How tax incentive law may have killed a much-needed supermarket in Camden

Within three months of the announcement, there were signs the ShopRite project was about to get a leg up on the competition. Lawmakers were considering landmark legislation to dramatically expand the state’s tax incentive programs, and someone thought a grocery store was deserving of a tax break.

Among page after page of proposed amendments to the bill was a paragraph that would have benefited the proposed ShopRite, qualifying it for a large tax credit while disqualifying the competing proposal on technical grounds. No one objected, and the bill — the Economic Opportunity Act of 2013 — was signed a few months later, the supermarket language intact.

In the end, neither store was ever built and the provision, only recently brought to the public’s attention, has landed in the center of an ongoing debate about what to do with the state’s tax credit programs, which expired last month.

A task force Gov. Phil Murphy has charged with investigating the programs recently surmisedthe supermarket language — drafted in part by the law firm Parker McCay, which later represented the ShopRite project — was not based on “considerations of the public interest, but rather the private business interests of one of Parker McCay’s clients.”

Randy Cherkas, the developer who wanted to build the competing store, is far more blunt about what it all means: While it’s unclear why the ShopRite never opened, Cherkas suggests it may have never been a serious proposal. The changes to the bill, he said, were “undoubtedly” drafted with the ShopRite project in mind, and the language “also had the benefit of blocking” his proposed store from qualifying for the new tax credits.

“Many people think that the Ravitz family never wanted to build in Camden, and only showed interest as a way to block a new supermarket from competing with its existing store in Cherry Hill, less than four miles away,” Cherkas said in a statement to POLITICO.

The Ravitz family denies the allegations.

The new accusations come six years after Republican Gov. Chris Christie signed the Economic Opportunity Act and as the incentive programs have come under intense scrutiny in Trenton. Questions have been raised about whether major sections of the law were crafted to benefit specific companies, if some firms cheated their way to tax breaks and around a perceived lack of oversight.

As that debate plays out, details of the grocery store provision call into question the assertions of state lawmakers and others who say the incentive programs were built on good intentions.

Program boosters, from Christie to South Jersey Democratic power broker George Norcross, have said numerous elements of the legislation that benefited those close to the Norcross family were all the result of a well-meaning, concerted effort to help Camden. They say the tax incentive law has done nothing but good for Camden, helping attract numerous businesses, contributing to a lower unemployment rate and injecting new hope for a more prosperous future.

But the grocery store language issue tests that assertion. Some say its intent is anything but well meaning, designed purely to benefit one company and crush another.

Even some who defend the programs have raised concerns about the supermarket language.

“That’s inappropriate and that might even be illegal,” Senate Majority Leader Loretta Weinberg, a Norcross ally, said in an interview. “You’re not allowed to do bid-specification for anything — make it so only one company can apply. You can’t do that whether you’re building a bridge or buying pencils.”

A FOOD DESERT

For Camden residents, grocery shopping can be a major ordeal.

Dava Salas, who lives in the Cramer Hill neighborhood in East Camden, says the most accessible market to her is the PriceRite near the outskirts of the city. Without a car, she said, it takes her two buses and up to two hours to reach the store, and then requires a $24 cab ride back home.

“It just costs too much money and time,” the 40-year-old mother of four said. “Twenty-four dollars is insane. That’s $24 I could have spent on food. It adds up.”

The Healthy Food Access Portal, a group that compiles data on food insecurity, estimates that 51,000 Camden residents — about two-thirds of the city’s population — live in areas of the city that have limited access to supermarkets.

Solving the issue of food accessibility is by no means simple, and that’s why the problem persists in impoverished areas not just in New Jersey, but across America. Experts say it’s difficult to get supermarkets to move into a city, and then to stay there.

Supermarkets already operate on thin margins, and grocery shoppers in low-income communities won’t be spending as much as residents in wealthier places. The upstart costs can also be higher than in more affluent communities, with more training requirements and higher insurance premiums.

“In Camden, it’s hard to find access to healthy food,” said Brian Lang, the director of the National Campaign for Healthy Food Access at the Food Trust. “As you get into the factors that drive that issue, they are complex and multifaceted.”

