Tax Abatements

[bdlaw]

Yeah well just wait for the reval...

[Isilme]

+1 woodsy and f%$* the 6 that voted for it, sell outs!

Remember the 6 sell outs who voted for the regular man to help pay for the developer's bills. Do they feel that its bad for the city if we have OUR houses sitting vacant and boarded up because things went poorly for us?  NO THEY DON'T!!  Next election lets hope more than 20% of Jersey City voters get their tired behinds out there and VOTE these people out!

[shahaggy]

+1 woodsy and f%$* the 6 that voted for it, sell outs!

[fasteddie]

"Fisher is asking to extend the length of the PILOT, or Payments in Lieu of Taxes, agreement from 20 to 30 years and reduce the percentage of annual gross revenue paid from 16 to 11 percent for the first five years, with 13 percent payments for the next five years, and 16 percent payments for the final 20 years."

Dumb question: What is meant by "annual gross revenue" in cases like this where units are sold not rented? How does this work? Does this mean 11% of total sale proceeds for the year? So, if you don't sell any units your payment is $0?

[Woodsy]

Council members Phil Kenny, Steve Fulop and Viola Richardson voted against the ordinance.

Thank you all for standing up for the residents of your wards who are now being forced to shoulder more of the county and school taxes as a result of this passing.  Shame on the rest of the council. 

"I've heard the same argument for 16 years, abatements are bad, abatements are bad, abatements are bad," said Ward D Councilman Bill Gaughan. "To me an abatement is a tool. It's a tool to move our city forward."

Yes it's a tool.  A tool to encourage development.  The property is already developed.  How does sweetening the pot now, after the development has already occurred, further this end?  Oh yeah I forgot, it's also a tool to give handouts to developers who in turn give you campaign contributions.    Way to stick it to the residents of your ward for your own personal gain Bill Gaughan. 

[Woodsy]

JJ:

Jersey City Municipal Council approves a sweeter tax abatement for luxury waterfront condo developer
by Amy Sara Clark
The Jersey Journal
Thursday June 18, 2009, 12:20 AM

By a vote of 6-3, the Jersey City Municipal Council sweetened the PILOT agreement a luxury condo tower on the Jersey City waterfront.

Council members Phil Kenny, Steve Fulop and Viola Richardson voted against the ordinance.

Fisher Development Associates, the developer of Crystal Point, located at 2 Second St., requested the revised deal due to slow sales.

The developer of the 42-story Crystal Point says only 24 of the eventual 269 condos have sold since going on the market a few months ago -- despite a 30 percent price reduction.

Fisher is asking to extend the length of the PILOT, or Payments in Lieu of Taxes, agreement from 20 to 30 years and reduce the percentage of annual gross revenue paid from 16 to 11 percent for the first five years, with 13 percent payments for the next five years, and 16 percent payments for the final 20 years.

Jersey City's Tax Abatement Committee recommended approval, despite a memo against it from Al Cameron, deputy director of the city's Department of Housing, Economic Development and Commerce, arguing that the change would cost the city millions of dollars.

Nearly two dozen people spoke against the abatement (none spoke for it) -- including Dan Levin, Norrice Raymaker, Andrew Hubsch and Rolando Lavarro, who all ran unsuccessfully in last month's municipal election -- saying it sets a dangerous precedence, was "an arbitrary handout" and just doesn't make sense.

"The game of real estate is like a game of poker," said resident Sebastian Bernheim. "Times are tough for all of us. The citizens of Jersey City should not be forced to bail out a gambler."

"I don't get it," said resident Meg Cohen. "All other major cities that have these kinds of views, they don't give these kinds of tax abatements on these kinds of properties. If you vote for this, I'm just flabbergasted."

But several of those voting for it defended their decision, saying the city won't get any taxes from units that remain empty.

"I've heard the same argument for 16 years, abatements are bad, abatements are bad, abatements are bad," said Ward D Councilman Bill Gaughan. "To me an abatement is a tool. It's a tool to move our city forward."

[MÇA]

JJ:


Council to vote on developer's request to reduce payments
Wednesday, June 17, 2009
By AMY SARA CLARK
JOURNAL STAFF WRITER

The Jersey City Council is set to vote tonight on whether the developer of a luxury condo tower on the Jersey City waterfront can revise its PILOT agreement with the city due to slow sales.

According to James C. McCann, an attorney for Fisher Development Associates, the developer of Crystal Point, who came to Monday's City Council caucus to defend the request, only 24 of the eventual 269 condos have sold since going on the market a few months ago - despite a 30 percent price reduction. The 42-story building is located at 2 Second St.

