Judge rules in favor of Holtec in dispute over EDA tax credits

·4 min read

TRENTON – A state judge has ordered New Jersey’s Economic Development Authority to pay $26 million in disputed tax credits to Holtec International of Camden.

In a 41-page ruling, Superior Court Judge Robert Lougy rejected the EDA’s claim that it could revoke the incentives due to alleged misrepresentations in Holtec’s application.

Holtec made the contested statements before obtaining EDA tax breaks worth $260 million for its 47-acre technology campus on the South Camden waterfront.

The authority's board approved the request in 2014, but later withheld $26 million in incentives for the 2018 tax year.

The EDA asserted Holtec voided its contract with the authority by providing incorrect information about its debarment history and the offer of free land for possible expansion to alternate sites in South Carolina.

But Lougy, ruling on a breach-of-contract lawsuit brought by Holtec in 2020, found the company did not make “any statement ‘false, misleading or inaccurate in any material respect’ and, thus, did not default under the agreement.”

The judge also noted Holtec, which relocated from Evesham to Camden in 2017, had made “the largest private investment in the history of the state’s poorest city"

He said Holtec, which serves the nuclear power industry, "performed under the contract (and the EDA) received the benefit of the exchange,"

"As such, (Holtec) is entitled to the agreed upon tax credits," wrote the Mercer County judge.

Holtec International in Camden, N.J. Friday, May 10, 2019.
Holtec International in Camden, N.J. Friday, May 10, 2019.

Lougy directed the EDA to provide Holtec with a long-denied “letter of compliance for the full $26 million annual amount for the 2018 tax period.”

Representatives of Holtec and the EDA split sharply over the ruling.

“Holtec is pleased by the judge’s decision and looks forward to working with the state of New Jersey and the city of Camden in the future,” company spokesman Joseph Delmar said Tuesday.

But EDA spokeswoman Virginia Pellerin said the agency was “disappointed” in the Dec. 30 ruling.

“We are considering a possible appeal and do not have any further comment at this time,” she said.

Related: NRC proposes $150K penalty for Holtec after Oyster Creek inspection

Lougy’s ruling granted summary judgment for Holtec, finding the company had essentially proven its case against the EDA.

Among other points, he said the EDA application's question about debarment was "ambiguous" — and that "the court declines to hold that ambiguity against (Holtec)."

The question requested a yes-or-no answer about debarment by any entity of the state or federal government.

Holtec answered "no" in 2014, but changed that to "yes" in 2019, describing its initial response as "an inadvertent mistake."

Holtec at that time acknowledged it had been debarred for 10 days by the Tennessee Valley Authority in 2010 after an investigation found a TVA manager had received money from the South Jersey firm.

The debarment question was the focus of a 2019 report by a task force appointed by Gov. Phil Murphy to review EDA operations under former Gov. Chris Christie. The task force also noted Holtec had not documented its claim of being offered free land in South Carolina.

But Lougy pointed to a Holtec executive's uncertainty over whether the debarment question applied to current or past incidents. He also said EDA staffers "were aware of confusion among applicants" over the question, including its relevant time period.

Lougy also said Holtec, at a period "close in time" to its EDA request, had disclosed the debarment "to another entity in response to an application's question that clearly called for its disclosure."

"Other than the ambiguity of (the EDA's) application, nothing distinguishes (Holtec's) disclosure in one instance and failure to do so in the other," the judge asserted.

Lougy also found Holtec "did not misrepresent its offer of free land in South Carolina."

He noted the EDA did not request documentation of any land offer in South Carolina, and that Holtec "consistently and explicitly referred to land costs as assumptions."

Lougy also said depositions by current and former EDA staffers “established that, given the magnitude of the project and the higher costs associated with construction in New Jersey, land costs were not a material factor" in the EDA's approval of Holtec's application.

Jim Walsh covers public safety, economic development and other beats for the Courier-Post, Burlington County Times and The Daily Journal.

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This article originally appeared on Cherry Hill Courier-Post: Holtec: Camden NJ firm wins case over EDA credits dispute

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