Honeywell International has applied for a tax credit under the popular Grow New Jersey Assistance Program less than two years after a different state incentive program was greatly expanded to keep the Fortune 100 company from leaving the state.
The Morris Township-based technology maker is once again considering a move to Pennsylvania as it seeks to modernize its headquarters, according to its application to the Economic Development Authority. The firm said the cost of renovating its corporate campus have spiked since 2010, when it first agreed to keep 1,100 employees in New Jersey, causing it to look to the more lucrative Grow New Jersey program.
Honeywell's commitment at the time came after Gov. Chris Christie pushed legislators to widely expand the Business Retention and Relocation Assistance Grant program, increasing the number of years and amount of money for businesses that plan to keep more than 1,000 jobs in the state. Since then, Christie has routinely cited Honeywell in speeches about his efforts to support and retain the state's businesses.
But in its Grow New Jersey application last month, Honeywell said the scope of its renovation plans has drastically expanded. The firm cites several factors, including assessments of building systems and infrastructure impacted by several unplanned Jersey Central Power & Light power outages, especially during last summer's hurricane.
"The significant increase in the project costs for Morris Township, and the high renovation costs associated with the recently added surrounding facilities further widened the gap between the New Jersey and Pennsylvania options," the company wrote.
Those options still include a build-to-suit facility in Pennsylvania, a redeveloped corporate campus in Morris Township or buying a nearby facility elsewhere in New Jersey, the application said. The company is looking for space that is more modern and uses about half of the 1.1 million square feet it currently occupies.
Ted Zangari, a real estate attorney with Sills, Cummis & Gross, of Newark, said a business would "have a heavy burden to overcome" if it's seeking to "trade up to a more generous incentive program." He noted the incentive programs require the company's CEO certify that it would keep its company in the state in return for the incentive package.
"The business would have to demonstrate (to the EDA) a dramatically changed set of circumstances that have prompted the need to switch incentive programs," said Zangari, one of the top advocates for the Grow New Jersey program. He said new circumstances could include "a significantly larger project, new construction instead of a minor refurbishing or a different facility with higher rents."
Honeywell's application comes as state officials debate whether to raise the $1.5 billion cap on the Urban Transit Hub tax credit program, which is the source of Grow New Jersey tax credits. At its last meeting, the EDA board voted to allow its Grow New Jersey awards to exceed the established $200 million cap within the transit hub program.
State Sen. Raymond Lesniak (D-Union) said today the Legislature is planning to increase the overall transit hub cap by $250 million. The legislation results from a compromise with Christie, Lesniak said, and he expected the governor to sign the bill by Thursday.
Grow New Jersey was signed into law in January, more than a year after the Legislature expanded BRRAG to offer up to $13,500 over six years per job retained, up from $1,500 for just one year. Under Grow New Jersey, certain businesses can receive tax credits, over 10 years, for up to $80,000 per job retained or added.
The amount of the Grow New Jersey tax credit that Honeywell applied for was not disclosed by the EDA. Agency spokeswoman Erin Gold said the application was filed May 22, but declined to comment further, as it is still under review.
Honeywell's application to the program was first reported by The Record. In the story, a Honeywell statement said the cost of redeveloping its headquarters has doubled, from $50 million to $100 million.
Representatives for Honeywell and Christie's office did not immediately return calls for this story.