Inside Camden’s aquarium, in September 2015, a packed crowd gathered for the unveiling of a new development plan: renderings of office buildings, shops, and apartments that would rise up along the city’s sparse Delaware River shoreline.
On hand were Democratic power broker George E. Norcross III, his political ally Gov. Chris Christie, and his friend and onetime business partner, William Hankowsky, CEO of Liberty Property Trust – the publicly traded firm that would oversee the project.
- New Jersey tax credits turned a Camden office complex into a lucrative investment. Now the feds and state AG are investigating
- FBI, Philly prosecutors investigating N.J. corporate tax breaks, sources say
- New Jersey gave companies credit for millions in ‘phantom’ property taxes to qualify for incentives
The vision would take off thanks to a 2013 tax-break law cosponsored and championed by members of the Norcross family and signed by Christie. “There’s momentum in the city,” Hankowsky noted, as he described the $700 million project on stage. Norcross, who formerly co-owned The Inquirer with Hankowsky and others, had personally pitched Liberty on the Camden investment idea.
Yet for a developer that added Comcast’s two towers to the Philadelphia skyline across the river, things in Camden did not go as planned.
Just a year later, in 2016, the relationship between Norcross and Liberty soured, to the point that Norcross and his partners ultimately went with another builder for their 18-story office tower.
Then, in 2018, Liberty announced it was taking a $26 million hit on the value of its Camden venture.
Yet if Liberty’s Camden investment didn’t pay off as expected, it did help others cement control of valuable waterfront land. Chief among them was Norcross, according to an Inquirer review of hundreds of pages of property records and previously undisclosed government documents. Norcross and his fellow investors’ holdings on the waterfront, access to rental income from tax-credit recipients, and ability to tap into additional lending on those properties go beyond what has been previously reported.
Norcross and his business partners now own three properties inside Liberty’s original development, as well as two others nearby, totaling about 10 acres. The portfolio came together between 2016 and 2018.
In all, projects Norcross has invested in along the waterfront have benefited from nearly $290 million in tax credits and other incentives from the state.
Multiple public agencies were involved in the transactions. Consider the three-acre parking lot across the street from the Victor Pub.
Both the Delaware River Port Authority and Camden Redevelopment Agency held interests in the land, which was appraised at $2.3 million in 2015. Public officials agreed to sell it to Liberty for $800,000. After the sale, Liberty gave Norcross and his business partners an option to buy the property — which they eventually did, for $350,000 — or 15 cents on the dollar of the appraised value when it was held by public agencies.
And while Norcross and his partners aren’t allowed to build on the parking lot for five years, they could develop it by 2023 if they choose.
The series of transactions also underscores the influence and reach of the Mount Laurel-based law firm Parker McCay, led by George Norcross’ brother Philip. The firm, which helped write the tax-credit law, also represented Liberty as it sought government approvals for its project — and represented George Norcross’ investor group in its dealings with Liberty.
Norcross has long pitched himself as the biggest cheerleader for Camden — the city where he was born, and set up his first business out of a basement office. He made his name in business as a successful insurance executive and built a powerful political machine in South Jersey. As chairman of Cooper Health System, he turned a struggling hospital network into an economic engine for the region.
Over the last year, however, the tax-credit program and projects tied to George Norcross have come under scrutiny from a state task force. Federal prosecutors in Philadelphia are also conducting a criminal investigation in connection with the incentive program, The Inquirer has reported. One area of interest is a real estate transaction involving the sale of Camden’s L3 office complex, in which Cooper Health owns a stake. The state-owned parcel was sold to private developers for $20 million under its appraised value, The Inquirer found.
Norcross is suing New Jersey Gov. Phil Murphy over the task force inquiry, calling it a political hit job. Some of Norcross’ allies see him as an indispensable asset who helped overhaul the city’s police department, improve schools, and attract unprecedented private investment. To encourage investment in Camden, Norcoss has said, he needed to lead by example.
