The deal that brought Rainforest Distribution Corp. from Queens to Bayonne came by way of CBRE — one of the country’s largest and well-known commercial real estate brokerage and investment firms — which helped the food service company find a new home and snag lucrative state tax breaks totaling $2.4 million from the New Jersey Economic Development Authority.
And to do that, according to witnesses testifying Thursday before a task force now investigating dozens of such deals, CBRE filed an application on behalf of Rainbow that essentially lied about plans to move elsewhere.
Before the hearing in Trenton was over, CBRE announced it had fired the executive involved in the lucrative deal.
The disclosure was just the latest outrage focusing on the failures of the EDA to properly review billions in tax incentive awards to companies that investigators say often gaming the system.
The tax incentive program has been mired in controversy since the task force appointed by Gov. Phil Murphy in January concluded that the agency responsible for economic development in New Jersey did not have adequate procedures in place to vet applications for New Jersey’s lucrative incentives.
Earlier this year, task force investigators concluded that the legislation which created the multi-billion-dollar program during the term of Gov. Chris Christie was largely shaped by special interests — including several businesses entities closely tied to George E. Norcross III, the South Jersey political power broker and healthcare executive.
In Thursday’s fourth hearing of the task force, much of the focus by investigators centered on how Rainbow Distributors — which is cooperating in the inquiry — got money from the state.
In January 2016 meeting, the NJEDA board approved a $2.4 million award over ten years for Rainforest Distribution, which provides delivery and merchandising services to producers of food products in the New York City metropolitan area, specializing in dairy and organic frozen and refrigerated products.
According to its application, for tax incentive, Rainforest said it had been deciding between relocating to Orangeburg, N.Y. or moving to a 50,740-square-foot facility at 20 Pulaski St. in Bayonne. To support its request the company had to show that relocating to New Jersey was the more expensive option for Rainforest, which meant that the grant of tax credits was a material factor in its decision. And the application certified that the warehouse space in New York was indeed on the table.
That was not true, testified Alexander Ridings, the CEO of Rainforest. In fact, a relocation from the company’s Queens site to Orangeburg had not even been considered when his company, with the help of CBRE, prepared its application.
“At that point in time we had no intention of moving to Orangeburg,” Ridings said.
The executive said his company had first reached out to CBRE to find a larger location, and then retained Susan Harte, who worked for CBRE, helping companies secure tax credits.
“We relied on experts to navigate the EDA’s complex process,” Ridings said, adding that he “had no experience” in tax incentive programs.
Jim Walden, counsel for the governor’s task force, said the application to the EDA included a letter that had been post-dated to suggest the Orangeburg site was being actively considered before it had even been proposed by Harte to Rainforest. Ridings testified he had also been told by Harte to visit the site.
“I need you to do that, in case we are asked,” Harte wrote in an email.
When he did, the space was already being occupied by another company.
In a statement released as Ridings was testifying, CBRE said that Harte had separated from the company on Wednesday.
“Susan Harte, who previously served in our Location Incentives Group, is no longer employed by CBRE,” said the real estate firm. “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.”
Harte, an attorney with a long background in tax incentives, could not be immediately located for comment.
New Jersey’s major tax incentive programs expired at the end of June. The governor vetoes an extension of those tax breaks earlier this year, saying the state’s economic incentive programs were among the most expensive and least productive in the nation, calling for major change.
Despite the cloud over how the tax incentive was awarded, Ridings testified his company moved to Bayonne because of the state’s tax incentives, creating 40 new jobs.
“We relied on experts to navigate the EDA complex process,” he said. “The award of the grant has been critical to the success of the company.
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