No merit to lawsuit over EDA award [NJBIZ (NJ)]

Ask any kid on the playground, and he'll tell you paper beats rock. Now, with a major employer's headquarters in the balance, the Economic Development Authority is about to find out if that's true in real life, too.

The rock in this case is the Rock, Prudential Financial, the recipient of a whopping $250 million in tax credits under the EDA's Urban Transit Hub incentive. It gets those credits if it builds a new headquarters in Newark and creates 400 jobs, both conditions the insurance giant says it's prepared to meet.

But taking a page out of Hartz Mountain's playbook, three Gateway Center landlords are suing to prevent Prudential from claiming the credits, saying the company doesn't meet the requirements to get the credits and citing the tremendous impact Gateway would suffer without Prudential.

Hartz Mountain's lawsuit, filed in March, was based on what it called flaws in the EDA's approval process of $100 million in tax credits, which are allowing an electronics company to vacate its Secaucus space, in a Hartz building, and relocate to a new building in Newark. We sided with Hartz because we felt the award was being used in that case for corporate retention, instead of transit-related urban development. As Secaucus is ineligible for funding under the program, we also feared similar battles between cities and towns would be played out until the pool of credits ran dry.

Instead, in this case, we're seeing civil war, with Newark landlords saying Newark will suffer if Prudential leaves Newark for Newark. On that basis, the lawsuit has all the credibility of a presidential primary debate. But when you have an incentive worth $1.5 billion that hands out tens of millions in tax credits per award, you're asking for trouble. This is now two suits over Urban Transit Hub in less than a year, and while New Jersey needs a tool like this, it's far too generous for its own good. We'd advise a bit more restraint when the next Prudential comes calling.