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Smart growth group defends transit hub incentive in wake of critical report

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While a national think tank panned the Urban Transit Hub tax credit in a report on economic development incentive programs, a smart-growth group said the program has been successful, though its expansion beyond the nine urban centers first targeted by the legislation has weakened its impact.

"From Teachers Village, in Newark, to the Gateway Transit Village, in New Brunswick, it is clear that these projects are absolutely helping to cluster economic growth around transit hubs," Economic Development Authority spokeswoman Erin Gold said in an e-mail. "The major reason why (Panasonic Corp.) was looking for a new facility in the first place was to encourage its employees to use transit, which was not really possible in its current location. So that's over 800 employees that will now have greater access to transit."

The Good Jobs First criticism, first reported in The Record, said expansions to the original program — including the Grow New Jersey component, which set aside incentive dollars in suburban settings not well-served by mass transit — caused the program to become "a very costly corporate tax giveaway with little connection to transit accessibility," though its "new-job creation incentive … is noteworthy."

Peter Kasabach, executive director of the smart-growth group New Jersey Future, said Urban Transit Hub has "had its growing pains." He called $250 million incentive to Prudential Financial "questionable," but said "other corporations in and out of the state are now looking at Newark and figuring out how to move there, too" as a result of the Prudential incentive and Panasonic's relocation from Secaucus, which he said "wouldn't be happening without the program." Panasonic was awarded a $100 million incentive to build a new headquarters in Newark.

While state Sen. Raymond J. Lesniak (D-Union) doesn’t disagree with the report’s inquiry of the program’s benefits as it fuels intrastate job competition, he said the think tank failed to acknowledge “this is a race, and we’re not the only state going after” companies in New Jersey looking to relocate.

“Because we have competitive disadvantages with other states, we have to have these types of incentives to remain competitive even with companies that are already here,” Lesniak said. “Without this program, we’d be shut out.”

While the report said the state could improve the program's impact on economic development by tracking commuters' transit usage, Kasabach said the initiative has been "effective if you measure it against what it was intended to do — reverse decades of disinvestment and begin investing in these specific urban transit places, not to create net jobs for New Jersey or have everyone working for a company that received an incentive take public transit."

But Kasabach agreed with the report's criticism of the Grow New Jersey program, which "dilutes funding that should be going to the transit areas."

"Grow New Jersey has very loose geographical criteria, so it doesn't have that same kind of geographical focus for direct investments like Urban Transit Hub. It should be looking at where investments are needed — like in places that wouldn't have economic development without subsidies — instead of subsidizing a large swath of the state of New Jersey," Kasabach said. "For the program to be most effective, incentives need to be more targeted to projects and places that actually need the investment."

But Lesniak said the Urban Transit Hub, Grow New Jersey and tax-increment financing programs that he sponsored in the state Legislature are working together to encourage development, foster job growth and job retention and stave off competition from other states.

“We want to encourage job creation in urban areas near mass transit, but we also want to create jobs in urban areas outside of mass transit,” Lesniak said. “The point is to encourage economic development everywhere in the state of New Jersey, and these tax credits are necessary to make that happen.”

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