And he has. The three-acre parking lot sits next to the 18-story tower, known as Triad1828 Centre, built for Norcross’ insurance brokerage, Conner Strong & Buckelew, and two other companies with the award of $245 million in state tax credits. Adjacent to the building, there’s a one-acre parking lot, which the partners bought for $1 from Liberty.
Just steps from the tower, Norcross lives in the 156-unit apartment complex he and his partners built — 11 Cooper — in part with $18 million in state grants.
Walk a couple of blocks south along the waterfront, toward the Adventure Aquarium, and there’s the Ferry Terminal Building, an office building Norcross and fellow investors bought in 2016 for $16.5 million. Half of the building’s square footage is now leased by tenants that won tax breaks to cover their rent.
With new leases in place, the investors were able to take out a $7.6 million second mortgage on the property. The three-acre parking lot was also listed as collateral on the loan.
Each of the buildings has a local property tax abatement on the valuable waterfront land.
Not everything the investors tried worked out. Their control over another parking lot led to pushback from a state agency.
The state’s Economic Development Authority spent $555,000 to build a parking lot next to the Ferry Terminal Building. And the EDA leased the lot to the Camden Parking Authority for public access to the waterfront and events at the nearby BB&T Pavilion.
But the parking authority ended up leasing it to the Norcross group, starting in June 2018, records show.
That arrangement continued into this year when an EDA audit found the lot wasn’t being used for waterfront events, as its agreement with the Camden Parking Authority required. At EDA’s direction, the parking authority eventually terminated the lease with the Norcross group.
But those investors had more success working with Liberty.
When the group bought the Ferry Terminal Building, the investors inherited a long-term parking lease, on land that Liberty would soon acquire for the project.
Those new owners of the Ferry Terminal Building agreed to give up the lease, set to expire in 2021, and in return they got ownership of a multimillion-dollar piece of property, known as Parking Lot Nine, records show.
William Sasso, an attorney for the investors, said they accepted parking on a lot that was farther away from the Ferry Terminal Building. The investors also spent $450,000 on repaving and environmental issues, he said. Some of the parking spaces are reserved for Victor Pub patrons.
The investor group “had a parking lot that was necessary to Liberty’s development and they did a swap, for Lot Nine,” said Sasso, chairman of the Philadelphia law firm Stradley Ronon. He added: “The use of the lot that they were giving up was just much more beneficial to the operation of the building than the one that they got."
Liberty said the transactions it participated in were vital to the waterfront development project. While assembling the land and doing due diligence, “we learned of numerous potential obstacles, the resolution of which was necessary for the project to proceed,” spokesperson Jeanne Leonard said in a statement. The company did not agree to an interview for this story.
Making parking available for the Norcross investor group was “complex and heavily negotiated," Leonard said. “It was not just a simple land sale for $350,000.”
The DRPA said it received adequate compensation for its share of the property. The CRA said that its own interest in the parking lot did not have monetary value, and that it simply shifted its rights from the parking lot to the larger Liberty development.
In the waterfront investments, Norcross has partnered with executives from the logistics firm NFI, including the family of CEO Sidney Brown, and The Michaels Organization, a developer. The partners have personally invested more than $300 million in the development boom, but for now, they are “underwater” on those investments, Norcross told the state Senate in November.
“Nothing would have occurred” in the city without the tax incentives, Norcross testified. Since the law was passed, New Jersey has approved about $1.6 billion in tax credits for companies to move to Camden, one of the state’s poorest cities.
“The question I ask, whenever I get people yelling at me in different places, I say, ‘OK, fine, you don’t like what George Norcross is doing, what’s your plan?’ " said attorney William Tambussi, who represents Norcross’ company. "What’s Plan B?”
Years before the three-acre parking lot ended up with Norcross, it was linked to another development project: ill-fated plans for a tram connecting Camden to Philadelphia. While the Delaware River Port Authority sank $16 million into the concept, it would never be built, earning criticism as a government boondoggle.
By 2016, the DRPA had already abandoned the tram project, but it still loomed over Liberty’s plans. An aerial easement for the tram crossed a swath of the new development site. The company also says it needed the parking lot — known as Parking Lot Nine — to provide the “critical” substitute parking for the Ferry Terminal Building.
