Finding big benefits to thinking smallerOversized incentives get the headlines, but more firms find assistance in BEIP and BRRAG
Outsized business incentives like the Urban Transit Hub tax credit have put New Jersey on the map with competing states and corporate site selectors. But smaller programs have served as the economic stopgaps, adding or saving thousands of jobs while the Garden State waits to realize the benefits of long-term development projects.
Since unemployment started to spike five years ago, tools like the
Business Employment Incentive Pro-gram and the Business Retention and Relocation Assistance Grant have helped ease the drain on state tax rolls. BEIP awards made after 2007 have produced more than 7,700 jobs, according to data from the Economic Development Authority, though the actual total is likely higher because of delays in reporting.
BRRAG, meanwhile, has helped New Jersey retain about 14,800 jobs through awards granted to companies in the same period, EDA data show.
"It's not always going to be the big project that satisfies the state's criteria," said Jeffrey Rich, an attorney and head of the real estate practice at Genova, Burns, Giantomasi & Webster, in Newark. "And I think these smaller projects in the aggregate have significant impacts to the economy."
Changes may be in store for the 16-year-old BEIP, which gives grants to firms that relocate here or expand within the state. For several months, lawmakers and industry leaders have been discussing an overhaul of the state's incentives, including a possible expansion of BEIP or a merger of multiple programs.
But hundreds more jobs could still come online from the BEIP and BRRAG programs, which have become increasingly fruitful after being awarded. About 81 percent of BEIP grants and 77 percent of BRRAG awards approved since last year have been executed, EDA spokeswoman Erin Gold said, meaning their recipients have closed on their agreements and can start to fulfill the job requirements needed to receive the grant.
Anecdotally, only about half of all awards approved before 2011 had been executed, Gold said. She attributed the uptick to the EDA's alignment with Lt. Gov. Kim Guadagno, who reaches out to businesses approved for incentives; the state's Business Action Center, a customer service-type agency; and Choose New Jersey, a nonprofit business attraction group.
BEIP and BRRAG incentives have helped companies ranging from tiny startups to global corporations, but with different impacts, said Ted Zangari, a Sills, Cummis & Gross real estate attorney who chairs the firm's redevelopment law and public policy practice groups. For large firms, the awards can help tip the scales when executives are deciding between states with similar work forces, accessibility and other key features.
"Incentives only make a difference in corporate location decisions when all other factors between states are roughly equal," said Zangari, founder of the Smart Growth Economic Development Coalition, which advocates for business incentives. "Then, and only then, does the company evaluate the financial incentive packages that may make one state more competitive than another state financially."
Such packages will defray the high cost of doing business in New Jersey for companies like Church & Dwight, which last year opted to stay here rather than leave for Pennsylvania. The Princeton-based firm was approved last year for a $2.7 million BEIP and a $13.5 million BRRAG, supporting the retention of about 1,000 jobs, the creation of 100 positions and an upcoming move to a new headquarters building in Ewing.
But for a startup with limited resources, an incentive to expand can be "vitally important," Zangari said. "Every dollar saved on rent, like with any entrepreneur, is a dollar they can spend on hiring another employee" or purchasing additional furniture, fixtures or equipment.
A potential $1.1 million BEIP grant helped lure Celsion Corp., a biotech firm focusing on cancer treatment, from Maryland to Lawrenceville this year. By January, the firm of about 20 expects to have the results of a clinical trial, which could allow it to add sales and marketing employees if the outcome is positive, said Jeffrey Church, Celsion's senior vice president for corporate business strategy and investor relations.
The state will not start paying the grant until Celsion starts to add jobs, but Church said the commitment can be reassuring to investors in a startup, especially before it is able to build a revenue stream.
"They certainly look at that in a very positive way, that you're able to bring in money, and that the local jurisdiction that you're in values you," Church said.
BEIP and BRRAG incentives lead to quicker turnarounds because of lower eligibility thresholds and the lack of a capital investment requirement, Zangari said. Yet it's crucial for the state to also have outsized incentives in order "to be all things to all people. … And our programs cannot be one size fits all. They have to be adaptable so that we can accommodate that company — and all things being equal, be able to match or exceed whatever stipend that company is being offered by a competing state to close the deal."
And while robust incentives are needed to keep the state competitive, the importance of a stronger business climate cannot be understated, said John Boyd, principal of The Boyd Co. Inc., a Princeton-based relocation consultant. He said such improvements under Gov. Chris Christie have been important "because incentive packages have been so homogenized nationally over the past decade or so."
"The number-one thing that distinguishes one state's incentives versus another … is really responsiveness and accountability," Boyd said. "And that starts with the governor's office. This governor gets it."
E-mail to: firstname.lastname@example.org
On Twitter: @JoshBurdNJ