According to a press release issued on Sept. 16, the city recently demanded payment from EQR Lincoln Urban Renewal Entity, in connection with the Hudson Point and North Pier developments for excess profits generated on these tax abated properties.
Under New Jersey’s Long Term Exemption Law, developers who are awarded tax abatements are limited in what they can earn in profits. If they exceed that limit, the law requires the developer to share excess profits with the city. On an annual basis, the city is to review the developer’s annual audited financial statement and use a calculation set by the state law to determine the city’s excess profits share. A demand is then generated for the city’s share of excess profits. However, this was allegedly not done for several years.
EQR was awarded a 20-year tax abatement in July 2000. For the first seven years, the city audit found that the developer had not generated any excess profits. However, beginning in 2007, EQR’s financial audit shows an excess profit, according to the Jersey City Tax Collector. Despite this, the city alleges that EQR did not voluntarily turn over to the city its fair share of excess profits. The tax money that was owed to the city from these excess profits was, according to Fulop, not collected for several years.
Jersey City only last year began an aggressive audit of its abated properties after community activists demanded that such an audit be taken. That initial limited audit by the city Tax Collector found that several abated properties were paying the city less in property taxes than they should.
The tax payments from those properties have since been adjusted and Fulop has promised to continue to audit abated properties on an ongoing basis. The city, Fulop said, will continue to go after other developers in violation of their abatement agreements.
“These are tax dollars that could be used to put cops on the street, fund recreation programs, pave roads, or simply lower the amount of taxes paid by our residents,” Fulop said in the release. “Failure to collect this money is unacceptable and we are going to hold these developers accountable.”
Corporation Counsel Jeremy Farrell added: “Developers who have received tax abatements from the City should be on notice that we will be enforcing their contracts to ensure the City is collecting everything it is owed and if legal action is required we are prepared to take that action.”