Critics question benefits of 76ers, Holtec projects in Camden

When officials announced plans recently for a massive factory in Camden's gritty port district, cheers erupted from an enthusiastic crowd of executives and elected officials.

But the reaction was more restrained from another group — academics and activists concerned over generous tax breaks for firms building in Camden.

Holtec International Inc., an Evesham firm that plans to make nuclear-power equipment in Camden, will receive $260 million in state aid under a deal approved this month by the state Economic Development Authority.

Similarly, the EDA in June approved an $82 million tax break for the Philadelphia 76ers, which plans to build a practice facility on the city's Waterfront.

Advocates say the projects will bring jobs and economic development to the impoverished city. They note the tax breaks were made possible by a 2013 state law, designed in part to benefit Camden, that passed with strong support from South Jersey Democrats.

But skeptics doubt the state subsidies will help residents in Camden's struggling neighborhoods.

"Without a doubt, these are great developments," allowed Raymond Lamboy, president of the Latin American Economic Development Association in Camden. "But the pressing issue is: The house is on fire. Where's the hose? Yeah, you're bringing in a tanker with water, but it's only splashing part of the city.

"It's not putting out the fire," said Lamboy.

A harsher view came from Stephen Danley, an assistant professor of public policy and administration at Rutgers-Camden.

"We throw money at the cities, but it's corporations that catch it," he said.

'Ripple effect'?

The projects' supporters note Holtec's factory will provide almost 400 jobs, including 235 new positions, when it opens in 2018. The 76ers facility will employ about 250 people, including 50 new jobs; it is to open in 2016.

Gov. Chris Christie noted the 600,000-square-foot Holtec plant represents "the largest-ever capital infusion" in Camden's history. In announcing the project, a statement from Christie's office included bipartisan praise for the 2013 Economic Opportunity Act, as well as from the New Jersey Business and Industry Association and the New Jersey Chamber of Commerce.

The state's tax incentives "ensure the creation and retention of jobs," EDA spokeswoman Virginia Pellerin said. "In the bigger picture, an important part of the value of these incentives is the ripple effect they have on an area, particularly a distressed one."

Pellerin predicted the projects will boost private investment in the city, in turn helping small businesses and creating job opportunities.

She added the Grow NJ program, which provides the aid, requires a test to ensure that an applicant's direct investment, as well as indirect spending associated with a project, "is always greater than the state's award of tax credits."

Under the 2013 law, firms seeking tax breaks in Camden must show they'll bring in 100 percent of the benefits in 35 years. In other parts of New Jersey, the required return is 110 percent in 20 years.

New Jersey Policy Perspective, a progressive research group, has noted the potential for steep losses if firms leave Camden before the 35-year period ends.

Gordon MacInnes, NJPP's president, noted Holtec's aid package estimates a net benefit of $155,520 after 35 years. But the deal requires Holtec to stay in Camden for only 15 years, and the state could face a $148.7 million loss if the firm left at that time.

"To minimize the risk to the state, the amount of time the company is required to stay without being penalized should be equal to the amount of time over which the net benefit is calculated," said MacInnes, who also favors a cap on corporate subsidies.

Jobs that fit

Holtec has indicated it's taking a long-term approach to its new home, signing a 50-year lease for its Camden site. The company's founder and president, Kris Singh, has predicted the complex will employ 3,000 workers after five years of operation.

"We are acutely aware of our social responsibility," he said in announcing the company's plans. Singh said Holtec will work with the state and city "to leverage our plant to serve as a training academy to help young men and women, especially unemployed Camden residents and veterans, to acquire skills that yield well-paying jobs."

But no single factory will lift Camden's residents out of poverty, said Lamboy. As a result, he said, the city should seek a range of employers, from small shops to large warehouses, that need entry-level workers.

"Thousands of people are out of work in Camden," he noted. "A lot of these individuals do not have a high school diploma. We have to consider the guy who's 34 and looking for work, but doesn't have high-level skills."

Rev. Edward Livingston, executive director, Camden Churches Organized for People, also has said business-attraction efforts "should be guided in part by the number of low-skilled or unskilled living-wage jobs being created." He put the living wage at $27.71 per hour for a family of three with one adult.

David Fiorenza, who teaches at Villanova University School of Business, also believes Camden's widespread problems will mute the effect of blockbuster projects.

He said the 76ers facility, in particular, would have little impact if the building is not open for community events. "The players aren't going to live in Camden," he said.

A 76ers spokesman did not respond to a request for comment.

Keeping them in Camden

"Now is the time for Camden to really look at mixed-used residential development," said Fiorenza, who acknowledged conditions in the city make that a daunting challenge.

"A lot of the (large) business projects, they're visible to the public and they make good press releases," he said.

"But longer term, the best way to grow an area is to keep people there longer than a day, and the best way to do that is through housing."

The EDA endorsed that view in May when it approved $6.1 million in aid for a $17.3 million project to house students and staff at Cooper Medical School of Rowan University. The EDA said the Broadway project — with 59 apartments holding 106 bedrooms — would help stabilize a downtown neighborhood while attracting new stores.

'Race to the bottom'

Some critics question the value of corporate tax breaks, calling them a costly and ineffective way to attract or keep a business.

Executives are more likely to choose locations based on factors like transportation costs, access to supplies and customers, and quality of life concerns, said Julia Sass Rubin, an associate professor at Rutgers University's Bloustein School of Planning and Public Policy.

"Ironically, the good infrastructure and high quality public schools that attract companies to a location draw on the same tax dollars that the tax abatements divert to corporate profits," she said in a recent online statement.

She called tax breaks "a race to the bottom for municipalities and states, with corporations playing them off against each other to get the largest gift they can from the taxpayers."

According to the EDA, Holtec said it would put its plant in South Carolina without a tax break. The 76ers said state aid was "a material factor" in the team's decision to leave a practice facility in Philadelphia.

NJPP last month reported the state has awarded more than $4 billion in tax breaks and credits to businesses this decade, including more than $1 billion in 2014. The organization asserted that reflects "a largely unsuccessful attempt to spur economic activity and boost the state's crawl out of the Great Recession."

But Camden Mayor Dana Redd said the state's strategy — and the 2013 law — have fueled "a tremendous surge in businesses seeking to locate or expand in the city."

Critics also asserted the state's generosity has stirred resentment among both city residents and suburbanites.

"It doesn't send a good message politically to the middle class," Fiorenza said. "Are there any tax credits or grants for them?"

State Sen. Michael Doherty, R-Warren County, blasted the state aid to the 76ers, saying the planned facility "will essentially be a free gift from the hard-pressed taxpayers of New Jersey to Joshua Harris, the billionaire owner of the team."

Alex Law, an activist from Haddon Township, complained that the deals announced so far appear to help political insiders. He noted George Norcross III, an insurance executive and prominent South Jersey Democrat, serves on Holtec's board, while his brother, attorney Philip Norcross, represented the 76ers in their move.

The Economic Opportunity Act was sponsored by a third brother, state Sen. Donald Norcross, D-Camden. The legislator, who's running for Congress, in May received more than $10,000 in campaign contributions from Holtec's president.

"It makes me uncomfortable that the people driving these deals have a financial stake in them," said Law, a 23-year-old consultant and community organizer.

Donald Norcross offered a different view.

"Anybody who can help or advocate for jobs should be applauded and encouraged to drive economic development," he said.

Reach Jim Walsh at jwalsh@ courierpostonline.com or (856) 486-2646.