Camden, once among the most dangerous and impoverished cities in America, has made strides since George Norcross and other officials turned their attention to improving the community on the banks of the Delaware River. | AP Photo The Camden exception: Lawyer for Norcross-linked firm wrote key part of tax credit law

An obscure provision of New Jersey’s tax incentive law that went largely unnoticed has come to the fore in recent weeks amid the growing controversy over the incentive programs.

Most companies applying for tax credits must demonstrate they’re either going to create jobs in New Jersey, eliminate existing jobs or move them out of state.


But when the current law — the Economic Opportunity Act of 2013 — was drafted behind closed doors, an exception was made for companies contemplating a move to Camden. Those companies, an interpretation of the law states, don’t have to show their jobs are at risk of leaving the state, only that the tax credits are instrumental in their decision to move to Camden.

That provision was written by Kevin Sheehan, a high-ranking attorney with the law firm Parker McCay, according to a document POLITICO has obtained. And that carve-out is now the center of debate. One current and one former employee of the New Jersey Economic Development Authority — the agency that oversees the tax incentive programs — testified last week that despite the law’s Camden exemption language, even companies considering a move to the South Jersey city must show the jobs are at risk of leaving the state in order to qualify for some or all of the incentives.

Parker McCay’s managing shareholder is Philip Norcross, the brother of South Jersey Democratic power broker George Norcross, whose insurance brokerage — as well as the hospital system he chairs — has been awarded huge tax credits for Camden projects through the incentive programs.

U.S. Rep. Donald Norcross (D-N.J.), George Norcross’ other brother who was a state senator at the time, was a co-sponsor of the bill and would later repeatedly claim to have “led the charge” for its passage.

The Camden-specific provision has taken on new relevance as a task force appointed by Gov. Phil Murphy examines whether several companies that received hundreds of millions in tax incentives ever really planned to leave the state, even though they indicated they would.

One of the companies is Conner Strong & Buckelew, the insurance brokerage run by George Norcross. Two of the others are NFI and The Michaels Organization, which are partnering with Conner Strong to build a nearly-completed new headquarters in Camden that they will share. Combined, the companies were awarded $245 million in tax credits for the new headquarters, credits they have yet to collect. A nonprofit George Norcross chairs, Cooper Health System, received a $40 million tax credit to relocate jobs from one part of New Jersey to Camden.

New Jersey has had tax incentive programs for businesses for more than 20 years, but the Economic Opportunity Act of 2013 vastly expanded them. Of the roughly $11 billion in incentives awarded by the state, about $7 billion have come under the new law, which was written to devote more resources to Camden.

Camden, once among the most dangerous and impoverished cities in America, has made strides since George Norcross and other officials turned their attention to improving the community on the banks of the Delaware River. Crime is down and the skyline is being reshaped. Norcross and others call it a “renaissance.” But Camden still faces daunting challenges, from block after block of vacant properties to a population struggling to make enough money, with more than a third living in poverty.

The incentive programs are set to expire July 1 unless they are renewed by the state Legislature. Murphy campaigned on paring down the awards, and since taking office has called for more narrowly-targeted programs with strict caps. Senate President Steve Sweeney, a Norcross ally who helped usher the current law through the Legislature, has called for reauthorizing the programs without major changes.

During a hearing conducted May 2, the task force publicly displayed excerpts from documents from the three Norcross-linked companies that allegedly suggested they obtained quotes for office space in Philadelphia to show that hundreds of New Jersey jobs were at risk of moving there. The quotes, however, were cursory and demonstrated a lack of intent to actually move, the task force‘s lead attorney, Jim Walden, suggested.

In response, Dan Fee, a spokesperson for both George Norcross and Conner Strong, cited the Camden provision.

“As the authorizing legislation makes clear, under the 2013 Grown NJ reauthorization, firms that want to move to or expand in Camden have to confirm that the provision of tax credits are a material factor in their decision to do so; they are not required to have an alternative out of state location,” Fee said in a statement last week. “That's due to the fact that Camden was the poorest and most dangerous city in the state (and part of the new NJ Growth Zones), but the requirement that there be a net benefit to the taxpayers did not change.”

Despite the alleged deficiencies in the office space quotes, George Norcross’ allies have stressed that Conner Strong already has a dual headquarters in Philadelphia, so moving its office there from Marlton, N.J. would not have been a stretch.

“While a company that was considering moving to Camden was not legally required to certify that they were considering leaving the state, all three companies … seriously considered doing so,” Fee said in a statement Thursday.

George Norcross, a South Jersey native, has defended the tax breaks as necessary to rebuild Camden. Fee said in a Thursday email that George Norcross played no role in Sheehan’s insertion of the exception for Camden projects.

“Conner Strong has dual headquarters in Philadelphia and Marlton. As the firm recruited new staff, it found it increasingly difficult to attract workers to travel to Marlton,” Fee said. “As its lease was expiring in Marlton, it planned to consolidate its headquarters in one location that would allow it to continue to attract and retain high caliber staff. While there were strong arguments for consolidating in Philadelphia — the firm already had 100 staffers in the city — because George Norcross and his partners are committed to Camden, they wanted to move the firm's national headquarters and hundreds of jobs to Camden.”

Walden at last week’s hearing also questioned whether Cooper Health System ever intended to move back office jobs from Cherry Hill and Mount Laurel, N.J. to Philadelphia despite telling the EDA it was looking at office space there.

A spokesperson for Cooper stated last week that the health system did not say on its November 2014 application for tax incentives that jobs were at risk of leaving New Jersey. However, Walden presented information during last week’s hearing that showed a representative for Cooper Health toured office space in Philadelphia in late 2014, after Cooper Health had filed its application, and provided the EDA with a letter of intent to lease there.

