Jersey City has announced it will conduct an audit of all its tax abatement deals with developers to try and help close the school funding gap.
This comes after the school district released an audit report stating the city and the Board of Education were missing millions of dollars due to inaccurate Payment In Lieu of Tax (PILOT) billings.
Mayor Steven Fulop announced that the city will be moving forward with hiring outside auditors to review all historical PILOT agreements per the recommendation of the Board of Education forensic audit, which will ensure the city is receiving the maximum amount of revenue according to each PILOT agreement, noting that additional dollars found will be transferred to the Board of Education.
“While our administration has done away with granting tax abatements, we feel it is important to audit the abatements that were granted by previous mayors to ensure that those agreements are being upheld,” Fulop said.
“Our priority over the next few months is to work closely with the Board of Education to solve the issues facing the city, and if there are recommendations from their audit that show areas where more money can be made available, our responsibility is to pursue it.”
The Jersey City School District faces a loss of more than $150 million in state aid over the next seven years.
The Jersey City Board of Education had a financial audit done, released in October of last year, which concluded that the school district lost more than $16 million a year since 2016 due to inaccurate PILOT billings.
New York City accounting firm PKF O’Connor Davies conducted the audit, selecting the top 19 properties which made up “the largest difference between the PILOT billing and the fully assessed tax,” according to PKF.
The 19 properties should be paying a combined $41.4 million on property valued more than $1 billion, according to the audit.
The 42-page audit also recommends the district cut 71 employees and switch health care to a self-insured plan, which would save the district nearly $23 million.
Mayor Fulop’s Administration has not granted any tax abatements for more than three years, because his position has been that this needs to be a tool used selectively and not given to nearly all projects, as previous mayors had done.
Currently, there are 178 active abatement agreements in Jersey City, ranging from five years to 30 years, with the oldest projects dating back to the early 1990s.
“We are thoroughly reviewing each PILOT agreement and all payments made, to ensure the city receives the maximum amount possible and that all PILOT payment calculations are correct,” said John Metro, director of the Department of Finance. “Once each audit is complete, we plan to contact property owners to confirm the billing adjustments. We will hold every developer accountable for their fair share of taxes.”
On Feb. 13, the city council is scheduled to review proposals for three firms: Donohue, Gironda, Doria & Tomkins, LLC; Wielkotz & Company, LLC; and Hodulik & Morrison, P.A. to review the PILOTs.
“This is significant and many years in the making,” said Ward D Councilman Michael Yun. “This is a declaration of Jersey City’s independence from the developer class, a signal that the voters are truly in control. Developers have received their abatements. This will insure that they are paying their fair share to our community and is our first step in finding additional funding for our schools.”
Last month, the Jersey City Council approved a November referendum which would allow residents to decide if the Jersey City Board of Education should be elected, or appointed by the mayor and approved by the city council.
Fulop, who supports an appointed board, said if the board was appointed it would allow city officials to be held accountable to the district and allow the city to help fix the budgeting crisis.
“Over the next few weeks, we intend on presenting a comprehensive plan for immediate and long-term funding to solve the issues facing the schools,” Fulop said. “We are working hard on finding new revenue and cost savings, and we expect the elected Board of Education members to do the same per recommendations from their forensic audit.”
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