Jersey City officials are disputing a recent report from a statewide think tank that says tax abatements for developments along the city’s waterfront are disadvantageous and possibly unnecessary.
For many years, Jersey City has offered developers special formulas for their property taxes, as an incentive for them to build here. This spares the developers from the vagaries of regular fluctuating property taxes, and the money can go straight into the city budget, rather than being shared with the school system.
But some say that developers no longer need an incentive to build on the city’s prosperous waterfront, and that it’s not fair that other taxpayers have to pay regular school taxes while developers don’t contribute.
Naomi Bressler, a policy analyst with New Jersey Policy Perspective (NJPP), presented a report critiquing the city’s abatement policy during the City Council caucus on Monday.
“From my perspective, the conclusions were not accurate.” – Eugene Paolino
The report also echoes what critics have long argued, that abatements may not be needed to entice developers to build on the waterfront anymore since it has become such a desirable area. It recommends city and state officials limit abatements to no longer than 10 years, establish a state review of all property tax abatements above a certain value, and make abatement negotiations public.
The city responded Monday by charging that the report was inaccurate and uninformed on the city’s abatement policy. They have also countered with their own report rebutting the points made by abatement critics.
At the meeting, Bressler was questioned by Assistant City Corporation Counsel Joanne Monahan and City Business Administrator Brian O’Reilly over what they called inaccuracies in the report. They challenged her on her knowledge of abatement policy, which a feisty Bressler tried to deflect by saying she was looking for questions on the “substance of the report.”
Councilman Michael Sottolano had a spirited back-and-forth with Bressler about whether abatements helped stabilize the city’s tax rate.
O’Reilly offered a 29-page rebuttal to the NJPP report – created in July – and invited Bressler to come back or to submit her response to their rebuttal by e-mail.
After the presentation, Bressler said she felt city officials were employing a “tactic” of questioning her on information she didn’t have in front of her.
Differing views unabated
When Bressler was speaking, she had a small audience of local residents who agreed.
Yvonne Balcer, longtime critic of abatements and a Downtown Jersey City homeowner, said she had read the NJPP report and said Bressler was “right on.” She said the council had tried to “justify their actions” in granting abatements, which she said resulted in the city not paying its fair share of county and school taxes.
However, local attorney Eugene Paolino, who has represented various developers seeking abatements from Jersey City government, said he found it “interesting” that Bressler wanted to speak only on the recommendations and not address how the report was put together.
“It seems to me that the recommendations were based on the conclusions made in the report,” Paolino said. “From my perspective, the conclusions were not accurate.”
The city makes its case
In a meeting on Tuesday at City Hall with members of the local media, O’ Reilly, Monahan, and Deputy Mayor Rosemary McFadden said the NJPP researchers who put together the report should have done “due diligence.”
An example of the supposed inadequate research was the money received by the city for the abatement of the Sugar House, a 65-unit condominium building on Washington Street downtown, where condos sell for as much as $1 million.
Based on information gathered online, the NJPP report found that in 2007, the owners of the Sugar House, under their tax abatement, paid a total of $695,477 to Jersey City, consisting of $39,066 in taxes and $656,411 in payments in lieu of taxes (or PILOT). The report claims that under normal taxation the developers would have paid $1,627,108 or $931,631 more. They say city would have received $746,845; the county would have received $413,741 and the Jersey City School District, $455,965.
However, O’Reilly said the city’s calculations found that the Sugar House owners, under normal taxation, would have paid $1,016,344, with the city’s share $466,364. Under the abatement agreement the Sugar House paid $652,216 directly to the city. So while other entities may have missed out, the city benefited.
McFadden said the benefits of the abatements have gone beyond just giving tax breaks to wealthy developers and the tenants occupying their buildings, pointing out that development has created 22,000 full-time jobs and added $15 million to the city’s Affordable Housing Trust Fund since 2003.
However, the city is agreeing to the report’s call for transparency by putting the city’s rebuttal to the report and another report on the financial benefits of abatements on the city website: www.cityofjerseycity.com.
And the city is planning to open tax abatement committee meetings to the public.
Healy says no revised abatement for 77 Hudson St.
Mayor Jerramiah Healy on Monday sent a letter to the City Council stating that he does not support an amendment to the 20-year abatement for the $250 million 77 Hudson St. development project.
As with other developers, the owners of this project already received an abatement for it years ago, but wanted to revise it because of the economy.
Their proposed amendment would extend their abatement 10 more years and reduce the project’s service charge.
Healy said he reviewed the application himself and found that 77 Hudson St. should not have an amended abatement because is “nearly fully developed.” - RK
Ricardo Kaulessar can be reached at email@example.com.