In March 2016, DRPA records show, the agency’s board approved the start of negotiations to sell Liberty the parking lot and the air rights.
What happened next shows how a development project heralded as a catalyst for change in Camden also helped the de facto political boss of South Jersey get a bargain deal on land down the line.
Appraisals commissioned by the port authority in 2015 reflected the fact that if the DRPA didn’t finish the tram project by 2026, then the Camden Redevelopment Agency was supposed to regain ownership of the parking lot.
“We do not believe that any significant building will be developed on the site unless a buyer also purchases the reversionary interest owned by CRA,” an appraiser for Valbridge Property Advisors wrote in his report to the DRPA.
The appraisal valued Parking Lot Nine at $2.3 million, based on comparable land sales.
But the Camden Redevelopment Agency did not sell its rights to Parking Lot Nine. Rather, on April 13, 2016, the CRA simply voted to terminate its interest in the property.
In advance of the vote, agency officials received drafts of the resolutions, including language that the CRA would give up its reversionary interest, from a Parker McCay attorney. The firm, led by Philip Norcross, was representing Liberty at the time.
“Attached are the resolutions for the CRA related to the Liberty project that we were asked to have the CRA approve this month,” attorney Kevin Sheehan wrote in an April 4, 2016, email to agency officials.
That same month, on April 15, Philip Norcross had a call scheduled with the DRPA’s deputy general counsel, Stephen Holden, and DRPA Commissioner Jeff Nash to discuss “Liberty Property Trust,” according to a DRPA calendar entry obtained by The Inquirer through a records request.
DRPA chief executive officer John Hanson now says that Holden has “no recollection of the call.”
“He has no notes on it in any of his personal notes,” Hanson said in an interview. “There’s nothing that came out of that call, as far as I can tell, that in any way impacted the negotiations.”
Nash also told The Inquirer he didn’t remember the call. Representatives for Philip Norcross and his law firm would not comment for this story.
Hanson added that he had a “very vague recollection” about an occasion in which Philip Norcross called him and asked for “any information that was in the public record about what we were doing with Lot Nine.”
“To the best of my knowledge, we never negotiated with Phil,” Hanson said. “He was never involved in any way.”
Liberty says the DRPA was aware the parking lot might be used by the Norcross investor group. Hanson disputed that, saying he wasn’t aware of the investor group until after the agency had closed on the sale, and that he didn’t know George Norcross was one of the principals.
All the parties say resolving the tram rights and selling the parking lot involved a complex series of transactions.
One of the DRPA’s appraisals valued the air rights for the tram at $4.2 million, and put the authority’s share at $1.45 million. The appraisal for Parking Lot Nine valued the DRPA’s interest in the lot at $800,000. The total was $2.25 million.
Ultimately, Liberty paid the DRPA $1.3 million: $800,000 for the parking lot, and $500,000 to officially kill the tram project and the air rights.
In addition, Liberty said, the CRA and DRPA were “keenly aware that … Liberty would be expending tens of millions of dollars for improvements to the roads, sidewalks, utilities and other infrastructure” on the waterfront.
Hanson said the parking lot was a nuisance and the DRPA’s rights to the property were tenuous. The DRPA got full value for the property as well as indemnification for potential environmental issues, he said. Besides Liberty, no other entity had expressed interest in buying the property since Hanson started at the DRPA in 2004, he said.
As for the aerial easement, Hanson said DRPA got as much as it could. He also said that, for the time being, the authority was relieved of obligations to pay for the removal of tram structures in the river. The sale helped DRPA get out of the economic development business, he said. The authority maintains four bridges between Pennsylvania and New Jersey and runs the PATCO commuter line.
Hanson could not cite any specific policies that DRPA follows for selling land.
“It’s not a very common thing the DRPA gets involved in,” he said. “And when we do, when it happens, it’s usually because somebody approaches us. We’re not really actively working the economic development business, and we just try to get fair market value for it. That’s the approach.”