CHANGING THE LANGUAGE

Grow NJ, the state’s largest tax credit program and the one targeted by the supermarket language, hadn’t previously offered incentives to retail businesses, including grocery stores. Retail location decisions are typically driven by market forces rather than tax incentives, the reasoning went.

But the changes added to the 2013 legislation not only made tax credits available to grocery stores, but also allowed for credits that would benefit general retail space.

The language added to the bill was precise, meeting the exact specifications of the ShopRite project, a joint venture by the Goldenberg Group, a real estate developer, and Ravitz Family Markets, which already ran five ShopRites in Burlington and Camden counties.

To qualify for a tax credit, such a retail project needed to be located in Camden or Atlantic City and cover 150,000 square feet, with at least 50 percent of the space occupied by a full-service grocer. As originally envisioned, the proposed ShopRite, slated for Admiral Wilson Boulevard, would have been 75,000 square feet and taken up exactly half of a 150,000-square-foot retail facility.

At the same time, Cherkas, president of Grapevine Development, wanted to open a 50,000-square-foot Fresh Grocer location at his long-planned, mixed-use Haddon Avenue Transit Village. He later considered a ShopRite for the space but was rejected by Wakefern Food Corp., a cooperative that manages the ShopRite brand. The project did not meet the requirements to qualify for the tax credits, putting it at a disadvantage.

At a hearing in May, the task force created by Murphy questioned Tim Lizura — who was president and chief operating officer of the state Economic Development Authority when the law took effect — about the policy reasons behind the grocery store provision.

Given Camden’s status as a food desert, asked Jim Walden, the task force’s counsel, why not give out tax incentives to any grocery store that moves into Camden?

“I don’t know what — whoever put it in — what their policy was,” Lizura said.

Walden raised the Cherkas proposal, asking if the provision added to the bill would have “effectively killed that deal.”

“Well, this provision wouldn’t apply to that deal,” Lizura said, later adding: “We would not be able to advance that project further.”

THE NORCROSS CONNECTION

The amendments to the bill were drafted by Colin Newman, then senior counsel in Christie’s office, and Kevin Sheehan, a high-ranking attorney with Parker McCay, according to a document previously obtained by POLITICO, and first reported by The New York Times.

Parker McCay’s managing shareholder is Philip Norcross, the brother of George and Donald Norcross, who is now a member of Congress and used to boast that, as a member of the state Senate, he had “led the charge” in getting the now-controversial bill passed.

Numerous companies tied to George Norcross, including his insurance brokerage and a hospital system he chairs, have been awarded huge tax credits for Camden projects through the incentive programs. Norcross sued Murphy to try to stop the investigation into the programs, but a state judge last week dismissed the complaint. Norcross is appealing that decision.

Sheehan also wrote a number of other amendments to the tax incentive bill, some of which later benefited clients of Parker McCay.

Sheehan and other representatives at the firm did not respond to numerous requests for comment, including a detailed list of questions, placed over several months via email and phone calls.

The Ravitz family denied retaining Parker McCay “to represent it in this matter or with regard to any related legislation,” and also said the allegation by Cherkas “is simply not true.“

“The site Cherkas hoped to develop with a ShopRite store was considered by retailer-owned cooperative Wakefern Food Corp.,” Shawn Ravitz, the vice president of administration for Ravitz Family Markets, said in a statement provided to POLITICO via a spokesperson for Wakefern. “Like all proposed store sites, an internal review was conducted, but the site was not approved for development. It’s that simple.”

Ravitz said his company, as part of the process of planning a store in Camden — “and at the developer’s request“ — provided “information and offered insights into the proposed store’s operations and financial model.“

“Ultimately, the parties were unable to bring the store to fruition,” he said.

The developer, the Goldenberg Group, declined to comment for this story.

While it remains unclear if Parker McCay represented the Goldenberg Group, Optimus Partners — a lobbying firm run by Philip Norcross — did, according to documents filed with the Election Law Enforcement Commission.

The Goldenberg Group retained Optimus Partners at some point in the third quarter of 2013, potentially when the tax incentive law was being crafted, according to the documents filed with ELEC. Christie signed the measure on Sept. 18 of that year.

ELEC records show Optimus Partners working on behalf of the developer, lobbied the EDA with respect to the Grow NJ program. Philip Norcross was among those to do so.

