A special task force appointed by New Jersey’s governor to investigate the state’s multibillion-dollar tax-credit programs released an extensive report Monday evening, finding that two powerful brothers – lawyer and lobbyist Philip Norcross and South Jersey power broker and businessman George E. Norcross III – enjoyed outsize influence over the tax-break legislation and its financial benefits.
Conner Strong & Buckelew, the insurance brokerage headed by George Norcross, and two other firms that partnered with the company to build an office tower in Camden collectively were approved for $245 million worth of tax credits in 2017. The report found that the Economic Development Authority’s “failure to investigate the red flags in these companies’ applications could have resulted in over $70 million in improperly approved tax-incentive awards."
The law firm led by Philip Norcross, Parker McCay, and its clients “appear to have had a significant impact” on the Economic Opportunity Act of 2013, investigators found, pointing to draft copies of the legislation and internal email exchanges the task force obtained.
The law expanded the Grow New Jersey tax-credit program, which has directed about $1.6 billion to companies pledging to invest in the long-struggling city of Camden.
As a result of influence by “special interests” during the legislative process, the report found, the law was “structured to favor certain parties while disfavoring others in certain respects.”
At a court hearing earlier Monday, a group of plaintiffs including George Norcross, the Parker McCay firm, and Cooper University Health Care, whose board is led by George Norcross, tried to stop the task force from releasing the report. But a Superior Court judge ruled that the public had a right to see the report as the Legislature weighs how to handle the tax-credit program, which is set to expire at the end of June.
George Norcross and the companies sued Gov. Phil Murphy last month, arguing that the governor created the task force unlawfully.
When The Inquirer asked Norcross spokesperson Dan Fee to comment on the release of the report, Fee, who is also a spokesperson for the plaintiffs, issued the following statement:
“We will continue this litigation in an aggressive manner to protect our rights.... Our litigation has never been about blocking an investigation, but rather to ensure that the Governor’s Task Force gave each firm basic due process rights, including the opportunity to present fully the facts about their companies, their applications, and their decisions to move to Camden."
Fee also said that on Tuesday, the firms will ask state legislative committees reviewing the tax incentive programs "to allow us to participate in their hearings and will fully cooperate in their review, just as we are already cooperating with the state Attorney General’s Office in its inquiry.”
Attorney General Gurbir S. Grewal announced an inquiry into the tax-credit programs in January after a scathing audit by the state comptroller told of significant oversight problems at the EDA.
“There is a great story to tell about Camden, why these firms are moving or expanding there, and the process each followed to be approved for tax incentives,” Fee said in the statement. "Beginning with the legislative hearings, we will tell it.”
Murphy’s office declined to comment Monday evening.
The governor created the task force through an executive order after the comptroller’s report in January. Chaired by Rutgers University law professor Ronald Chen, the task force hired two outside law firms to serve as special counsel.
So far, the team has held two public hearings, and in April it announced one criminal referral to law enforcement, citing evidence of “unregistered lobbying.” Investigators did not name the subject of the referral.
This is the first report the task force has issued during its ongoing investigation. Among the companies the report examined was Cooper, which was awarded about $40 million in incentives in December 2014 to move office jobs from existing locations in Cherry Hill and Mount Laurel to Camden.
The task force said it found evidence suggesting that Cooper was never seriously considering relocating jobs out of state. Had the EDA calculated the award based on Cooper’s initial representation — that no jobs were at risk of leaving the state — the company would have won just $7 million in tax breaks, the report says. Cooper filed an updated form within a few days of its initial one, mentioning an alternative site.
Investigators pointed to a Nov. 25, 2014, email sent by a Cooper executive to a real estate broker that said Cooper needed a term sheet — a document outlining terms of a business agreement —for an office location outside of New Jersey to include in its application for tax credits.
"I need a credible location that is LESS expensive than L3” (a building on Federal Street in Camden), wrote Andrew Bush, Cooper’s vice president of real estate and facilities, to Jon C. Sarkisian, executive vice president at the real estate firm CBRE. Cooper ended up moving to L3.
Bush asked if the broker could secure a term sheet for 120,000 square feet of office space, suggesting the Centre Square building at 1500 Market St. in Philadelphia.
“No probability of us moving to Center Sq, so I don’t want to make too much noise,” Bush wrote.
“The obvious reference is that Mr. Bush was asking Mr. Sarkisian to provide a sham term sheet that could be supplied to the EDA as evidence of its bona fide intent to relocate outside New Jersey, when in fact Cooper Health had no such intention,” the task force report said.
EDA ultimately calculated its award for Cooper based on Bush’s representation to an agency underwriter that the company was considering relocating to Philadelphia, the report said.
In an op-ed column on NJ.com last week, a Cooper Health spokesperson wrote, “The bottom line is simple. Cooper never certified that any jobs were at risk of leaving the state, and the law did not require it to do so.”
The task force made nine recommendations in the report, largely aimed at improving legislative transparency and oversight functions within the EDA.
Future laws should be designed “without favoring specific business interests,” the report said. And any new legislation, it said, should direct the EDA “to use a qualified professional services firm to conduct rigorous background checks” on applicants.