In this case, Hanson said, the DRPA’s options for selling the property also would have been limited, because the land was tied to redevelopment obligations for the tram.
For its part, the Camden Redevelopment Agency received no financial compensation in the deal. The agency said it was not a party to the sale of Parking Lot Nine, and had no reason to commission its own appraisal.
The agency, which draws funding from grants, project management fees, rental income, and land sales, has operated at a loss every year from 2014 to 2018, according to its audited financial statements.
The CRA said its reversionary interest in the property was meant to “gain assurance" that the tram “would be built.”
“Any implication that the CRA, directly or indirectly, gave away, conveyed or transferred property rights at less than fair market value is fundamentally inaccurate,” Mark P. Asselta, the agency’s general counsel and a partner at the South Jersey firm Brown & Connery, said in a statement.
Brown & Connery partner William Tambussi has long represented Norcross personally, including in the lawsuit against Gov. Murphy. Tambussi said the firm has not represented any Norcross entities in matters before the Camden Redevelopment Agency.
As the CRA and DRPA negotiated an end to the tram rights in 2016, emails show that Asselta could not participate because of a conflict. Asselta now says that was because the law firm also does work for the DRPA.
In September 2016, George Norcross and his partners acquired the 100,000-square-foot Ferry Terminal Building, for $16.5 million. Built in 2007, the four-story office complex on the river’s edge was the first privately financed building completed in Camden in decades.
The Ferry Terminal had a lease until 2021 for parking on land that Liberty was set to acquire for the big development. Liberty said the new owners also had a “perpetual right” to extend the lease.
But a 2005 developer agreement casts doubt on that assertion, showing the Ferry Terminal could use the land as parking for up to 15 years, but that the site had to be developed for a “higher and better” purpose —such as residential, retail, and hotel projects — or the Camden Redevelopment Agency could purchase the land.
Liberty said it couldn’t recall whether it was aware of the 2005 agreement — though it was referenced in a 2017 contract between Liberty and the Norcross partners, The Inquirer found.
“In any event, we believed that the parking rights of the Ferry Terminal Building were a material impediment to the Camden Waterfront project,” the Liberty spokesperson said.
Once Liberty purchased the lot from the DRPA, in early December 2016, the company gave the Norcross group a “perpetual” lease on the site as well as an option to buy it, according to property records.
When Liberty gave the “perpetual” lease to the Norcross group, Philip Norcross signed paperwork on behalf of his brother and the partners. During this same period, the Parker McCay law firm where Philip Norcross serves as CEO was also representing Liberty on matters related to waterfront development.
Asked about a possible conflict of interest, a Liberty spokesperson said: “We do not wish to comment on the confidential and privileged arrangements with our law firms.”
George Norcross and William Hankowsky’s friendship began in Camden in the 1970s, when Hankowsky was director of community development and Norcross worked for the city. But during the fall of 2016, the relationship between their firms started to fray, over a central piece of the waterfront development: the office tower where Norcross and his business partners wanted to relocate their companies, using tax credits.
One point of contention were the rights held by the developer Carl Dranoff, who built the Victor Lofts apartment building in Camden in the 2000s. Dranoff’s easement restricted how high someone could build on the waterfront, and Liberty had been working on a deal with him to terminate the rights.
In October 2016, Liberty’s general counsel told Philip Norcross that Liberty had been negotiating with Dranoff for months, and was not seeking input from the Norcross camp. Philip forwarded the message to George.
“They don’t view us as party with Dranoff. That says it all. I think I’m at the end,” George Norcross wrote to his brother and business partners in an Oct. 17, 2016, email, a copy of which was provided to The Inquirer by Norcross’ lawyers.
Norcross told lawmakers last month that he and Liberty also clashed over the cost of the building. Norcross and his partners hoped to get tax credits for the project, but they’d need to invest their own money up front to build the tower.
In early December 2016, Liberty trumpeted a milestone: The company had finished the 15-month process of assembling land and development rights for the waterfront project — including the Dranoff easement. Now the company was ready to start building its first project: a new headquarters for American Water.