Fisher is asking to extend the length of the PILOT, or Payments in Lieu of Taxes, agreement from 20 to 30 years and reduce the percentage of annual gross revenue paid from 16 to 11 percent for the first five years, with 13 percent payments for the next five years, and 16 percent payments for the final 20 years.

Jersey City's Tax Abatement Committee recommended approval, despite a memo against it from Al Cameron, deputy director of the city's Department of Housing, Economic Development and Commerce, arguing that the change would cost the city millions of dollars.

At Monday's caucus, Downtown Councilman Steve Fulop argued that the risk taken by the developer should not be shifted to the "backs of taxpayers" and that the building will sell if prices are lowered far enough. He also said that if the council gives Crystal Point a break due to the economy, every development project in the city will ask for the same.

"I would urge you all to consider that this would be a very dangerous precedence," he said.

Greenville Councilman Michael Sottolano and City Council President Mariano Vega, who serves on the Tax Abatement Committee, argued that if the project doesn't go forward it could affect the value of a city-owned site directly across from it.

"We know that the economy is not very strong right now and we want to continue growing the development in our city," Vega said in an interview yesterday.

Fulop has the backing of the New Jersey Policy Perspective, a think tank that is due to release a study on Jersey City's tax abatement policy next month.

"We're really concerned about the precedent Jersey City is setting," said Naomi Bressler, a policy analyst at NNPP who worked on the study. She said Jersey City's policy seems to be "a tax giveaway" for "any or all developers."

[Isilme]

Wow, another unfortunate developer down on his luck!  But not to worry, thanks to more nice reworked PILOTs, the rest of us little guys who pay taxes that include schools and Hudson County rates, can prop him up during his hard times.  And if we have hard times...oh yeah, tough luck, we should have spent our money more carefully.  Thanks Mr. Vega!

[duke_of_earl]

But City Council President Mariano Vega argued in favor of the ordinance, saying that if Jersey City has one development project fails "it will have a ripple effect on the rest of the city."

"I don't need an empty development on the waterfront or anywhere in Jersey City," he said.

Thank god somebody is standing up for the downtrodden developers!  Mariano Vega, two thumbs way, WAY up for you!!

duke

[MÇA]

Jersey City Council mulls new PILOT deal for waterfront developer
by Amy Sara Clark / The Jersey Journal
Monday June 01, 2009, 11:55 PM

Claiming slow sales, the developer of a luxury condo tower on the Jersey City waterfront is asking to revise its PILOT agreement with the city.

"The developer is really losing his shirt," said James C. McCann, an attorney for the Fisher Development Associates. "This is a question of survival or failure."

The development, called Crystal Point, is located at 2 Second Street, right on the waterfront.

According to McCann, who came to tonight's City Council caucus to defend the request, only 24 of the 42-story tower's eventual 269 condos have sold since they went on the market a few months ago, despite a price drop of 30 percent. The last two units were sold below cost, he said.

Fisher is asking to extend the length of the PILOT, or Payments in Lieu of Taxes, agreement from 20 to 30 years and reduce the percentage of annual gross revenue paid from 16 percent to 10 percent for the first five years and to 12 percent for the next five years. The developer will pay the full 16 percent in the final two decades of the agreement.

Jersey City's Tax Abatement Committee recommended giving the OK, despite a memo arguing against the change from Al Cameron, deputy director of the city's Department of Housing, Economic Development and Commerce.

Cameron estimated that the deal could cost the city almost $20 million over the next 30 years, but McCann disputes those calculations, arguing that the city will get more from abatements in the final decade of the extended contract than it would from conventional taxes. (Neither side can be proven right, since it is not possible to know for sure what the building would bring in conventional taxes 20 years from now.)

McCann said lowering the PILOT payments for the first 10 years will help fill the units, which can only be beneficial to the city.

"If the units don't sell there's not going to be any revenue to the city," he said.

Ward E Councilman Steven Fulop argued vehemently against allowing the change, saying that if the break is granted to this building, every other developer in the city would soon be asking for a revised deal.

"This is a dangerous slippery slope we're going down," he said.

He added that if the city is going to start granting better tax rates due to slow sales, why shouldn't all homeowners trying to sell get the same deal?

"There are nearly 2,000 apartments for sale in Jersey City. To me there is no difference between (Crystal Pointe) and the person who is looking to sell on Mercer Street and is struggling to sell because of high taxes," he said.

But City Council President Mariano Vega argued in favor of the ordinance, saying that if Jersey City has one development project fails "it will have a ripple effect on the rest of the city."

"I don't need an empty development on the waterfront or anywhere in Jersey City," he said.

