Task force: Real estate firm hid tax break application docs from EDA

NJBIZ

Commercial real estate consultant CBREfound itself at the center of the state’s ongoing tax break scandal for allegedly helping the recipient of a $2.4 million tax break win the incentive by providing shoddy information and hiding documents about where, instead of New Jersey, the company would move without the awards.
CBRE responded by dismissing its consultant Susan Harte on Oct. 16, who was the focus of two hours of testimony before a tax force Gov. Phil Murphy put together to scrutinize the controversial incentive program: the Grow New Jersey tax corporate tax breaks.
In 2015, Rainforest Distribution Corp., with the help of CBRE, submitted a Grow New Jersey tax break application to the Economic Development Authority with the intent of moving from Long Island City, N.Y. to a larger space in Bayonne.
The company listed a 45,000-square-foot office space in Orangeburg, N.Y. as the alternative location, even though there were no serious plans to move there, according to emails read during an Oct. 17 hearing.
Rainforest Distribution already had a draft lease for the Bayonne location where they ultimately moved, but Harte advised them to include the letter of interest for the Bayonne site in the application rather than the draft lease.
“I would prefer to use that as it shows we are not that far along and since we likely won’t have a lease draft from that alternative scenario,” Harte wrote in an Oct. 6, 2015 email to Alex Ridings, who was then Rainforest Distribution’s chief financial officer and is now the chief executive officer.
Rainforest’s application included the Orangeburg location, though the proposal letter was not received until weeks later on Oct. 19.
It was included in the application on Oct. 27, 2015, but the proposal letter was altered to appear like it was received on Oct. 1 of that year.
“Backdating the document to Oct. 1 would make it look like the alternative site was under consideration for longer than it was,” task force counsel Jim Walden of Walden, Mach and Haran LLP said at the hearing.
Ridings told the task force that he believed the Orangeburg site to be one where the company “hypothetically could move” to instead of Bayonne.
Harte, in an Oct. 29, 2015 email to Ridings said he needed to visit the Orangeburg site “in case we are asked.”
Harte, in a Nov. 5, 2015 email presented during the hearing to EDA Community Development Officer Diane Ubinger and Senior Business Development Officer Matthew Abraham, falsely told them that there was no draft lease for the Bayonne site “as the company wants to see if it is approved for the benefits before starting the lease draft.”
Throughout October, Rainforest Distribution was eyeing a site in Hartford, Conn. and Queens, N.Y. However, they were informed that the latter location would not be an eligible location for where they would move instead of New Jersey.
CBRE received a $128,000 commission from Rainforest Distribution, according to Walden, part of a “success fee” which the firm receives for any successful Grow NJ applications.They do not receive any money if the tax break application is rejected Walden said, which “incentivized” CBRE to “get this application through.”
Harte was ultimately the one who clicked the submit button on the application, according to Walden.
“CBRE takes great pride in its reputation for upholding the highest ethical standards, which we demand from each of our 90,000 professionals around the globe,” reads a Thursday statement the firm released while the hearing was taking place.
"We've hired more people than we thought, we've been able to invest more money than we thought we'd be able to, we've grown more than 10 times the size when we were in Queens,"Ridings maintained at the hearing.
The real estate firm has come up repeatedly during scrutiny of the state's corporate incentives by the Murphy administration and media outlets.
CBRE Executive Vice President James Tully is the leasing agent at Blue Hill Plaza in New York, which a dozen New Jersey companies listed as a token location for where out of state they would move without the incentives despite no plans to do so, according to the New York Times. All told, they won roughly $100 million of tax breaks, according to the report.
The real estate firm was also highlighted by the task force earlier in the year as having helped Cooper University Health Care where South Jersey power broker George Norcross is board chair.
Cooper submitted its application, which included questionable information about where in Philadelphia it would move to from Camden without the $39 million of incentives they ultimately won.
A June report by the task force suggests that Cooper should have won closer to $7 million in tax breaks.