Chris Christie backers awarded $223m tax break to build New Jersey mall

The Guardian – by Jon Swaine

A major new shopping mall and housing development in New Jersey, which is controlled by the biggest corporate funders of Chris Christie’s official mansion, has been awarded a $223m public subsidy by the governor’s administration.

Luxury Point, a vast retail, residential and entertainment complex to be built in Sayreville, was last month given one of the biggest corporate tax breaks handed out so far by the Republican governor’s state authorities, which are facing a $2.7bn budget shortfall over the next year.  

The $223.3m, 10-year subsidy was awarded without fanfare to Sayreville Seaport Associates LP, a corporate partnership that owns the 440-acre development alongside the Raritan river, where construction on a shopping mall targeted at millennials is due to begin later this year.

But a detailed proposal for the $2bn venture discloses that the project is majority-owned by Prudential, the New Jersey-based financial and insurance giant, which has in the past three years given more than $125,000 to the Republican Governors Association, which Christie chairs.

The company is also the most generous corporate backer of a foundation that raises as much as $1m a year to maintain and restore Drumthwacket, Christie’s official mansion in Princeton, which the governor uses to host private dinners, receptions and other events. Prudential contributes at least $50,000 a year, securing it “diamond” status from the foundation.

Prudential’s chairman and chief executive, John Strangfeld, chairs the Drumthwacket Foundation, and his wife, Mary Kay, is the vice-chair. The couple has donated at least $5,000 a year to the foundation themselves since Christie entered office, according to its website. FEC filings say that in 2012, John Strangfeld gave $25,000 to the Republican presidential campaign of Mitt Romney, which Christie served as a top fundraiser, and the party’s national committee.

The subsidy for Luxury Point was awarded by Christie’s economic development authority (EDA) one week after Prudential posted a profit of $1.24bn for the first quarter of 2014.

Bob DeFillippo, a spokesman for Prudential, said of the financial contributions by the firm and the Strangfelds: “None of these activities had any impact on this project”. He said that the couple’s involvement in Drumthwacket was “a project where they are getting involved with restoring one of New Jersey’s most historically significant structures, and they are proud to do it”.

Asked whether Christie or anyone in his office had discussed the Luxury Point venture with anyone at Prudential, or raised it with anyone at the EDA, Kevin Roberts, a spokesman for the governor, said: “Governor Christie has never discussed this project with Mr Strangfeld”.

Roberts said in an emailed statement: “Grant and incentive program funding is awarded based on a strict, objective review process dictated by statute, program rules, and a bipartisan review of the EDA board. These are not discretionary in any way as any project can apply to demonstrate eligibility and a net economic benefit to the state, and the Governor’s Office has no role in that process whatsoever.”

Corporate subsidies for development projects are not covered by New Jersey’s law against so-called “pay-to-play”, which bans the state from contracting a company for goods or services if the firm or its biggest shareholders have donated to the governor or any political party.

Greg LaRoy, the executive director of Good Jobs First, a watchdog group that monitors state subsidies, said: “We think that the same ethical rules that apply for procurement ought to apply for incentives such as this one.”

Christie’s EDA spends hundreds of millions of dollars a year on tax exemptions, grants and loans with the stated aim of attracting business and boosting New Jersey’s flagging economy.

The EDA’s chief executive is Michele Brown, a longtime friend of Christie’s, who was a senior official in his office as US attorney, before becoming his appointments counsel when he took office as governor. Federal authorities are currently auditing the EDA’s use of $23m in disaster recovery funds that it spent on a TV ad campaign starring Christie after hurricane Sandy.

The Guardian reported earlier this week that the EDA awarded a $105.6m subsidy last year to a property venture in Paterson involving Jon Hanson, a close friend, donor and policy adviser to Christie, after state law was amended to make it easier for the project to obtain funding.

Paterson’s Democratic mayor, Jeffery Jones, said he was concerned that The Hampshire Companies, Hanson’s real estate firm, may have been given a “special sweetheart deal” that will see it ultimately own a $53m office building that was part-funded by New Jersey taxpayers. Hanson was in recent years a member of Prudential’s board of directors.

Prudential’s new funding award is the second significant public subsidy given by Christie’s EDA to the firm, which is the biggest private company in New Jersey. Both subsidies follow a series of political donations by the company to the Republican Governors Association (RGA), which funds GOP gubernatorial campaigns around the US.

In June 2012, while Christie was serving as vice-chairman of the RGA, the authority awarded Prudential a $210m subsidy to develop a new office facility in downtown Newark, under a separate corporate tax break scheme. This award was first reported by Pando Daily.

Weeks later, according to IRS filings, Prudential contributed $75,450 to the coffers of the Republican Governors’ Association. Prudential also gave the RGA $25,450 in 2011, the year Christie was appointed vice-chairman. The company contributed this amount again in 2013.

Prudential has also made some contributions to Democrats. In New Jersey, the company gave $7,500 towards Cory Booker’s successful US Senate campaign last year, and $8,000 to the re-election campaign of Robert Menendez, the state’s senior senator, in 2012.

A proposal for the Luxury Point development prepared for the EDA’s board last month stated that 57% of Sayreville Seaport Associates is owned by Sayreville Prisa II, which according to SEC filings is a wholly-owned subsidiary of Prudential.

The remainder of the partnership is owned by Brian O’Neill, a Pennsylvania retail estate executive, who according to FEC filings has donated to both Democrats and Republicans including Rick Santorum, the former Pennsylvania senator and presidential candidate, and Rudolph Giuliani, the former New York City mayor and a Christie ally. DeFillippo, the Prudential spokesman, said that O’Neill’s firm had prepared the application for the EDA.

The authority concluded that the Luxury Point development would create 3,900 jobs and would, over the next 20 years, create enough new tax revenues to effectively repay the investment. The project site is to be developed by O’Neill Properties Group, a real estate company based in King of Prussia that O’Neill owns and chairs.

A spokesman for O’Neill did not return calls, messages and emails seeking comment. O’Neill said last week he expected to break ground later this year on the futuristic shopping mall and the first of 2,000 residential units. “We are the iPad of malls and outdoor shopping,” hetold an interviewer. “The millennial, the customer of today – they run their lives digitally, so if we want those customers, we have to run our lives digitally and we have to build our facilities digitally.”

http://www.theguardian.com/world/2014/jun/06/chris-christie-backers-223m-tax-break