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Committee Meeting of SENATE ECONOMIC GROWTH COMMITTEE ASSEMBLY COMMERCE AND ECONOMIC DEVELOPMENT COMMITTEE “The Committees will take testimony from invited guests concerning the oversight and effectiveness of New Jersey Economic Development Authority tax incentive programs” LOCATION: Committee Room 4 DATE: February 11, 2019 State House Annex 10:00 a.m. Trenton, New Jersey MEMBERS OF COMMITTEE PRESENT: Senator Nilsa Cruz-Perez, Chair Senator Troy Singleton, Vice Chair Senator Shirley K. Turner Senator Joseph Pennacchio Senator Steven V. Oroho Assemblyman Gordon M. Johnson, Chair Assemblyman Robert J. Karabinchak, Vice Chair Assemblyman John Armato Assemblyman Clinton Calabrese Assemblyman Roy Freiman Assemblyman James K. Kennedy Assemblywoman Eliana Pintor Marin Assemblyman P. Christopher Tully Assemblyman Robert Auth Assemblyman Anthony M. Bucco Assemblyman John DiMaio Assemblyman Parker Space ALSO PRESENT: Alea Couch Laurine Purola Eugene Lepore Senate Republican Robert C. Rothberg Senate Majority Kevin Logan Patrick Brennan Bianca Jerez Thea Sheridan Office of Legislative Services Assembly Majority Assembly Republican Committee Aides Committee Aides Committee Aides Meeting Transcribed by The Office of Legislative Services, Public Information Office, Hearing Unit, State House Annex, PO 068, Trenton, New Jersey TABLE OF CONTENTS Page Philip James Degnan, Esq. State Comptroller Office of the State Comptroller State of New Jersey 3 Tim Sullivan Chief Executive Officer New Jersey Economic Development Authority 56 Bruce Ciallella, Esq. Senior Vice President Portfolio Compliance, Management, and HUD Programs New Jersey Economic Development Authority 97 James J. Florio Former Governor State of New Jersey 109 Stephen P. Mullin President and Principal EConsult Solutions, Inc. 115 Michael Amato, Sr. Co-Founder and Chief Executive Officer Camden Yards Steel 125 Stephen M. Eels State Auditor Office of the State Auditor Office of Legislative Services State of New Jersey 131 Ron Beit Founding Partner and Chief Executive Officer RBH Group, LLC 138 TABLE OF CONTENTS (continued) Page Josh Goodman Senior Officer Pew Charitable Trust 149 Sheila Reynertson Senior Policy Analyst New Jersey Policy Perspective 154 Brandon McKoy Director Government and Public Affairs New Jersey Policy Perspective 159 Erica L. Jedynak State Director Americans for Prosperity 163 Robert Asaro-Angelo Commissioner Department of Labor and Workforce Development State of New Jersey 167 Ronald Marino Assistant Commissioner Income Security Office of the Commissioner Department of Labor and Workforce Development State of New Jersey 170 Peter Kasabach Executive Director New Jersey Future 182 Maria E. Yglesias Co-Founder M&M Development 190 Maria Del Mar Lopez Co-Founder M&M Development 191 TABLE OF CONTENTS (continued) Page Eugene R. Diaz Principal Prism Capital Partners 196 APPENDIX: Testimony, plus New Jersey Economic Development Authority A Performance Audit of Selected State Tax Incentive Programs submitted by Philip James Degnan, Esq. 1x Testimony submitted by Tim Sullivan 76x Testimony submitted by James J. Florio 82x Testimony, plus attachment submitted by Stephen P. Mullin 84x Testimony, plus attachment submitted by Stephen M. Eells 136x Testimony submitted by Josh Goodman 157x Testimony submitted by Sheila Reynertson 159x Testimony submitted by Erica L. Jedynak 161x TABLE OF CONTENTS (continued) APPENDIX (continued) Page Testimony, plus attachments submitted by Peter Kasabach 164x An Assessment of the New Jersey Business Employment Incentive Program submitted by Joseph J. Seneca, Ph.D., James W. Hughes, Ph.D., and George R. Nagle 173x Credits and Incentives Talk with Deloitte Grow New Jersey: A modern day case study in job attraction and retention submitted by Charles Ruby and Gina Giordano Deloitte 216x Testimony submitted by Laurence M. Downes Chairman of the Board New Jersey Economic Development Authority (NJEDA) 224x Letter, addressed to Senate Economic Growth and Assembly Commerce and Economic Development Committees from Elizabeth Maher Muoio Treasurer State of New Jersey 229x Letter, plus testimony addressed to Senator Nilsa Cruz-Perez and Assemblyman Gordon M. Johnson from Philip James Degnan, Esq. Comptroller State of New Jersey 230x pnf:1-203 SENATOR NILSA CRUZ-PEREZ (Chair): Good morning. We are going to start the joint hearing on EDA incentives -- the Assembly and the Senate. Can I have a roll call, please? MR. ROTHBERG (Committee Aide): Good morning. Assemblyman Space. ASSEMBLYMAN SPACE: Here. MR. ROTHBERG: Assemblyman DiMaio. ASSEMBLYMAN DiMAIO: Here. MR. ROTHBERG: Assemblyman Bucco. ASSEMBLYMAN BUCCO: Here. MR. ROTHBERG: Assemblyman Auth. ASSEMBLYMAN AUTH: Present. MR. ROTHBERG: Assemblyman Tully. ASSEMBLYMAN TULLY: Here. MR. ROTHBERG: Assemblyman Kennedy. ASSEMBLYMAN KENNEDY: Here. MR. ROTHBERG: Assemblyman Freiman. ASSEMBLYMAN FREIMAN: Here. MR. ROTHBERG: Assemblywoman Pintor Marin, substituting for Assemblyman Chiaravalloti. Assemblyman Calabrese. ASSEMBLYMAN CALABRESE: Here. MR. ROTHBERG: Assemblyman Armato. ASSEMBLYMAN ARMATO: Here. MR. ROTHBERG: Assemblyman Karabinchak. 