At some point after the tax incentives law was signed, Parker McCay also began representing the proposed ShopRite project as the companies considered applying for tax credits, according to numerous emails obtained by POLITICO. It’s not clear if the law firm had been retained by the Ravitz organization, the Goldenberg Group or both.

Sheehan began asking officials at the EDA about tax credits for a Camden supermarket as early as Sept. 30, 2013. He didn’t name his client at that time.

By July 2014, Sheehan made clear that either the Goldenberg Group or Ravitz Family Markets were interested in applying for tax credits for the Camden ShopRite under the specific provision he helped write.

They were facing one obstacle, however.

The project was supposed to include a liquor store that would be run out of a separate condo unit from the grocery store in order to qualify for incentives under a separate program the Goldenberg Group wanted to use to finance the overall real estate project. The developers insisted the liquor store count toward the required supermarket portion of the project, Sheehan wrote to state officials, including a deputy attorney general.

“In order to make this project work, the developer must be able to include the liquor store in the 50% supermarket component,” Sheehan wrote in one of the emails.

He argued the liquor store was no different than a bank located in a grocery store, except that it would be part of a separate condo unit.

Gabriel Chacon, the deputy attorney general copied in the email, replied 11 days later: “We currently don’t see any issues with including both condo units you describe as part of the full service supermarket that must occupy at least 40% of the retail facility.”

A RINGING DEFENSE

Despite the accusation by the task force and Cherkas about the intent of the provision added to the law, former state Sen. Raymond Lesniak — the prime sponsor of the Economic Opportunity Act — defended the changes. While he did not deny the language may have been tailored to help one project, arguing such efforts are legal, he said the intent wasn’t to limit competition.

“That’s bullshit,” Lesniak said in an interview. “It’s total bullshit.”

Lesniak, a Democrat from Union County who retired last year after unsuccessfully running for governor against Murphy, said the provision was designed to attract a mixed use-development as opposed to the single-use purpose of a grocery store.

A standalone supermarket is a good thing, he said, but one that is part of mixed-use complex would add even more value for Camden, which has been ranked as one of the poorest and most dangerous cities in America but has made strides in recent years.

“Here’s what reporters and politicians who want to exploit this issue either don’t understand or understand but don’t care about the truth: mixed uses are important,” Lesniak said. “It was a legitimate economic development tool for the poorest city in the state.”

Still, Senate President Steve Sweeney, who has created his own committee to examine the tax incentive programs, told reporters in May the provision is something the committee will review.

“We’ve all been pushing for a supermarket to open up in Camden. That was one of the big goals that we were looking to obtain,” Sweeney said. “So when the time comes, this committee will review that. Listen, the committee we formed isn’t going to hold back.”

‘FOOD AND WATER IS A LUXURY’

Meanwhile, Camden remains a food desert, and residents there see no signs that access to food will improve any soon time soon.

Anastasia Fabian says getting to and from a grocery store used to mean walking at least an hour to Cousin’s supermarket in the far northeast corner of the city. Combined with water quality issues, she said, some basic needs can be hard to come by in the city.

“For us, in Camden, food and water is a luxury,” said Fabian, who is 52 and has since purchased a car. “It’s something we strive to obtain.”

Fabian and Salas have become involved in activism in their city, and are both members of NJ Communities United, a grassroots organization that represents historically marginalized communities in the state. They feel the state’s tax incentive overhaul was not meant to benefit the people of Camden, but the beneficiaries of George Norcross and his allies.

“All these tax initiatives weren’t meant for us,” Salas said, and then turned to the reporter interviewing her. “I’m sorry to say this, it was meant for people, like you, who lived outside the city.”

Despite never going through with its plans for the ShopRite, Ravitz Family Markets does own a PriceRite in Camden. The store opened in October 2014, about a year after a Pathmark closed on the same site.

While the PriceRite qualified for a $100,000 grant from the state and other partners to help it cover costs, the store is operating at a $500,000 loss and the Ravitz family says it is at risk of closing.

“We’ve been discussing exiting the market,” Jason Ravitz said in an interview published in New Jersey Monthly magazine in March. “I love that store, and I love my employees there. But we’re not doing well in terms of sales volume. We need to at least break even.”

Ravitz said he has gone to local officials for help, to no avail.

“No one’s listening,” he said.