The highlight of the March 28 City Council meeting – which was pushed back a day because of the religious holiday – was supposed to be the public hearing on the city’s proposed $486 million municipal budget for 2013.
But since only three people at the council meeting – resident and taxpayer advocate Yvonne Balcer, City Business Administrator Jack Kelly, and Assistant Business Administrator/Budget Director Robert J. Kakoleski – seemed to fully understand or even care about the spending plan, this public hearing was overshadowed by a trio of tax abatements that were approved by the council later in the evening.
The council unanimously approved a 12-year tax abatement for the redevelopment of the vacant social services building at 100 Newkirk St. Two other 10-year abatements were approved by the council majority for developments downtown at 200 Greene St. and 160 Morgan St.
Ward E City Councilman and mayoral candidate Steven Fulop, who currently represents the ward where these latter two developments will be built, voted in opposition to these abatements. The remaining City Council members voted in favor of all three tax deals, arguing that the projects will general much-needed jobs for construction workers.
Lavarro: ‘The time is now’
Developers often enter into a tax abatement agreement, or payment in lieu of taxes (PILOT), to pay a separate fee to the city instead of paying fluctuating property taxes. This keeps their tax rate stable over a number of years. The amount they pay is sometimes equal to regular taxes, and can be based on a percentage of their profits. The money goes directly into the city budget and does not support local schools, although developers pay a nominal fee for county taxes.
The original intent of such deals was to draw developers to blighted areas.
The two developments planned for 200 Greene and 160 Morgan are both large-scale projects that are expected to produce hundreds of construction jobs. The project at 160 Morgan is also expected to add life to long-dormant plans to create the Powerhouse Arts District.
A development that will be built in three phases by Toll Bros., 160 Morgan will include 417 residential housing units in its first phase and will create 415 construction jobs during the first phase of development. The city anticipates there will be approximately 31 full-time and 12 part-time jobs in this phase.
The public hearing on the 2013 municipal budget was overshadowed by a trio of tax abatements that were approved by the council later in the evening.
In exchange, the city has approved a tax abatement package that will require Toll Bros. to pay 10 percent in revenue to the city in taxes in the first four years. Over the next four years the developer will pay to the city 12 percent of its revenue in municipal taxes. In the final two years of the abatement, the developer will pay 14 percent.
Ward A City Councilman Michael Sottolano, chairman of the Tax Abatement Committee, estimated that it will “take about 10 years to complete” all three phases of this project.
The second large-scale abatement approved last week was granted to 200 Greene St., a project that will generate approximately 700 construction jobs during the build-out of the 763-unit high rise.
“I normally don’t approve of abatements for developments near the waterfront,” said Councilman At-large Rolando Lavarro Jr. “But the sheer size of this project, and the large number of jobs that it will produce, outweighs opposition in this case.”
Developer Mack-Cali will contribute $1.5 million to the Affordable Housing Trust Fund, as most developers do when granted a tax abatement from the city.
As in the case of 160 Morgan St., the developer of 200 Greene will also pay 10 percent in the first four years, 12 percent in years five through eight, and 14 percent in the last two years of the agreement.
The final abatement approved last week was for the conversion of an existing building into residential property.
An old social services building 100 Newkirk St., near Journal Square, will be converted into a residential housing development with 56 rental units. The Hopkins Group, the developer of this project, will contribute $84,000 to the city’s Affordable Housing Trust Fund.
Several development projects, including the Journal Squared development, have recently been approved for the Journal Square community, an area that saw little, if any, new development during the pre-recession housing boom in Jersey City.
“If shovels go in the ground anywhere in Journal Square it’s a good thing,” said Sottolano.
Lavarro agreed, but also sent a warning to developers.
“If there are other developers out there watching, and they are interested in getting an abatement from the city, Journal Square is an area where the is opportunity, so the time to get in is now, not 20 years from now, when there’s no risk to developing in this area.”
About that budget…
Balcer was the only member of the public who chose to speak at the public hearing regarding the budget. Balcer, who had read every single line item in the budget document, asked questions about several expenditures that concerned her. The glassy-eyed council members either zoned out or caught up on e-mail as Balcer, a retired math teacher, raised questions about the city’s bonds and debt.
The dozens of construction workers who had shown up to express support for the approved construction projects nearly drowned Balcer out with conversation.
At present, the proposed $486 million spending plan does not include a tax increase.
The 2013 municipal tax levy, according to Kakoleski, is $201,968,235, some $17,836 less than last year. The municipal tax rate for every $1,000 of assessed valuation of property is $3.47.
This amount pertains only to municipal taxes. This figure does not include the amount of money property owners pay to the school system. The Board of Education recently approved a budget of $660 million for the 2013-2014 school year that includes at two percent tax increase.
The municipal budget is often amended several times before it is passed and can include an increase when adopted.
E-mail E. Assata Wright at email@example.com.