Governor Signs Sprawling Stimulus Act With Backdrop of Corruption

For Immediate Release

July 27, 2009

Contact: Jeff Tittel, 609-558-9100

Governor Signs Sprawling Stimulus Act With Backdrop of Corruption

Newark - Gov. Jon Corzine today signed into law the so-called New Jersey Economic Stimulus Act just days after the federal government made sprawling arrests in a statewide corruption probe. This bill will give away billions of dollars in public subsidies without proper oversight to the same areas where dozens of local officials have been arrested for corruption.

The New Jersey Economic Stimulus Act has no pay to play restrictions and sets up a watchdog-free system in which developers can use public money to build anywhere in New Jersey, including in environmentally sensitive areas. The recent corruption probe shows that Governor Corzine must tighten reform in the state instead of weaken it with bills like the Economic Stimulus Act.

Under the guise of economic recovery and job creation, the Corzine Administration and state legislature are giving away the state treasury to developers to stimulate their own campaign finances. "The Corzine Administration is giving the state away to developers. First they privatized site remediation and extended permits, now they are giving away the state treasury in tax subsidies." Jeff Tittel, Director of the New Jersey Sierra Club. "The recent corruption probe proves the need for strong reform in New Jersey. Governor Corzine should have stood up against corruption and strengthened this bill."

Last March, the Governor announced a pay to play indictment package for reform. Nothing has happened with that reform package except now we see more arrests.

The Economic Stimulus Act combines four different programs: it will provide Revenue Allocation District (RAD) incentives to developers at the cost of municipalities; expand the Urban Transit Hub tax Credit program; eliminate the affordable housing surcharge on non-residential developments; and allow for private partnerships in public colleges and universities.

Under the Revenue Allocation District (RAD) section of the Act, developers will be paying very little, if any, taxes to the town or state. They will be able to keep 75 percent of its tax money. That money may be used to pay for infrastructure and to finance the development. These developments will still need police and fire emergency services, require transportation improvements and increase the town's COAH requirements, all of which will be paid for by the average taxpayer. The RAD program allows for development in environmentally sensitive areas and expands eminent domain use for private purposes. In addition, there are no prohibitions on developer pay-to-play at the local level, where abuse is high.
The Urban Transit Hub portion of the Act allocates up to $50 million tax credit toward development that is within a mile of a train station. However, development does not have to be connected to the train station and residents do not have to be able to walk to get to it. This unnecessary subsidy will cost the state $1.5 billion, resulting in more cuts to services. Besides Jersey City and Hoboken, these Urban Transit Hub exemptions could affect Camden, Perth Amboy, Trenton, and Harrison. The fact that some of these cities have a history of corruption or are currently being investigated, show why the laws need to be stronger. ANDREW MILLS/THE STAR-LEDGERMonmouth County and federal investigators remove boxes of evidence from the Deal Yeshiva as part of an international money laundering and corruption probe that includes rabbis in the Syrian Jewish communities of Deal and Brooklyn.
* This legislation repeals the 2.5 percent tax on nonresidential building that pays for towns to construct affordable housing. The elimination of the affordable housing surcharge is a $50 million tax break for Xanadu alone and a $40 million tax break for Giants Stadium. This may lead to builders' remedy court challenges that will allow developers to build four market units for each affordable unit.
* The bill also allows New Jersey's 31 universities and colleges to contract with private developers to build on campus without competitive bidding. Developers will be able to mix public and private use, such as office space or housing, on state owned land. They will also have full administrative and financial responsibility over these projects.

"This is what we call 'sprawlfare,'" said Tittel. "At a time when people are losing their jobs and struggling to pay their bills and important services are being cut, giving massive subsidies that won't really create jobs is unconscionable."

Unlike its federal counterpart, the New Jersey Economic Stimulus Act fails to invest in growing sectors, like clean energy manufacturing or research and development. It also encourages development in environmentally sensitive areas. The same types of subsidies are given for development on green fields and brown fields. Construction costs are generally less on green fields, effectively inducing new development. (The initial draft of the bill contained $60 million to retrofit diesel school buses to protect children's health, clean contaminated sites, fix state parks and remove underground storage tanks. These components were eliminated from the legislation, costing green jobs and hurting the environment.)

"New Jersey is the Unbama Administration doing the opposite of what the president is doing," Tittel said. "This bill isn't about stimulating the economy and putting people back to work; it's about stimulating campaign finances."

Furthermore, the "omnibus" nature of the bill violates the New Jersey State Constitution (Article IV, Section VII) which states that "every law shall embrace but one object, and that shall be expressed in the title."

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Kara Seymour, Program Assistant

NJ Sierra Club

145 W. Hanover Street

Trenton, NJ 08618

609.656.7612

(f) 609.656.7618

<http://www.newjersey.sierraclub.org> www.newjersey.sierraclub.org

> Received on 2009-07-27 10:29:03