Jersey City will soon see millions of dollars in the form of tax-break payments from the flurry of waterfront development - even though none of the properties have broken ground yet. "They will be making payments now. It will be an immediate benefit to this year's budget," said Council President Tom DeGise recently, who estimated these "pre-payments" could net the city from $11 million to $12 million this year out of the $45 to $50 million anticipated. The state would have to approve the money. But Ward A Councilman Robert Cavanaugh has complained that these prepayments are an election year ploy and will be used by the city to provide a tax cut, one the city will have to pay for down the road. An example of a company making an up-front payment is developer Samuel LeFrak's Newport Office Center VI, one of two buildings that will house the back offices of Chase Manhattan Bank. LeFrak will be making a payment of $911,400 immediately to the city, along with $2.7 million for Newport Office Center VII. This is money the city likely would not have seen until 2002, or whenever the construction was completed. Under normal circumstances, a developer does not begin making payments in lieu of taxes until a certificate of occupancy is issued. The council approved the pre-payments for several properties Wednesday by a 7-0 vote. DeGise said that this is not an election-year tax ploy. (The Jersey City mayoral election will be held next year.) "I feel that Cavanaugh is accusing me of keeping taxes low," said DeGise, "And I plead guilty." DeGise explained that the city would only be receiving one year up front, so it will not cost the city in the long run. He theorized that it might be in the Ward A councilman's political interest to keep taxes high, though he added, "Some skeptical people might say it's an election year tactic." Said Cavanaugh, "That's nonsense. I'm the one who tried to cut the budget by $5 million." Both DeGise and Cavanaugh, likely combatants in next year's mayoral election, have sparred consistently in recent council meetings. "I want to make sure the abatements are here for us now" rather than letting future governments take credit for the influx, DeGise said. Finite asset
Many have felt that the core neighborhoods of the city have not benefited from the tumultuous waterfront development, and Cavanaugh has said that he feels the city has "given the store away" in issuing some of these abatements. "The waterfront is a finite asset," he said. "Once it's gone, it's gone." But DeGise feels these pre-payments go a long way toward changing that perception. "I want the taxpayers to know that they're receiving tax relief from the abatement," he said. The state Division of Local Government Services would need to approve the money, said Business Administrator Laurie Cotter, because the actual funds would not become available until May or June of next year. But having an executed agreement between the city and the developers to provide the payments may go a long way toward getting state approval. With the city's budget gap for last year at around $20 million, and the difficulty the city has had in recent years of passing budgets, the pre-payments may provide relief. These abatements, or payments in lieu of taxes (PILOTs), have recently come under fire from other municipalities in the county, specifically Secaucus, which claims Jersey City ends up paying less in county taxes as a result of the abatements. Secaucus recently won the first round of a court case against Jersey City. As far as the question of whether the city will get less money as a result of the pre-payments, DeGise vehemently denied that assertion. "We're not giving up money," he said. "We're just getting a little in advance. To me this makes all the sense in the world." In last Wednesday's meeting, Cavanaugh introduced a resolution that would make tax abatement committee meetings public. The resolution was defeated. (The tax abatement committee is a body that includes two council people, the tax assessor, and others.) Cavanaugh also voted in favor of the pre-payments, even though he said they were a political ploy. "I'm not going to not take the money," he said. "What I'm saying is, let's open the review process." In an interesting sidebar, the city also granted an abatement to a building that has been unfinished since construction was halted in the late-'80s. The property, at 689 Henderson St. (also known as Marin Boulevard), near the Hoboken border, is now owned by Henderson Street Lofts Urban Renewal. That property, however, will not provide any pre-payment money to the city.