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report are related to the legacy or “predecessor” programs. Furthermore, of the reported jobs that OSC
contends lacks substantiation at approval, 88 percent relate to the predecessor programs, with over
1,300 of the 2,933 jobs in question having been approved at the Commerce Commission. It also must
be noted that, as it relates to economic impact and program results, there is an important distinction
between the NJEDA Board’s approval of an application and the actual realization of an award of tax
credits. Of the approximately $8 billion NJEDA has approved for projects under the HUB, ERG, and
GrowNJ programs, less than nine percent has actually been paid out to date.
The NJEDA appreciates the recommendations provided by OSC given this is a pivotal time as the ERG
and GrowNJ programs sunset in July 2019. To that extent, and under new leadership beginning in late
February 2018, the NJEDA has already begun to take significant actions to ensure the utmost
transparency and due diligence is exhibited for all legacy and future programs.
A critical step has been the creation of a new division – Portfolio Management and Compliance – which
reports directly to me as Chief Executive Officer and focuses on the post-approval monitoring of projects
and compliance. I charged Division leadership to review the existing incentive management and
compliance process, which has resulted in a clear action plan to significantly enhance compliance and
data integrity moving forward.
A second critical step is that the NJEDA and the New Jersey Department of Labor and Workforce
Development (NJLWD) have met to set up a data sharing arrangement to better monitor job
performance. This data sharing agreement will serve to assist NJEDA in better verifying the information
submitted by applicants. This, in addition to NJEDA’s current procedure of CPA, CEO and CFO
certifications and random external audits, will strengthen documentation.
Third, the NJEDA continues to update the annual requirements for businesses seeking tax credit
certifications, having already incorporated many of the recommendations laid out by OSC.
Lastly, the NJEDA is close to completion of a new organization-wide data and documentation system
that will be the central database for all programs at the NJEDA, which will allow ready access to
information.
Executive Summary of NJEDA Response
As the agency charged with administering the State’s incentive programs, the NJEDA’s fiduciary
responsibility and strong resolve to protect the public interest remain our paramount obligation. As
demonstrated through improvements executed during the two decades NJEDA has been administering
incentive programs, the NJEDA welcomes the opportunity to strengthen related policies and processes.
The NJEDA’s response will address the findings detailed by OSC and the subsequent recommendations.
Prior to getting into the details of these findings, it is important to make clear that the NJEDA
administers the five programs detailed in the OSC report based on legislation. The legislation, not the
NJEDA, sets the requirements of each program, with each having its own nuances that distinguishes it
from one another. The NJEDA then publishes rules to ensure the program requirements of the
legislation are being met. Due to the complexity and nuances related to the incentive programs, an
outside observer may misunderstand what is required from each program and how respective statutes
dictate the specific evaluation of the various information required. Further, and as stated by the OSC, a
non-statistical sampling approach was used, and therefore, cross-portfolio extrapolations cannot be