The ordinance proposing the change will be introduced at Wednesday night's City Council meeting.

[duke_of_earl]

"This is really a sea change in our approach to PILOTs," Zimmer said, using the shorthand for the concept known as payment in lieu of taxes. "We've always taken the approach that PILOTs are a good thing for the taxpayer. But what if they're not?"

Slightly better than asking this question after the fact is asking the question before PILOTs became a standard.

"The way we have done PILOTs has contributed to our financial crisis," Zimmer said. "When taxes go up, everyone outside the tax-abated area has to pay the price."

Is this true?  My understanding is that PILOTs were on a percentage basis and not fixed rate....

duke

[MÇA]

JJ:


Council: Get more info before tax abatements
Monday, April 20, 2009
By CARLY BALDWIN
JOURNAL STAFF WRITER

HOBOKEN - The City Council has unanimously approved a resolution that will give the city more information before Hoboken hands out tax abatements.

The resolution, sponsored by Councilwoman Dawn Zimmer, requires that the city's finance director do a comparative financial analysis for all developments seeking tax abatements.

The analysis would compare a tax-abated property with how much they would pay under normal taxation, and whether the abatement would benefit other taxpayers.

"This is really a sea change in our approach to PILOTs," Zimmer said, using the shorthand for the concept known as payment in lieu of taxes. "We've always taken the approach that PILOTs are a good thing for the taxpayer. But what if they're not?"

Several properties in Hoboken are tax-abated, including 1100 Adams St., 800 Jackson St., and 1200 and 1300 Grand Streets.

The comparison would be made available to the council and public 30 days before the vote. The resolution also mandates that if those payments are projected to be less than what would be collected normally, the developer would have to show some sort of give-back to the city, such as a public park.

"The way we have done PILOTs has contributed to our financial crisis," Zimmer said. "When taxes go up, everyone outside the tax-abated area has to pay the price."

Fred Bado, the city's community development director, said he routinely does comparative analyses for tax abatements, but he was not formally required to.

[bdlaw]

What the state giveth, the state taketh away.

When you take money you become beholden.  Why would the city want to take money from the state?

[pinky]

On Jan. 23, 2008 Councilman Fulop voted in favor of introducing ordinance #08-11 a 20 year tax abatement for a market rate residential condominium project to be constructed by the Warren and York Urban Renewal Corporation LLC, in the Paulus Hook section of Jersey City.

Jan 23rd Council Agenda:
http://www.cityofjerseycity.com/uploadedFiles/Public_Notices/Agenda/city_council_agenda/CC%20AGN%202008%2001%2023.pdf

Ordinance # 08-11:
http://www.cityofjerseycity.com/uploadedFiles/Public_Notices/Agenda/city_council_agenda/CC%20OR1%202008%2001%2023.pdf


I don't quite understand how a person who is 100% against tax abatements, votes in favor of introducing one in downtown on Warren and York?

[MÇA]

Manzo rips tax abatements at budget hearing

More on this hearing from today's JJ Political Insider column:

IN THE GOLD COAST SHADOW
At Monday's PJ Ryan's celebration, The Insider asked Healy if he planned to attend the state Assembly Budget Committee session scheduled for Wednesday at the Liberty Science Center. Healy said he would not attend. He also did not plan to send someone from the city Finance Department.

Naturally, when the Assembly panel began its session, the first thing asked was whether there was anyone present from the city administration to open the hearings on the state's proposed $33 million budget.

Instead, Liberty Science Center officials and Assemblyman Anthony Chiappone of Bayonne did the honors.

Remember, this is the panel that will review the $8 million special aid (formerly Distressed Cities) that Jersey City is supposed to get to help balance the budget.

An early speaker was former Assemblyman Lou Manzo. Manzo attacked the city's practice of tax abating everything on the waterfront long after the need for the practice disappeared. He said the payments in lieu of taxes (PILOTS) force city and state taxpayers to subsidize luxury housing and pick up the remaining tab for local schools.

From the hearing room, the Assembly members from around the state could see Jersey City's gleaming glass and steel Gold Coast skyline when Manzo pointed at it and noted: "There's $2.1 billion in ratables sitting there contributing nothing to your budget."

Can one hear state officials salivate?

[duke_of_earl]

His statements seem totally reasonable to me.

I agree.  Anyone know exactly what specific project he was ripping?

doe

[nikki]

His statements seem totally reasonable to me.

Can some of the longer term residents explain why he was nicknamed Looney Lou?

