Nick Corasaniti and Matthew Haag

But before the bill was approved by the Legislature, a series of changes were made to its language in June 2013 that were intended to grant specific companies hundreds of millions of dollars in additional tax breaks, with no public disclosure, according to interviews and documents obtained by The New York Times.

Many of the last-minute changes to drafts of the bill were made by a real estate lawyer, Kevin D. Sheehan, whose influential law firm has close ties to Democratic politicians and legislative leaders in New Jersey.

Sheehan was allowed by lawmakers to edit drafts of the bill in ways that opened up sizable tax breaks to his firm’s clients, according to a marked-up copy of the legislation obtained by The Times, which identifies Sheehan’s changes.

Nearly six years later, the fallout from the legislation has set off an uproar in the state Capitol over allegations that the state’s $11 billion in economic development programs have been poorly managed corporate giveaways that have brought few benefits to New Jersey.

One of the clauses added by Sheehan to the text of the bill helped a client, Holtec International, an energy technology company, to claim a tax credit of $260 million in 2014 to build a new headquarters at a port in Camden, New Jersey.

The state’s own analysis at the time indicated that for the $260 million tax credit to Holtec, the net benefit to taxpayers would be tiny: $155,520 in potential benefits for the state over 35 years, including new tax revenue, as well as the creation of 235 new jobs and the retention of 160 jobs.

That is about $650,000 in tax credits for each job.

Another clause that Sheehan inserted into the draft called for a tax credit for a “qualified business facility located in a priority area housing the United States headquarters and related facilities of an automobile manufacturer,” the draft of the legislation shows.

That language appeared intended to benefit just one company, Subaru of America, which ended up reaping a $118 million tax credit from the state, according to interviews and documents.

Sheehan, whose role in the drafting of the legislation has not been disclosed before, declined to be interviewed for this article.

His law firm, Parker McCay, said in a statement that it “was asked by policymakers, including those in the Legislature, to review this legislation and offer input and suggestions on ways it could be strengthened.”

Sheehan did not register to lobby on the 2013 Economic Opportunity Act, and the firm maintained that its work on the legislation did not amount to lobbying.

Parker McCay’s chief executive is Philip Norcross, whose brother is George Norcross, an insurance executive who is widely considered the most powerful Democratic political leader in southern New Jersey. Another brother is Donald Norcross, a former Democratic state senator who represented Camden and who is now a U.S. representative.

As a result of the 2013 legislation, George Norcross’ insurance firm, Conner Strong &amp; Buckelew, also benefited, receiving approval for an $86.2 million tax credit to relocate to an 18-story office tower in Camden.

In all, under the legislation, the state has granted at least $4.8 billion in tax credits extending well into the future, and it appears that the changes made by Sheehan helped to significantly increase the program’s cost.

The bill was approved overwhelmingly by the Democratic-controlled Legislature and signed by the governor at the time, Chris Christie, a Republican, who in recent weeks has contended that the state’s economic development programs have been a major success.

Christie and other supporters of the legislation said the programs were the only way to lure companies to economically depressed areas like Camden, a city of 75,000 on the Delaware River across from Philadelphia.

The Times’ findings about how the Economic Opportunity Act was approved were based on interviews with officials, lawmakers, lobbyists, corporate executives and others, as well as an extensive examination of government records.

A task force appointed by Gov. Philip D. Murphy, a Democrat elected in 2017, is examining whether the economic development programs, including those created under the Economic Opportunity Act, have delivered significant benefits or have been tilted toward helping politically connected firms and companies.

The task force last month referred evidence to federal prosecutors for possible criminal charges, though it was not immediately known whether the evidence might lead to charges against anyone.

In January, the state comptroller released a blistering audit that revealed “numerous significant deficiencies” in the state’s economic development programs.

The audit found that the tax credits from the 2013 act seemed to fall short of creating as many jobs as promised, and that the state badly managed the program.

The comptroller did not offer a complete analysis of the jobs created or retained by the legislation. But it did raise significant questions about the state’s long-standing policy of granting tax breaks.

It found that from 2005 and 2017, the New Jersey Economic Development Authority, the agency overseeing the tax credits, had approved 401 projects for tax breaks that were projected to create 50,633 new jobs and retain 33,727 jobs.

The comptroller scrutinized a sample of 48 projects during that time period, projected to create more than 8,700 jobs and retain 6,650 jobs. The audit found that it could not substantiate nearly 3,000 jobs the companies said they had created or retained.

“In the end, a lot of companies will make their decisions about where to go, and then kind of game the system to maximize how much in tax credits they can get,” said Jon Whiten, the deputy director of state communications at the Center on Budget and Policy Priorities, a liberal-leaning research organization in Washington.

“With all the changes that New Jersey made in 2013, the state just sort of surrendered more of the power in that equation to big businesses looking for bigger tax breaks,” he said.

Murphy has been an outspoken critic of the state’s economic development programs, saying that “a full accounting of how as much as $11 billion was squandered is now required.”

He recently demanded the resignation of five members of the Economic Development Authority. (So far, just one member, Larry Downes, the former board chair, has stepped down.)

Christie accused Murphy of “political assassination” over his criticism of the incentives.

“The program works,” Christie said at an event last month. “You can’t win the philosophical argument, so what you do is you vilify and lie about the program.”