1 ASSEMBLYMAN ROBERT J. KARABINCHAK (Vice Chair): Here. MR. ROTHBERG: Chairman Assemblyman Johnson. ASSEMBLYMAN GORDON M. JOHNSON (Chair): Here. MR. ROTHBERG: All present. MR. BRENNAN (Committee Aide): Senator Pennacchio. SENATOR PENNACCHIO: I’m here. MR. BRENNAN: Senator Oroho. SENATOR OROHO: Here. MR. BRENNAN: Senator Turner indicates she will be here. Vice Chair Singleton is on his way. And Chair Cruz-Perez. SENATOR CRUZ-PEREZ: Present. Senator Oroho, can you lead us in the Pledge of Allegiance? (all recite Pledge) ASSEMBLYMAN JOHNSON: Good morning, everyone. Welcome to this joint hearing. We are here to hear from the industry -- the business side; the businesses in the state -- to find out if we can improve the different incentive programs that we’ve heard about so much in the press. It appears that some mistakes were made in the past; but through this hearing, and through what we hear today from different business sectors in our state, we can only improve -- hopefully we can improve the programs and show the taxpayers that we are doing the best that we can to bring business in, but also do it in an effective and efficient way. 2 So we are going to ask that those who come before us limit their remarks to five minutes, if possible, recognizing that some sectors of business may have a little more to say than others. But still, we’ll try to limit it to that. And with that-- Anything else to add, Chairwoman? SENATOR CRUZ-PEREZ: Yes, I want to take this opportunity to recognize -- I see Governor Jim Florio in the audience. Thank you for attending, and good morning. And good morning to everyone. ASSEMBLYMAN JOHNSON: This is neat stuff, because I get to share this with my fellow Chairwoman here; so we’re going back-and- forth. So first up we have Philip Degnan, the State Comptroller. Is he here? He is. P H I L I P J A M E S D E G N A N, Esq.: Good morning. I begin by thanking Chairwoman Cruz-Perez and Chairman Johnson for the opportunity to provide testimony concerning issues worthy of public debate. I also thank Senate President Sweeney and Assembly Speaker Coughlin for their stewardship of public money spent by government in the State of New Jersey. Lastly, I wish to take a second to thank the joint Committee staffers, Ms. Jerez and Mr. Lepore, for their assistance and courtesies with administrative matters over the last couple of days. 3 On March 9, 2018, the Office of the New Jersey State Comptroller formally initiated a performance audit of the New Jersey Economic Development Authority, with a particular focus on EDA’s administration of five economic incentive programs overseen by EDA -- the Grow New Jersey Assistance Program, the Economic Redevelopment and Growth Program, Business Employment Incentive Program, Business Retention and Relocation Assistance Grant Program, and the Urban Transit Hub Tax Credit Program -- for the time period from January 2005 through December 2017. This matter was referred to us through an Executive Order signed by Governor Murphy, on January 19, 2018; and was subjected to every aspect of our usual audit process, including the evaluation of the referral, pre-planning, engagement of the auditee, field work, quality control checks, preparation of a discussion draft of the report which was provided to the auditee, and an evaluation of the auditee’s response. Ultimately, OSC issued its final report on January 9, 2019. At the outset, and as we did in the report, I acknowledge the cooperation shown to us by the executives and professionals at EDA. OSC consistently advises auditees that a performance audit is not an adversarial process. Indeed, our goal -- which is consistent with our mission as an office -- is to evaluate agencies and programs, and to make recommendations for improvements designed to safeguard taxpayer funds. This is a mission that anyone with an interest in good government and a sensitivity to the use of public money should appreciate. We always understand, however, that it is rarely a comfortable experience for the auditee. Notwithstanding that tension, I will say that 4 EDA -- as an agency, and the individuals with whom we interacted through the course of the audit -- acted professionally, in good faith, and made every effort to comply with our requests for information and to assist us in fulfilling our mission. That is not to say that EDA agreed with all of our findings. Indeed, they responded in a way that I would expect, testing

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