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N.J. offers Sixers $82 million in tax credits

In one of the most generous development deals in state history, New Jersey awarded the 76ers $82 million in tax credits over 10 years to build a practice facility on Camden's waterfront.

Sixers CEO Scott O'Neil and Camden Mayor Dana Redd mug for the camera Tuesday after the New Jersey  Economic Development Agency approved an $82 million deal for the 76ers to build a practice center and move its headquarters to Camden.
Sixers CEO Scott O'Neil and Camden Mayor Dana Redd mug for the camera Tuesday after the New Jersey Economic Development Agency approved an $82 million deal for the 76ers to build a practice center and move its headquarters to Camden.Read moreTOM GRALISH / Staff Photographer

In one of the most generous development deals in state history, New Jersey awarded the 76ers $82 million in tax credits over 10 years to build a practice facility on Camden's waterfront.

The dollar-for-dollar exchange allows the Sixers to recoup every cent they spend - not to exceed $82 million - on construction of a 120,000-square-foot state-of-the-art facility and team headquarters.

For Camden, it means 250 new jobs - about 200 of which are already filled by Sixers administrators, players, and staff - and the hope that the state-of-the-art behemoth lures additional developers to its tax revenue-strapped city. The state predicts the deal will net $76.6 million over 35 years, but naysayers called the projection inflated and questioned how the move will help local residents.

"This will be the biggest and best training facility ever built in the U.S.," Sixers CEO Scott O'Neil said at a news conference Tuesday, after a meeting of the state's Economic Development Authority (EDA) at which the board voted unanimously to approve the project.

Standing beside O'Neil, Mayor Dana L. Redd called it "a catalyst for change" in Camden.

"Today would not be possible if it were not for the belief that Mr. O'Neil had in our city to help us write a new story and set us on a new trajectory," Redd said. "I could not be more grateful today. I am elated for my city."

O'Neil said that until four months ago, the team had plans to build at the Navy Yard in Philadelphia but the tax credits in New Jersey allowed it to take "a whole other step in terms of size and scope of the project."

Philadelphia showed the team six potential locations for the facility, but Mayor Nutter said last week, when news broke that the team was headed to Camden, that it was hard to compete when "you have the State of New Jersey literally throwing money at the 76ers."

The team will continue to play its games at the Wells Fargo Center in Philadelphia, but once the Camden facility is built in 2016, the team will practice there instead of the Philadelphia College of Osteopathic Medicine, where it has been since 1999.

The deal, gleaned from the pages of the Economic Opportunity Act of 2013, guarantees an $8.2 million tax credit annually that the Sixers can use or sell, so long as they employ 250 people in Camden and stay in the city for 15 years.

The EDA did not yet release what the team will pay to lease the four acres near the Susquehanna Bank Center on the southeast corner of Delaware Avenue and Martin Luther King Boulevard.

EDA president Timothy Lizura said the $76.6 million in benefits are spread out between the city and state and include direct benefits such as New Jersey wage taxes and indirect "ancillary economic effects," including possible retail and restaurant space that may open around the area.

The players will now have to pay a New Jersey wage tax for the time they spend practicing in New Jersey, under federal tax code.

The Sixers payroll is around $52.1 million. Players pay Philadelphia wage taxes on days they have home games and pay other city wage taxes when on the road. There isn't a set number of practice days, but O'Neil said the facility would be used year round.

The Economic Opportunity Act extended the availability of tax credits in Camden and sets no cap on incentives for capital investments of $30 million or more where 250 or more jobs are created.

While local politicians celebrated what will be a glamorous waterfront tenant, two policy groups, and a state senator called the deal too generous.

The New Jersey Policy Perspective, a liberal-leaning watchdog group, called the deal "among the worst we've seen under the Economic Opportunity Act."

Gordon MacInnes, president of the group, noted that the $82 million credits translate to about $328,000 in state tax dollars for each of the 250 jobs the deal brings.

The average median salary for those jobs is $45,000.

"I don't remember anything ever done in New Jersey that even approached that figure," MacInnes said.

MacInnes' group published a report this month that says the state has given out $4 billion in corporate tax breaks over the last decade, yielding few improvements in the state's economy. The EDA approved nearly $190 million in tax breaks at Tuesday's meeting.

In Camden, more than 52 percent of the properties are tax-exempt, and taxpayers provide just $24 million of the $181 million budget. The state contributes $113 million of the budget. Unemployment is at a staggering 16 percent, and 42 percent of residents live below the poverty line.

State Sen. Michael Doherty (R., Warren), who voted against the Economic Opportunity Act, called the deal particularly surprising given New Jersey's budget problems. "New Jersey is struggling to meet its budget gap, it can't make a full pension payment, state reimbursement for certain programs are being cut to the bone, and here we're giving $82 million dollars, the entire cost of the development project, to the owner of the 76ers, a billionaire," Doherty said.

He alleged the deal was fueled partly by South Jersey political connections.

The Sixers are being represented in the development deal by Philip Norcross, an attorney with Parker McCay who specializes in public financing. Norcross is the brother of powerful South Jersey political figure George E. Norcross III and of State Sen. Donald Norcross (D., Camden), who sponsored the Economic Opportunity Act.

The four acres, currently a vast expanse of parking lots, will undergo two years of construction beginning in October, with a completion date of June 2016. The facility will include a 60,000-square-foot practice facility with two basketball courts, fitness training and rehabilitation space, player and coaching staff locker rooms, an audio-video review room, broadcast media facilities, a player lounge, support facilities, and office space. A connected three-story commercial building, also 60,000 square feet, will house business operations, offices, and storage.

There are no plans to open the facility to the public, O'Neil said. Typically, practice facilities are privately operated, though he said he wouldn't discount the possibility of children's programming, such as athletic camps.

For Camden's waterfront, which draws about three million people annually to the aquarium, Riversharks ballpark, and Susquehanna Bank Center, the hope is, once they build it, more development will come.

Resident Kelly Francis, a lone public voice at the meeting, which was held just 48 hours after the incentive package was made public, is skeptical of that expectation.

"They tried this 22 years ago with the Susquehanna Bank Center. It was supposed to do the same thing - lure in businesses. It hasn't happened," he said.

Francis said he would prefer industrial use of the space, which he said could bring in more entry-level jobs.

Raymond Lamboy, president and CEO of the Latin American Economic Development Association in the city, said that with roughly 14,000 residents unemployed, the city needs to bring in companies with jobs more suited to residents.

"These are great developments, these are positives for the city's image, but we have to take these and also look for opportunities to bring in jobs for people today," he said.

Redd said training programs would be available to residents to prepare them to apply for these and other jobs. A PriceRite and a ShopRite are due to open in the city, and Redd said more announcements are coming.

"The ancillary services that are going to be needed provide a great opportunity for small businesses, to reap rewards," she said. "There's going to be a spill-over effect."