Democrats in the Legislature who oversaw the passage of the bill, like Stephen M. Sweeney, the Senate president, have largely defended the program.

“We sought and welcomed the advice of a wide range of people who possess experience and expertise in the many aspects of economic development,” Sweeney said. “Their contributions made it a better bill.”

He said the legislation had helped to revitalize Camden and other cities. “These are investments that can produce real and lasting improvements.”

It is not entirely clear who allowed Sheehan, the lawyer at Parker McCay, to edit the drafts of the legislation.

Parker McCay has worked for several clients that received large tax breaks, including Holtec and Subaru of America. The law firm did not dispute that Sheehan made changes to the draft legislation. But firm said the work was not lobbying.

The firm said in a statement, “It would be a reckless mischaracterization of Parker McCay’s activities to state that Parker McCay was engaged in unregistered lobbying in 2013.”

New Jersey’s Election Law Enforcement Commission, which regulates lobbying, declined to comment on Parker McCay or Sheehan’s work on the legislation.

The commission said that, in general, “a lobbyist is defined as someone who is compensated to influence legislation, regulations or governmental processes by communicating with or providing a benefit to a high-level state official.”

Donald Norcross, who was a sponsor of the bill when he was in the state Senate, said he was not aware of changes made to the legislation.

In a statement, his office said: “Donald Norcross was a champion of the bill, as was every elected official from Camden and virtually every member of the state Legislature. He supported it because he knew it would be good for Camden and the facts are clear that it has been.”

Philip Norcross, the chief executive of Parker McCay, declined to comment.

George Norcross, the Democratic political leader, said in a statement that he “was a cheerleader and advocate for Camden for many years prior to the passage” of the 2013 legislation.

Companies relocating to Camden have been awarded $1.6 billion of the $4.9 billion handed out across the state under the 2013 legislation. The last-minute changes to the bill carved out special bonuses and lenient rules for companies moving there.

Holtec International, the energy technology company, is perhaps the biggest beneficiary in Camden. It began negotiating a move there in the weeks after the Economic Development Act was introduced in early 2013.

Over the following months, the Parker McCay law firm assisted Holtec in its relocation plans as the company sought to qualify for a large tax break when the bill became law, according to emails obtained by The Times.

By mid-June 2013, Holtec executives were told that the New Jersey Economic Development Authority had evaluated its potential application based on the latest version of the legislation and determined that it would qualify for a $121 million tax credit, emails show.

But after Sheehan and others made revisions to the bill, Holtec’s potential credit had jumped to $260 million because of new provisions that allowed companies to receive a tax credit equal to their total capital investment.

That provision pertained only to companies in Camden.

Joy Russell, a senior vice president at Holtec, said in a statement that Sheehan did not work as a lobbyist for the company, and the company had not asked him to make changes to the legislation.

Russell said, “Parker McCay was Holtec’s outside law firm for various matters.”

Despite Holtec’s monthslong pursuit of the Camden project, the company claimed in its application to also be seriously considering a move to Charleston, South Carolina.

New Jersey’s Economic Development Authority said Holtec had received a similar offer of tax credits from South Carolina.

But the mayor of Charleston at the time, Joseph P. Riley Jr., said in an interview that he had never heard of Holtec exploring a move there.

The Charleston Regional Development Alliance, which recruits companies to the region, said it was also unaware of the company weighing a move there.

Russell said in the statement that Holtec “seriously considered South Carolina to develop its technology campus (and other states).”

She did not provide documentation for Holtec’s offer of incentives from South Carolina.

Russell said the Camden project was “a true success story” and “the gold standard for the program.”

“The incentive programs of New Jersey were the reason Holtec International decided to make the largest private investment in the history of Camden,” she said.

Subaru had its North America headquarters in Cherry Hill, New Jersey, not far from Camden. But by 2013, the company began indicating that it might leave the state.

The Economic Development Authority awarded the company $118 million to relocate to Camden, saying the deal would result in a net benefit of $168 million in various forms of tax revenue and boosts to local businesses over 35 years. The company would also retain 500 jobs and create 100 more.

Dominick Infante, director of communications for Subaru of America, said in an email that Sheehan worked for a real estate developer, Brandywine, which worked on what would eventually become the headquarters of Subaru.

Sheehan was Brandywine’s lawyer on that project, according to public records.

Until this week, the Parker McCay website hailed its success in obtaining “hundreds of millions of dollars” in tax credits. It said one of its clients that earned tax credits in Camden was an “automobile manufacturer.”

But after Parker McCay was contacted by The Times about the 2013 legislation, that section of the law firm’s website disappeared.

This article originally appeared in <a href="https://www.nytimes.com/2019/05/01/nyregion/nj-tax-break-kevin-sheehan.html" id="9cf9acc1-c036-35e8-a529-02344b03f90c">The New York Times</a>.

It was called the Economic Opportunity Act, a measure intended to kick-start the sputtering post-recession economy in New Jersey, particularly in its struggling cities. The state would award lucrative tax breaks to businesses if they moved to New Jersey or remained in the state, creating and retaining jobs.

The Tax Break Was $260 Million. Benefit to the State Was Tiny: $155,520.

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Nick Corasaniti and Matthew Haag

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The Tax Break Was $260 Million. Benefit to the State Was Tiny: $155,520.