A top New Jersey official remains confident Fiserv will satisfy hiring promises it’s made to the state, despite the company’s recent cost-cutting moves.
The New Jersey Economic Development Authority last year granted the payments and fintech company an Emerge award, promising $109.2 million in state tax credits over seven years in exchange for Fiserv creating and retaining about 3,000 jobs and investing $105.6 million in a new Berkeley Heights, New Jersey, corporate campus.
Fiserv won’t get a penny of the tax credits it’s seeking from the state until the company proves it’s satisfied the jobs pledge, said Tim Sullivan, CEO of the New Jersey agency. That said, he’s not tracking progress in the company’s hiring at its Berkeley Heights “hub” facility in the meantime.
“Until they come in to certify, I don't have any specific insights into what (Fiserv’s) numbers are,” Sullivan said in an interview last week.
Specifically, Fiserv agreed to create 1,927 jobs, and retain 1,063 jobs in the state that might otherwise be moved out of the state. It has until Sept. 29, 2024 to meet those terms, with the possibility of two six-month extensions, a spokesperson for the agency said. At that point, if the agency has verified the company has met the requirements, Fiserv will begin receiving tax credits.
The company could certify prior to the 2024 date, but Sullivan said he didn’t have any insights into whether Fiserv is ahead or behind schedule on meeting the job creation terms.
“I fully expect and hope that the company is going to meet its requirements and meet its obligations in New Jersey,” Sullivan said. “And if they don’t, taxpayers of New Jersey won’t have their resources committed to the company.”
Assessing job promises
Fiserv in recent months has cut workers and sold off business units to shore up profit margins. And like many other payments companies, it’s grappling with inflationary pressures. But it’s also been outfitting the Berkeley Heights campus and shifting workers there.
The company seeks similar tax benefits in Wisconsin, as it makes plans to relocate its global headquarters from suburban Brookfield, Wisconsin, to Milwaukee.
Fiserv has said it’s concentrating its presence in seven U.S. cities and has closed about 100 offices in the process as it sheds employees. As of the end of last year, the company had about 44,000 employees, according to an annual regulatory filing. A Fiserv spokesperson has said that’s also the current headcount figure.
New Jersey's Emerge program is aimed partly at retaining businesses that threaten to reduce operations in the state. Sullivan declined to comment on whether Fiserv threatened to leave New Jersey or the negotiations between the agency and the company.
Still, the state agency’s documents show Alpharetta, Georgia, was an “alternative location” for Fiserv’s plans – that’s a city in which the company already has a significant presence. Fiserv also received an incentive offer from Georgia – $89.5 million, as well as a local tax abatement over a decade valued at $3.2 million – and shared that with the NJ EDA, according to the agency documents.
The NJ EDA’s Emerge program aims to spur economic development by offering per-job tax credits for up to seven years, according to agency documents.
Party City is the only other company that’s received an Emerge award, although that award is now in jeopardy since the company has said it’s cutting jobs, The (Bergen, New Jersey) Record reported.
When companies promising job creation and capital expenditures in the state come to the EDA seeking incentives, “we verify whether that promise is realistic or not,” Sullivan said.
He added, however, that with a company of Fiserv’s size and scope, “there’s a higher degree of credibility to those assertions,” and the EDA employs “more of a reasonableness assessment than a verification,” Sullivan said.
Once Fiserv has created the specified number of jobs and is ready to certify, the NJ EDA will go through a “very robust process” to ensure compliance, Sullivan said. The agency obtains job logs and payroll reports from companies, and it verifies that information against other state sources such as the labor department.
The agency also does site visits to ensure the company is providing accurate information, he said, adding that the Emerge award comes with in-office requirements.
To receive the tax credit each subsequent year, Fiserv will have to maintain the number of jobs it committed to during the seven-year period, Sullivan said.
The program is “100% performance-based,” Sullivan said. “Even if you get a tax credit in year one or year four, if, in year five, you drop below the number of jobs you need to have, there’s consequences.”
A company might drop out of a program or have old tax credits recaptured, Sullivan said. He added that happens with “reasonable frequency” across the state’s broader set of tax credit programs. In January, the agency said it had reduced tax credits for 82 companies that didn’t live up to job creation or retention promises; those cuts amounted to $350 million, the EDA said in a news release.
When asked about recent cost-cutting at Fiserv, Sullivan acknowledged “we’re in a challenging part of the business cycle right now. That’s not a surprising outcome of some softening economic conditions.”
Still, he asserted, Fiserv “has given us no indication that they have any change of plans in New Jersey.”
As for the jobs Fiserv has pledged to create and retain at its Wisconsin headquarters, Sullivan said there’s “no reason to think the company is not able to meet” its commitments in both New Jersey and Wisconsin. Nonetheless, he hedged on having any details about Fiserv’s plans elsewhere. “I don't have any insider visibility into the nature of the agreement with the good people of Milwaukee or Wisconsin,” Sullivan said.
“My insights and interests are exclusively limited to how many jobs are being retained and created in New Jersey,” he said. “If they don't live up to that agreement, they won't get the benefits that were promised to them.”