According to its minutes from the approval of Cooper Health’s $40 million tax incentive in December 2014, the EDA stated on page 199 the tax credits were a “material factor in the company’s decision whether or not to locate the project in Camden” and that “the main alternative option is to relocate to Philadelphia, PA.”

Fee said that despite the EDA minutes and the documents shown at the task force hearing, Cooper never intimated that its jobs were at risk of leaving New Jersey.

“If the EDA meeting minutes you reference indicate otherwise, then those minutes are inaccurate,” Fee said. “Cooper's application and accompanying certification did not state that any of its jobs were going to move out of New Jersey. In fact, Cooper unambiguously responded ‘N’ on its application when asked if any jobs were ‘at risk’ of leaving New Jersey.”

Fee added that Cooper looked at Philadelphia office space after it filed its application because it “was asked by the EDA to provide comparable data for ‘alternate’ locations.”

Whether Cooper ever represented it planned to move office space to Philadelphia matters because, according to expert testimony at the task force hearing, a company’s representation that jobs are at risk of leaving the state is a major factor in determining the size of the tax credits it receives — or even whether it receives tax credits at all.

The Economic Opportunity Act of 2013 went through many revisions before it was signed by then-Gov. Chris Christie. The landmark law overhauled New Jersey‘s tax incentive programs, expanding them and removing a $1.75 billion cap on the total awards that could be given out as part of what would become the biggest of the programs, Grow NJ.

A draft copy of the bill obtained by POLITICO — which has been reported on by the New York Times and referenced extensively during last week’s hearing — shows line changes made by three people in June 2013, including Sheehan, the chair for real estate and land use at Parker McCay.

Sheehan and a spokesperson for Parker McCay did not respond to multiple requests for comment via phone and email.

An earlier draft of the bill stated that top executives for companies seeking tax incentives have to submit a certification indicating that jobs are at risk of leaving New Jersey. Sheehan, according to the documented draft edits, inserted language that stated “provided, however, [it] shall not be required with respect to projects in the Garden State Growth that qualified as an MRERA.”

(MRERA — the Municipal Rehabilitation and Economic Recovery Act — is a 2002 law that applies solely to Camden, enabling the state government to take over many of its functions. That language Sheehan inserted was later slightly modified but ultimately made it into the final version of the the law, however it no longer included the words that businesses looking relocate into Camden “shall not” show existing jobs are at risk of leaving the state. During the task force meeting, Walden stressed that within the EDA there were two interpretations of the requirements.)

The draft edits also show Sheehan inserted language that stated explicitly that there would be no limit on how much in total incentives the EDA could award, writing “there shall be no monetary cap upon value of credits approved by the authority.”

Fee stated that “the legislative committee in 2013 specifically said projects in Growth Zones were ‘exempt’ from showing that a job is ‘at risk’ as part of the net benefits test.”

“Any statements to the contrary are simply wrong under the law,” Fee said, adding that Conner Strong and the companies it partnered with nevertheless “seriously considered” moving to Philadelphia.

But that’s not actually how the law worked in practice, according to testimony at the task force’s hearing.

Two expert, the EDA’s former president and chief operating officer and its current underwriting chief, testified that despite the law’s exception for Camden, any company — even one considering moving jobs to Camden from elsewhere in New Jersey — would have to show jobs are at risk of leaving the state or risk performing poorly on a “net benefit test” that would sharply reduce their incentive award, if they were to get one at all.

(The net benefit test requires that projects show they will eventually earn the state 110 percent of the initial tax credit investment, though for projects in Camden that threshold is only 10 percent. The draft edits of the bill show the lower threshold for Camden was inserted by Colin Newman, a Christie administration official, with input from Sheehan.)

During the hearing, Walden, the task force’s lead attorney, asked David Lawyer, the EDA’s managing director for underwriting, if all applicants to the Grow NJ program — which all the Norcross-linked companies applied to — had to show their jobs were at risk of moving out of state.

Lawyer said yes.

“Is that true even where an application proposes to move jobs intrastate from a city outside Camden to Camden?” Walden asked.

“That is my understanding, yes,” Lawyer said.

Tim Lizura, who was the EDA’s president and chief operating officer when all of the applications in question were approved, gave a similar answer.

“If we and the board couldn’t make a finding of at risk, then the net benefits test would be dramatically reduced, and the award that they would qualify (for) would be dramatically reduced,” Lizura said.

Walden then asked a “hypothetical” question: What would happen if the agency found evidence that companies fraudulently claimed jobs were at risk of leaving Camden when they were not?

“It would disqualify the applicant and we would refer that to the appropriate channels,” Lizura said.

Authorities have probed George Norcross’ involvement in tax credits. In September, after POLITICO obtained a document from the U.S. Attorney’s Office for the Eastern District of Pennsylvania that showed George Norcross’ phone had been wiretapped by federal authorities as authorized by that office, a Norcross attorney provided POLITICO with a letter from the New Jersey U.S. Attorney’s Office.

“You have inquired about your client George Norcross’s status in connection with an investigation conducted in the District of New Jersey pertaining to the procurement of tax credits,” read the letter by First Assistant U.S. Attorney Rachael Honig. ”Based on a review of the applicable law and evidence obtained during the investigation, we have concluded that no further action is warranted. Accordingly, this matter has been closed.”

READ THE DOCUMENT: View the draft edits of the bill that led to the Economic Development Act of 2013 here. The document was obtained by POLITICO in Microsoft Word format and printed to a PDF. All changes marked in orange are by Kevin Sheehan of Parker McCay. Changes in purple are by Colin Newman of the governor’s office. Changes in blue are by an unidentified “Default user.”