New Jersey’s Business Lure
A highly touted program designed to lure businesses to New Jersey appears to have survived efforts by local politicos to abolish it – at least temporarily.
Established in 1996 under the direction of former New Jersey Governor Christine Todd Whitman, the Business Employment Incentive Program offers substantial rebates and grants to increase the Garden State’s business competitiveness.
To date, the New Jersey Economic Development Authority, which administers the program, has approved more than $1.2 billion for the program, about $610 million of which has been disbursed. Qualifying businesses must demonstrate that BEIP funds are a key factor for expanding or relocating jobs in New Jersey; guarantee that a prescribed number of jobs will be created; and must stay in New Jersey for at least 1.5 times the number of years of the grant.
But a move by former Gov. James McGreevey to eliminate the program in 2003, plus criticism by local politicos—Republican and Democrat alike—have threatened its future. At the time, McGreevey said the program was “too expensive” and too much of a burden on the already overextended state coffers. His comments followed the state’s inability to fund more than $300 million in approved grants to various businesses that were planning to set up shop in the state.
The EDA was forced to issue bonds to meet the $300 million commitment. State legislators and others still criticize the program for ultimately hitting New Jerseyans with higher taxes in order to pay for the emergency loans and/or bonds that essentially bailed out the program more than five years ago.
Caren S. Franzini, who chairs the program, says approved funds to businesses are now disbursed from the state’s General Fund. “The BEIP assistance has leveraged more than $11.7 billion in total investment in the state. We must offer significant incentives like our neighboring states to attract businesses,” she says. The largest grant, for $164.3 million, went to beleaguered investment bankers Goldman Sachs Group Inc. It was executed in June 2002, but so far only $20 million has been disbursed. Franzini says the firm plans to eventually create more than 2,000 new jobs in Jersey City.
BEIP’s largest total disbursement of funds was $58.9 million to financial services firm ICAP North America, which relocated to New Jersey from New York and created nearly 1,000 new jobs. Franzini says small and midsized businesses have also used the program.
However, Avis Yates Rivers, owner and president of Technology Concepts Group Inc., an IT company in Somerset, N.J., says she has been more successful in raising funds outside of New Jersey than in her home state. She notes that New Jersey’s IT contracts are renewed every three years instead of put out for re-bid, which makes it especially difficult for minority and women-owned business enterprises like hers to thrive in that arena.
“Unfortunately, I have enjoyed greater success in [securing business and funding opportunities for my IT business] in other states than my own,” Yates says. “I advise potential entrepreneurs to embrace technology, outsource noncore activities and secure funding for at least a full year of operation.”
As for the future of the BEIP, Franzini would say only that New Jersey has a lot to offer. “New Jersey’s strategic advantages continue to make it a destination for businesses across [all] industry sectors,” she says. More information on the Business Employment Incentive Program may be obtained from the EDA’s Web site at www.njeda.com.