TRENTON – Legislation sponsored by Senator Nicholas P. Scutari to prohibit the state from providing tax incentives, loans or subsidies to businesses that owe New Jersey money from previously awarded subsidies is now law.
“It is financially irresponsible to provide companies that have failed to repay previous loans or subsidies with new ones,” said Senator Scutari (D-Middlesex, Somerset, Union). “The economic incentives are intended to stimulate growth in the state, and we have to take steps to protect against companies taking advantage of these subsidies. Prohibiting the award of incentives to companies already in default to the state is common sense.”
Under the law (S2896), a state public body will be prohibited from awarding an economic development subsidy to a business that was previously awarded one in the form of a loan or loan guarantee and is in default. In order to receive a financial incentive, the company would first have to pay any outstanding balance owed to the state in full.
A report by the Associated Press highlighted the case of a Camden developer who received millions of dollars in incentives from the state despite owing more than $6 million on a previous unpaid state loan. The news agency reported that the state awarded $13.4 million in tax credits to Broadway Associates 2010 LLC, a real estate development company controlled by Pennsylvania developer Israel Roizman, to refurbish 175 low-income housing units. He received the tax break despite owing $6.2 million to New Jersey’s Housing and Mortgage Financing Agency in unpaid principal and interest on a loan that has been overdue by several years. That loan was for a development called Camden Townhouses Development, according to the report.
Senator Scutari said the law will prevent these kinds of situations from occurring again. “We cannot reward companies that are behind on payments to the state, especially when it is coming at the taxpayers’ expense,” he said. “Just like any financial institution would evaluate its risk when considering loan applications, the state must do the same.”
The law defines “economic development subsidy” as funds to a business from a State public body with a value of greater than $25,000 for the purpose of stimulating economic development in New Jersey, including, but not limited to, any bond, grant, loan, loan guarantee, matching fund, tax credit or other tax expenditure.
The Senate approved the bill by a vote of 37-0. The Assembly approved it 75-0. The Governor’s Office announced today the bill has been signed.