Why Camden and Its $1 Billion in Tax Breaks Isn’t Growing at Philly’s Expense
Since September 2013, when Gov. Chris Christie signed into law New Jersey’s Economic Opportunity Act of 2013, the state has approved more than $2 billion in tax credits and incentives for the recruitment and retention of jobs and capital investment. A main focus of the Act was to incentivize development in economically distressed areas — especially Camden.
As a result, more than $1 billion in tax credits have been approved for companies to relocate or expand in Camden such as Holtec International, the Philadelphia 76ers, Subaru, American Water, Lockheed Martin, European Metal Recycling, and Cooper Health. (See the table below for more detail.)
Tax credits of $1 billion certainly sounds impressive and grabs your attention, but it’s unlikely that any of the companies will have enough New Jersey Corporate Business Tax liabilities to utilize all the credits. However, the attraction and value of the Grow NJ tax credits is that the credits may be monetized by selling them to other taxpayers at a small discount. This effectively becomes an alternative financing mechanism for the capital investment these companies are making in Camden. In effect, the tax credits become a series of cash grants spread over ten years.
In a similar period, Philadelphia has not appeared to have had nearly as much success. Philadelphia has some notable wins that include public, global companies such as Axalta, Hill International and FMC, as well as national companies such as Dietz & Watson and EisnerAmper. Additionally, the Philadelphia Navy Yard, assisted by the Keystone Opportunity Zone incentives, continues to add new businesses and capital investment. However, Philadelphia’s success does not have the same jaw dropping numbers to match Camden. However, one should be cautious to interpret the appearance of more success across the river as a lack of success in Philadelphia.
With that said, who’s city is winning, Philadelphia or Camden? That’s not an easy question to answer and definitely requires time to measure the jobs created and the spin off of intangible impacts that are often difficult to quantify. Success from an economic development perspective is relative, and it’s important to understand the stated objectives before results can be determined. It’s interesting to note a large majority of the companies investing in Camden are merely relocating from another location within New Jersey and many of those are moving only a few miles. (The big exception is the 76ers.) At this point, none of the companies noted above have yet to make their moves as the development process takes time. Therefore, time is needed to answer the question as to whether either city is winning.
With all the buzz in Camden, the next question is whether Camden is winning at Philadelphia’s expense. This again is a very difficult and complex question. What we do know is that many of the companies that have chosen Camden also considered Philadelphia. The 76ers, Subaru and EMR all considered Philadelphia. But was there real intent to possibly locate in Philly or was the city just used as leverage to increase the incentives package from New Jersey? If we merely look at the companies that have crossed the river one way or the other, there’s a pretty clear trend east when you consider the likes of the 76ers, Destination Maternity and Amoroso. However, there are also companies that have gone west to make or enhance their Philadelphia home including Deitz & Watson and Hill International. Again, time is needed to make this assessment, and very smart people may come to different answers.
In the end, this is doesn’t need to be and likely isn’t a zero sum game. The continued develop of the regional economy should be beneficial to all. Job growth is key because the retention and creation of employment opportunities across multiple disciplines will help to spur continual growth and ensure that both Camden and Philadelphia experience commercial revitalization that is long overdue.
Matt Wilk is the director of the State and Local Tax Group at EisnerAmper LLP. He can be contacted at email@example.com.
|Company||Incentive to Move to Camden|
|Holtec International||$260 million|
|EMR Eastern||$252.7 million|
|American Water Works||$164 million|
|Subaru of America||$118 million|
|Lockheed Martin||$107 million|
|Philadelphia 76ers||$82 million|
|Cooper Health System||$40 million|
|Volunteers of America Delaware Valley||$6.3 million|
|Plastics Consulting and Manufacturing||$3.9 million|