The two blocks, which are being developed by Frank Raia, will provide 432 housing units, approximately 100 of which will be affordable housing. The affordable units will rent for $492 an month for a two-bedroom and $564 for a three-bedroom. The blocks, 801-831 Monroe St. and 800-832 Madison St., are part of the city's Northwest Redevelopment Project for that formerly blighted part of town.
In PILOT tax abatements, developers are lured by a certain amount that they will pay to the city each year rather than being subject to the fluctuations of regular property taxes. The amounts go directly to the city and are not split between the city, county and schools. Tax abatements are controversial, as some believe that they are an important incentive to lure developers to blighted areas, but others believe that cities don't take in nearly as much tax money as they could if developers were paying regular taxes.
Hoboken has given out only one other abatement in recent years: to the South Waterfront redevelopment project. In neighboring Jersey City, abatements have been more frequent, and they have become a subject of debate in that city's municipal election.
As part of the agreement in Hoboken, as calculated by complex state mandated formulas, the two blocks combined will pay $438,402 in annual PILOT payments. City Business Administrator George Crimmins said that right now, the property, which is presently made up of empty lots and abandoned warehouses, pays a mere $95,768 in taxes, only $23,942 of which goes for municipal purposes. The rest goes to the county and the schools.
Not everyone was so confident that the tax abatement was a good thing.
The abatement proposal passed 4-0, with councilmen Ruben Ramos, Tony Soares, David Roberts and Stephen Hudock abstaining. Hudock said he abstained because of a conflict of interest, while the others had issues with the abatement.
Roberts did not vote against the abatement, but he did raise complaints during the meeting and in a letter released to the press Thursday. Roberts complained that the 75-page documentation accompanying the agreement was only given to the council just before the vote. But he then launched into other concerns.
Roberts stressed that he opposes tax abatements for luxury developments disguised as affordable housing. The letter stated that Ramos, Soares and Roberts opposed Wednesday's move because "it did not go far enough to provide adequate numbers of affordable, high quality housing units and because [the council] received 75 pages of relevant documentation on the project only minutes before the council meeting began." However, Raia's actual project was approved several years ago. It was only the abatement that was up for a vote Wednesday.
Also in his letter, Roberts added, "I strongly oppose the way this administration conducts itself, and this situation is a classic example. It is an outrage to use an important issue like affordable housing as a political cover to ram through a last minute, sweetheart deal for developers - with no notice to council members nor to Hoboken's tax payers. Introducing and immediately voting on a deal that relies on taxpayer dollars and favors a politically connected developer is inappropriate."
At the City Council meeting, Roberts also questioned whether or not it is possible to provide affordable housing without having the market value units. (Again, however, it has been known for some time that Raia's project would provide mainly market rate units.)
Developer Raia strongly contested the notion that he is trying to get this abatement merely for personal gain and rejected the notion that the plan was an eleventh-hour move.
Raia said last week that Roberts, who also has developed affordable housing in Hoboken, should have known the procedure for receiving a PILOT agreement. "This is not a new project," said Raia, "it has been in the works for over two years and Roberts has had plenty of time to do his homework and go to Trenton and get the necessary paperwork. Even Helen Hirsch [an community activist and City Council candidate] took the time to go to Trenton and get the necessary information."
Raia also added, "Right now, all the money that goes to the town from this property is approximately $45,000 annually [per block]. Once this project is built, Hoboken will be receiving more than $437,000 per year [in taxes], and that's a good thing for the city. The fact that Roberts, Ramos and Soares are abstaining shows no real leadership on their part. If anything, they should vote for affordable housing."
Raia said that in 1988 Councilman Roberts voted for a similar abatement for the Hudson Square North Project; therefore, he should not have been surprised by the content of the package that he was given before the meeting. Raia believes that Roberts' abstention now is a product of political posturing. Roberts is challenging Russo for mayor in the May 8 election.
Raia also said that as much as he would like to provide a building with only affordable housing, the current market conditions makes it impossible.
"Right now it would be impossible in Hoboken, because the land cost is just too high," Raia said. "When [Hoboken developer and provider of affordable housing] Joe Barry purchased the land for his projects, he only paid $1 million for a desirable piece of land that is on the waterfront. Several years later, I am now paying $5 million for property that is substantially inland, and not nearly as desirable. I am taking a big risk taking on this project, but it is something that I believe in."
As a condition set forth by the New Jersey Housing and Mortgage Finance Agency (NJMFA), the state agency that is approving funding for the project, a developer of 80/20 tax abated properties (80 percent market rate, 20 percent affordable) cannot have a return on revenue of more than 11 percent. If the project returns more than 11 percent, all extra funds by rule of law would have to be put back into the facilities. Therefore, by getting the tax abatement, Raia gives up the chance to make a greater profit.
But there are still some that think the city is losing out. Roberts, at one point in the City Council meeting, criticized the fact that the project would bring 432 new units that might put an undue strain on the already congested traffic and parking situation. Later in the same meeting, he said that taxpayers would be losing out on what he estimated to be $2.1 million dollars if, hypothetically, all of the units were paying regular property taxes. Raia said that the project would add to the community by providing a new Shop-Rite grocery store and plans for 2,298 parking spaces. But both sides can agree on the fact that affordable housing is extremely important to Hoboken.
"We need more affordable housing in Hoboken," said Roberts. "In fact, I have made the issue a key component of my mayoral campaign, but this new development provides close to only the smallest number of affordable housing units allowed by law [in order to get the tax abatement]. As mayor, I will make a serious effort to increase the number and quality of affordable housing units in Hoboken."
Raia agreed that affordable housing is important to Hoboken. "What would Hoboken be like without Applied Housing, Marine View Towers or the Clock Towers?" he said. "In the past, we have had the courage to build these projects. Now we must be given the chance to do the same thing for the next generation of residents."