[MÇA]

Manzo rips tax abatements at budget hearing
by Charles Hack
Wednesday March 19, 2008, 11:20 AM

Former state Assemblyman Louis M. Manzo ripped Jersey City this morning for continuing to hand out tax abatements at a hearing of the Assembly Budget Committee still in progress at the Liberty Science Center.

The committee is reviewing aspects of Gov. Jon Corzine's proposed 2009 budget.

Manzo, who has opened an "Office for Public Advocacy," called the way tax abatements are used in Jersey City an "abuse" since developers no longer need incentives to build on the Gold Coast.

Since tax-abated property owners are also the highest income people in the city, they should help pay for schools and county services, Manzo said.

Also signed up to speak at the hearing are Sam Pesin, president of the Friends of Liberty State Park, and representatives of Hoboken University Medical Center.

This hearing is focusing on education and local government and is expected to go well into the afternoon.

Assemblywoman Joan Quigley, D-Jersey City, sits on the committee.

[G_Elkind]

Hi Soshin:

There's no specific way to account for how PILOT payments are spent, as they are treated as general revenue -- just like our municipal taxes -- and they are spent accordingly. Generally speaking, the best way to see how the city spends its revenues is to read the city's approved budget.

The municipal budget does disclose anticipated PILOT revenues and realized PILOT revenues. The PILOT numbers from the FY 2007 budget, approved in April 2007, are:

Anticipated PILOT Revenues $79,069,078   

FY 2006 Realized PILOT Revenues $78,663,177

If one does a back of the envelope calculation, an additional 5% for education from PILOTS is a tad less than $4,000,000. As any such change would most likely only be assessed against new abatements (not retroactively), the actual amounts that might have been realized would be even smaller.

Even in the best light, these 5% contributions would be mere drops in the bucket when viewed against Corzine's proposed funding plan, which places the Jersey City School Budget at risk of losing $111 million, if fully phased in three years hence.

Stated another way, the $111 million represents the plan's calculated shortfall in school tax collections the state believes Jersey City should be collecting from its regular municipal tax levies.

If you're interested in reading more about the impact of the Corznine plan, check out the following link:

http://www.app.com/apps/pbcs.dll/article?AID=/20071228/OPINION/712280302/1030/OPINION

If you still have the stomach to read further, those who care about keeping our schools properly funded should become familar with the Jersey City Comprehensive Annual Financial Report.

http://www.jcboe.org/businessoffice/files/D0E3913387DB4630982B7BBD53174C2B.pdf

With a school budget in excess of $725+ million in revenues compared to the City's $425+ million budget, we should be paying really close attention to these numbers as well.
 
Looked at from this perspective, you might begin to understand why I had some reason to question the efficacy of the proposed resolutions brought before city counsel this past week. Yes, our schools and our children deserve better than a band aid solution.

All the best.

Geoff

P.S. The "shifting the burden" comment was nothing more than a red herring statement that really makes no sense. In the end, the question of who pays, and who might take it on the chin, if we don't look at the full picture on funding our schools will be Jersey City's regular taxpayers and our city's children.

[Soshin]

Is there some place where we can see how the PILOT money is currently being spent?  Who accounts for this and who exactly would be losing money is some of it is shifted to the schools? 

It seems to be disingenuous to just say "Do we just want to shift the tax burden from one person to another?" if we don't get told where the money is presently..........

Am I missing a bigger picture here?

[MÇA]

Council nixes plan to share abatement money with schools
by Ken Thorbourne
Thursday January 24, 2008, 2:54 PM

In 8-1 votes, the Jersey City council quashed proposals by Ward E Councilman Steve Fulop last night to share tax abatement money with local schools and expand the committee that negotiates the tax breaks.

Fulop, who received the tacit endorsement of Mayor Jerramiah Healy for his proposal to give schools 5 percent of the money the city rakes in from tax-abated properties, called the vote "a pretty sad day for Jersey City because they get an idea of how we value or kids."

"Five percent? I would say they're worth it," Fulop added.

Fulop's colleagues argued his 5 percent proposal amounted to robbing Peter to pay Paul, since money taken from the city would have to be replaced through taxes or other fees. Opponents of the measure also said that if more money went to the school district locally, state aid would shrink, meaning no overall increase for the district.

"Do we just want to shift the tax burden from one person to another?," said Ward Councilman Michael Sottolano, as he endorsed City Council President Mariano Vega's move to establish a committee to study the issue.

Ward C City Councilman Steve Lipski called Fulop "noble" for trying to "advance the argument" about school funding, but citing a Dow Jones report, said the city would be in a $19 million budget hole if it weren't for the income from for payments in lieu of taxes.

Fulop's other proposal called for adding two members of the Board of Education to the mayor's seven-member Tax Enhancement Committee, the group of city officials that negotiates the terms of tax abatements.

