as Jersey City, Atlantic City, Elizabeth, Paterson, Camden, Trenton, New Brunswick, East Orange, and Newark.
To qualify for the tax credit, a company must make an investment of at least $75 million in its new city. The tax credit equals 10 percent of the company’s real estate investment.
“The main goal of the bill was the bring jobs into the state, and not to take jobs from one community and just move them to another. Because that really doesn’t do too much for the economic development of the entire state,” said Drumeler last week.
In a Dec. 14 letter sent to Lt. Gov. Kim Guadagno – Gov. Christopher Christie’s point person for business and economic development in New Jersey – Mayor Gonnelli was more pointed.
“[O]f significant concern is the offering and use of this program to foster intra-state relocations from one municipality to another,” Gonnelli wrote. “This is not good public policy and cannot be permitted…Under no circumstance can the state count current New Jersey jobs as ‘new jobs’ for the purpose of a net benefit analysis…If the jobs are truly ‘at risk’ of leaving New Jersey, then the state must work with the business and the current host municipality to develop a benefits package to retain that business.”
Drumeler and others also noted that if Panasonic were to move to Newark, that city would not see a boost in real estate taxes since the tax credit would give the company a 10-year abatement on property taxes.
The state responds
However Caren Franzini, CEO of the state EDA, said Wednesday that when Panasonic approached the agency, the company said it was ready to move from the Secaucus site where it has been based since 1976 and was seriously considering a site out of state.
“The state of New Jersey makes it very clear, our role is never to [pit municipalities against one another],” she said. “In this case, the company wanted to apply for this benefit to see whether or not they could get approved for it. They’ll now take that information and compare it to offers [they have] in other states.”
“We have a number of incentives that we have at our disposal to attract business, to either relocate or remain in New Jersey,” Franzini continued. “And Secaucus has actually benefited in the past from some of these other programs.”
Specifically, Franzini pointed to several businesses that were lured to Secaucus and took ad vantage of he state’s Business Employment Incentive Program. Through this program the EDA awards grants to qualified businesses for up to 10 yeas. The grants equal 10 to 80 percent of the total amount of state income taxes generated by the jobs created by the companies
The Major League Baseball Network, Franzini noted, was lured away from Harlem in New York to Secaucus under the BEIP program, as were Alice & Olivia LLC, Ernst & Young, and Scharff Weisberg.
Franzini plans to meet with Gonnelli Friday, Jan. 14 to discuss ways the EDA might help the town attract new businesses to town to fill the void should Panasonic pull up stakes.
Counter offer in the works
In the meantime, the town, Gonnelli said, is prepared to fight to keep Panasonic in Secaucus.
The mayor said he met with representatives from Hartz Mountain Industries, which owns Panasonic’s current corporate space on Meadowlands Parkway, the day after the EDA decision was announced to devise a counter offer to entice Panasonic to stay where it is. Rough details of a counter offer were outlined at that meeting, including an offer by Hartz to rebuild Panasonic’s Meadowlands Parkway home.
Town officials have also approached State Assemblyman Vincent Prieto, a Secaucus resident, and other elected leaders who represent Secaucus in Trenton to lobby for changes to the Urban Transit Hub Tax Credit Act.
A Hartz spokesman contacted last week said the company is concerned about the possibility of losing Panasonic and confirmed that Hartz representatives met with Gonnelli on Jan. 12 to discuss the situation. The company, he said, had no additional comment regarding the matter at this time.
According to the Office of the Secaucus Tax Collector, Hartz paid a total of $1.4 million in real estate taxes last year for the 1 Meadowlands Parkway site. This amount includes property taxes paid to Hudson County, the local school district, and the municipality.
E-mail E. Assata Wright at email@example.com.