Negotiations with Norcross and his business partners, however, were another matter. By late December, Liberty was no longer planning to build the office tower, leaving the two sides to settle on a payment for land and infrastructure costs, a Liberty spokesperson confirmed.
On Dec. 30, Liberty’s general counsel, Herman Fala, rejected a $4 million offer. “We have worked diligently and in good faith in an effort to come to mutually acceptable terms with you over the past several weeks,” Fala wrote to Philip Norcross, copying Hankowsky. “We feel that our price for a simple discounted land sale was more than generous, considering our directs costs on this lot. ...”
Sidney Brown, one of Norcross’ partners, expressed bewilderment at the standoff. “I see that we went up 1m, correct? Are we 2m apart? Are they willing to take a potential loss of 20m or 2m? Doesn’t make sense.” Norcoss representatives would not say what the numbers referred to.
But George Norcross indicated he’d had enough. “I’m done,” he said in an email to his partners and his brother. “Phil, can we build on any land around Ferry Terminal or any other EDA- or city-owned land?”
Philip Norcross replied the next morning, New Year’s Eve, saying his law firm would notify the EDA “to table tax credit application due to economics and inability to reach deal with Liberty. … Separately, we will inventory all land along waterfront that may be suitable for office building and deck.”
Yet, in the end, Norcross’ office tower remained within Liberty’s waterfront site. Norcross and his partners revised their tax-credit applications, using another builder — Joseph Jingoli & Son — and won approval for $245 million worth of incentives in March 2017.
The tax credits are granted over 10 years, and companies can use them to offset their tax bills, or sell the credits for cash.
According to the investors’ June 2017 contract with Liberty, Norcross and his partners paid $3 million for their parcel of land, and $3.95 million for infrastructure costs. The contract also addressed a parcel next to the tower site: Liberty had a year to find a buyer for the land and a project, in which case Liberty would give the Norcross group a 50% cut of the deal, no less than $1.5 million.
If Liberty didn’t find a buyer, it would sell the lot to the Norcross group for $1, to be used for parking.
And in the summer of 2018, that’s what happened.
In July 2018, Hankowsky told investors that his firm was exiting the Camden development, because some potential buyers had decided not to proceed with projects, or chose other sites. He also noted that the tax-credit program was set to expire the following year.
For Norcross and his partners, however, the tax-credit program continued to pay off. The Ferry Terminal Building, under their ownership, welcomed two new tenants. Both won tax-credit packages under the 2013 incentive law to facilitate their moves to Camden.
United States Cold Storage, a transportation logistics company, was granted a $9.79 million tax-credit award, and its application indicates that it would pay $867,450 a year in rent, based on a rate of $30 per square foot. Corporate Synergies, an employee benefits brokerage, won incentives worth $15.6 million.
Combined, the two companies leased more than half of the Ferry Terminal Building’s 100,000 square feet.
In December 2018 the Norcross investor group took out an additional $7.6 million mortgage on the property.
An attorney for the business partners dismissed the suggestion that Norcross benefited from the tax-credit law cosponsored by one of his brothers — U.S. Rep. Donald Norcross, who was then a state lawmaker — and written in part by Philip Norcross’ law firm.
“Some people would like to cast a nefarious light on that by saying three brothers were in it for their own personal gain. But right now it’s at their own personal loss,” Tambussi said. Citing negative coverage in the news media and a state task force investigation into the economic development program, Tambussi said: “And frankly it’s a personal toll on each and every one of them.”
He added that George Norcross, who is 63, wouldn’t see a return on his investments until he’s in his 70s. “Time may not allow him to achieve a financial benefit that others might otherwise expect for this type of a deal,” Tambussi said.
Attorney William Sasso put it this way: “You’ve got to put it in context. He didn’t just come out of the blue and say, ‘I’m gonna make money and benefit financially from Camden.’ His whole life has been: ‘Camden deserves to be turned around, and I’m going to help do it.’ Think about all the good he’s done, which I think is incredible.”