JPMorgan Chase : Behind the Deal to Bring J.P. Morgan Jobs to New Jersey
By Heather Haddon and Josh Dawsey
The deal Thursday to bring more than 2,000 bank jobs to New Jersey from New York City began last year with a phone call.
Last fall, New York City Mayor Bill de Blasio rejected the entreaties of J.P. Morgan Chase & Co. to move its headquarters to the far West Side of Manhattan in exchange for hundreds of millions of dollars in tax breaks. The Democratic mayor called the company's subsidy request "a nonstarter."
Within a day of Mr. de Blasio's remarks, New Jersey Lt. Gov. Kim Guadagno, a Republican, and an official with the state's economic arm, Lauren Moore, called J.P. Morgan Chief Operating Officer Matthew Zames to discuss what the state could do to persuade the company to move jobs across the Hudson River, according to people familiar with the conversation.
The bank started a search of jobs that could be relocated out of New York, and initially considered moving them to existing facilities in lower-cost Ohio and Delaware. But New Jersey's nearly $190 million tax-subsidy proposal--representing $19 million annually for 10 years--proved most attractive.
On Thursday, the state Economic Development Authority awarded the bank the subsidy package to move 2,150 information-technology jobs to an office building in Jersey City.
The vote was pro forma. But it offered a revealing glimpse into the tug of war for jobs between two administrations with vastly different ideologies and priorities.
Gov. Chris Christie, who is running for the 2016 GOP presidential nomination, has made tax subsidies one of the hallmarks of his business strategy in New Jersey. On Thursday, administration officials and business groups were quick to credit the governor's tax subsidy programs as working.
Brian Murray, a spokesman for Mr. Christie, contrasted the state's corporate offerings with "cities and states that are going in the wrong direction with tax policies and hostility toward businesses." He didn't specifically criticize New York.
On Thursday, de Blasio administration officials said they had no intention of changing the city's policy on subsidies.
"Once you open Pandora's box, it can really become out of control," said Alicia Glen, the city's deputy mayor for housing and economic development. "It's not sound economic policy to do one-off-the-spoke deals for retention."
Ms. Glen said she doesn't call it a fight with New Jersey because "I don't have my pistol out." Places like New Jersey have less to offer than the city and must rely on incentives, she said.
The city offers tax incentives for certain industries and areas across New York, such as biotechnology and the Brooklyn Navy Yard.
The types of government subsidies vary but can include reducing a company's corporate business taxes in exchange for creating a certain number of jobs or making a big investment in a new facility.
Former New York City Mayor Michael Bloomberg, a businessman who ran on the GOP ballot, often used tax subsidies to help advance big projects in the city.
When he was a city councilman, Mr. de Blasio supported developments such as the Atlantic Yards site in Brooklyn that received subsidies.
But while running for mayor in 2013, Mr. de Blasio promised a "wholesale reform" of tax subsidies. He called the incentives "corporate giveaways" to "office towers on Park Avenue" during a speech in May 2013.
Mr. Christie publicly said New Jersey would embrace residents and companies unhappy with the de Blasio administration.
"You have a new mayor in New York who is aggressively talking about increasing taxes in New York City," Mr. Christie said before The Wall Street Journal's CEO Council in December 2013. "While I feel badly for New Yorkers, come to New Jersey."
The Christie administration has awarded more than $6 billion in tax incentives since the governor first took office, with the amounts escalating since 2013, according to an analysis by the New Jersey Policy Perspective, a liberal-leaning group.
Last year, New Jersey extended more than $2 billion in tax incentives to companies to create and retain jobs. That is about a 15-fold increase compared to 2009, the year before Mr. Christie became governor.
Business groups in New Jersey said that the state's generous policy with tax credits and Mr. de Blasio's negative attitude toward them has begun to have an impact.
"If you don't support incentives like de Blasio, then that's a negative view," said Tom Bracken, president of the New Jersey Chamber of Commerce. "You can't underestimate the desire for companies to be loved."
In late 2014, the Charles Komar & Sons clothing company was awarded a $37 million tax credit to move 480 jobs to Jersey City from Manhattan. Earlier that year, Forbes Media LLC received a $27 million tax credit to relocate its headquarters from Manhattan to Jersey City and take 350 jobs with it.
Last year, J.P. Morgan was awarded $225 million in tax credits to create 1,000 jobs in Jersey City and retain 2,612 existing ones. The company purchased office space at 575 Washington Blvd. last year and it will eventually house 4,612 employees there, company officials said.
For the new tax award, J.P. Morgan is looking to consolidate 2,150 jobs now scattered across Midtown, Brooklyn and lower Manhattan. The median salary of the positions was projected at $164,000, the company said.
The positions were expected to be moved by mid to late 2017, said Andrew Gray, a company spokesman.
Budget watchdog groups in New Jersey and New York said the subsidies represented bad tax policy.
"Once you go down this slippery slope of making deals, every business wants one, and every business wants more than the last one got," said Carol Kellermann, president of the Citizens Budget Commission, a city-based nonpartisan watchdog group. "It gets out of hand."
New Jersey rents are generally cheaper than those in New York, and tax credits also help, said Kathryn Wylde, president of the Partnership for New York City, a business group.
Ms. Wylde said she expected the headquarters of major financial institutions to remain in the city, while midlevel jobs would continue to move.
"This is part of a longer-term trend that has to do with the difficulty of keeping middle-wage jobs in New York," she said.
Write to Heather Haddon at email@example.com
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