At the fourth in a series of hearings on state economic incentive programs, a special task force commissioned by Gov. Phil Murphy turned its attention Thursday to a business that won $2.4 million in tax breaks to relocate in Bayonne.
Officials say the state Economic Development Authority made the award to Rainforest Distribution, a food and beverage distributor, after agents for the firm misrepresented whether it had an alternate, lower-cost location out of state — one of the agency’s key metrics in granting tax relief as an economic incentive.
The company’s application showed that it was considering the move from Long Island City to Bayonne, but also had an alternative location in Orangeburg, NY. But with a series of emails shown during the hearing, the panel poked holes in claims that the company was ever legitimately considering the Rockland County site.
An email dated Aug. 14, 2015 to representatives for the company from the consulting firm CBRE, ends with: “Also, remember we do need to come up with the lower cost option than NJ.”
More emails dated later in the process allege that as the Bayonne proposal was moving forward, the brokers for Rainforest Distribution had yet to firm up Orangeburg, nor was the site on the company’s radar.
“What is Rainforest plan on using for their alternative scenario?” a Oct. 2, 2015 email read. “Remember we need to be lower cost than NJ … did we ever come up with an alternative?”
Alexander Ridings, CEO of Rainforest Distribution, testified that he was unfamiliar with the incentive process or commercial real estate when he hired CBRE. He said he relied on the brokers to navigate the process. CBRE was paid $128,000 for handling the Bayonne transaction.
In a statement, a spokesman for CBRE said that the broker who wrote the emails had been fired.
Later, the panel attempted to show the EDA might be motivated to fast-track incentives by its own financial considerations. Fees paid to the agency were based on the size and quantity of the tax credit it awarded.
The task force hearings were convened after numerous investigations, including the task force itself, raised questions alleging serious failures by the EDA in vetting and awarding applications.
The controversial incentive programs run by the EDA were allowed to lapse. Murphy has suggested reforms, and the state Senate is also considering options for replacements.