Council members objected on the grounds that it didn't make sense to give school officials a say in city business when the city has no say over the school district's budget.

One of eight public speakers supporting Fulop, former mayor and current school board member Anthony Cucci, scolded the council for not showing "enough concern" for the school system.

No public speaker spoke against the proposals.

The backdrop to this discussion is a new school funding formula recently adopted by the state, which seeks to shift some state aid from poor, urban districts to more working- and middle-class school districts.

As of one of the state's 31 court-designated "Abbott" districts, the 32,000-student Jersey City school system receives more than $425 million in state aid. Local taxpayers contribute $81.2 million toward the school district's roughly $600 million budget.

[NON]

Haha and if that ain't a statement on the fickle nature of the JC electorate, lord knows what is...

 

You had me at I love you...

dear, sweet thebes. i love you so...

[thebes]

You had me at I love you...

dear, sweet thebes. i love you so...

[jennymayla]

OMG, i just got a PG flashback.  Who's with me? 

I can't even follow half of what this is about, what with all the inuendos and historical reference and my own self-inflicted civic ignorance, but I trust Thebes to do the right thing, based on her own position and instinct.

Rock on, girl.

[NON]

dear, sweet thebes. i love you so, and it's exactly this scenario i feared (and predicted) when I learned you had been hired to be councilman Fulop's aide. I really hope you'll listen to Geoff's advice regarding growing a thicker skin, and pinky's advice regarding learning to separate politics from personal relationships.

i share geoff's desire to bring about real reform to the abatement conundrum, along with his assessment that the 5% proposal is ineffective window-dressing that will have little real world impact, and that could potentially have the negative impact of creating a panacea that appears to correct the problem yet curtails momentum for real reform. McCain-Feingold anyone?

since i don't recall putting words into your mouth, thebes, i would appreciate it if you wouldn't put any into mine. iirc, you yourself have no plans to run for Mayor of JC in 2009 (though lord knows i would vote for you if you did. and i mean that.), and the only person i accused of grandstanding through his legislative efforts is Councilman Fulop.

I applaud you and JCFI for your work, as I have consistently stated, but that doesn't mean I should agree with every initiative of yours, or refrain from voicing criticism of those initiatives, particularly when what i'm criticising is the use of these initiatives for political purposes. I agree with Geoff 100% on the 5% proposal, just as i disagree with jroberts that if such a proposal were to pass, the abatement scheme would somehow hasten its extinction. You can make critics into villains all you want, but it's sad to see that you're only a few months into work at City Hall and already so good at speaking out against the critic and not their criticism.

Since the word 'naive' has already been raised in this thread, i think it is most appropriate to revisit it, in the context of examining the political moves of a politician with stated ambitions toward higher local office. I personally cannot look at anything Councilman Fulop does without looking at it through the prism of his campaign for the Mayor's seat, which though not officially declared, has been underway for some time now.

Where you see Fulop as "the only person willing to listen to our concerns and brave enough to stand up to everyone else", i see a skillful political opportunist who has absolutely nothing to lose in proposing fashionable, popular legislation that has little-to-no chance of success. He's a smart guy (who has benefited from the tutelage of very smart political operatives), who knows that such efforts will motivate vocal, active people who are politically active and frustrated with the status quo to rally around him. And he's doing this brilliantly. The more efforts, the more causes, the more band-aids, the more valiant david v. goliath stands, the more 8 to 1 votes, the more feathers in his cap.

Smart politics, this campaigning by legislative proposal. But i think it's intellectually dishonest. There's only so many times i can hear "sunlight is the best medicine" and so many times that the JJ can find out about proposals before his fellow councilpersons before i see through the politics behind it. That sincere, dedicated folks like yourself get emotionally invested and then disappointed, with everyone else around but the councilman looking like the villain, makes me sad.

This post is in no way an apology, because i never spoke out against you or your work (let alone accuse you of not doing anything to improve this city by default, as you did me), but i really hope it lends some insight into what my position is, which i don't really think you've understood in any of our mexican standoffs about politics and fulop.

On a side note, i also think it was very politically wise of Fulop to hire you. You're a dedicated member of a community outside his ward, who has already involved herself in the present Jersey City political landscape on hot-button issues. That'll sure come in handy in 2009 as he scrambles to get the city outside of ward E to consider voting for him. 



Edit: Geoff, i didn't mean to put words or positions into your mouth regarding the grandstanding issue. i read that into your post all by myself, probably because of my own feelings on the subject. i still share your position, and will try to refrain from ascribing views to you that you haven't explicitly stated.