Sunday, April 10, 2011

Times sees dismay at cross-border poaching with subsidies; Panasonic seen as likely to move from Secaucus to Newark, not Brooklyn

In a 4/8/11 article headlined Businesses Stand to Gain Most in Rivalry of States, the New York Times reported:
KANSAS CITY, Mo. — This city, sharing a name with one state but settled in another, has a long history of ugly border skirmishes dating back to the Civil War. And even today, the annual football showdown here between the University of Kansas and the University of Missouri is referred to as “The Border War.”

But the interstate rivalry has grown fierce on a new battlefield — business — as the two states stage cross-border raids and entice companies with generous incentives to move a few miles and resettle on the other side.

Though some say such moves strengthen communities with new jobs and tax revenue, a growing chorus of leaders on both sides are wondering about the point of it all, warning that the efforts serve only to help private companies at taxpayer expense. Even some beneficiaries confess surprise at neighbors’ competing with such rancor.

...This approach is often criticized by economists like Timothy J. Bartik, who studies state and local economic development policies for the W. E. Upjohn Institute for Employment Research.

"It’s a little bit of a zero sum game,” Mr. Bartik said. “Because one part gains and the other part loses. And the gains are much more modest than the losses.”
This is a completely legitimate good-government argument. And, of course, it applies equally to luring a basketball team across state lines.

Why was the federal government asked to subsidize a new arena in Brooklyn via tax-exempt bonds when a new arena had just been built in Newark?

Panasonic looks to remain in NJ, but move

And why was New York (presumably) being asked to subsidized Panasonic's possible move to Brooklyn, notably to Forest City Ratner properties?

Whatever those lures, it looks like new subsidies are keeping Panasonic in New Jersey, albeit in a new city.

The Star-Ledger reported 4/2/11, Panasonic gives strongest indication yet of a move to Newark
Panasonic Corp. is leaving its American headquarters in Secaucus and has plans to relocate to Newark, according to statements released this week by company officials.

...But the company’s current landlord, Hartz Mountain Industries, is not letting them go without a fight. Hartz filed an appeal on Thursday seeking to stop the state’s Economic Development Authority from issuing a $102 million transit hub tax credit for the move.

"The tortured application of the law in this case has effectively established an open invitation for one New Jersey municipality to poach businesses from another at the taxpayers expense," Allen Magrini, senior vice president of Hartz Mountain, said in a statement. "This was certainly not the intention of our Legislature, especially when, as is the case here, there are no new jobs being created as a result of the $102 million grant."

..."If a company is truly at risk of leaving our state or considering whether to move here, then the issue is not about pitting town against town, it’s about the reality that New Jersey is being pitted against competing states," [attorney Ted] Zangari said. "The ultimate goal is to make sure businesses expand and relocate here."

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