When it Comes to State Subsidies, Not All Transit Hubs are Equal
February 17th, 2011 by Tim Evans
New Jersey Policy Perspective offers food for thought with an interesting blog post on the Economic Development Authority’s award of a $102.4 million Urban Transit Hub Tax Credit to Panasonic if it decides to move 800 jobs from Secaucus to Newark. Does it make sense to subsidize a company to move offices from the vicinity of one New Jersey train station to another? All other things being equal, no, it doesn’t.
All other things are not necessarily equal, however. In this particular case, the train station area being vacated (Secaucus) is a relatively strong market, and will be in a much better position to refill the empty office space once the economy recovers. There’s a reason Secaucus was not included in the list of municipalities eligible for the Urban Transit Hub tax credit, despite its phenomenally good rail access — it doesn’t need the help. Yes, it’s a transit hub, but it’s not distressed.
In contrast, the destination (Newark) is a weak market that would otherwise require some other form of state subsidy. And in fact, the purpose of the Urban Transit Hub tax credit was to attract large employers to strategic locations where the move serves multiple state objectives.
So is subsidizing a company to move from a strong market to a weak one really all that bad? Haven’t a whole host of state agency investment decisions effectively been subsidizing the reverse movement (from distressed urban center to prosperous suburban office park) for several decades now?