The Grove Pointe, located at Christopher Columbus Drive and Newark Avenue, is a 29-story building that will consist of 67 condominiums and 458 rental apartments.
There will also be 535 parking spaces and 20,000 square feet of retail on the site. The project is expected to be completed by this summer.
The developer, Schenkman Kushner (SK) Properties based in Bridgewater, pursued a five-year abatement to get out of their original 20-year agreement made with the city in 2004. Their claim is that the 20-year abatement was no longer "advantageous" for them.
Tax abatements are special deals the City Council grants to developers to exempt their projects from regular, fluctuating property taxes. The deals are an incentive for developers to build in blighted areas, but some believe the city has handed out too many abatements. Critics worry that taxpayers have to pay more because abatement funds go directly to the city budget, not to county or school budgets. Some have criticized the city for granting long-term abatements of 20 to 40 years.
Several City Council members were not happy with the abbreviated abatement. They claimed it will allow the developer to change their abatement with the city again, whenever it suits them.
Under the new abatement, the developer will pay no taxes the first year. They will pay 20 percent of full taxes the second year, and there will be 20 percent increases for the next three years. Full taxation, which is $1,512,358, will occur after that period.
There will be a second reading on the shorter abatement at the next council meeting on May 9, when the public will comment and the council will cast a final vote.When 20 becomes 5
SK Properties' attorney, James McCann, said last week that the 20-year abatement will force the developer to pay the city $200,000 to $300,000 more per year than conventional taxes. That is because the rate at which properties are assessed compared to their true value dropped from 51 percent in 2004, when Grove Pointe's abatement was granted at 28 percent, he said. It means a $100,000 home is taxed as if were worth $28,000.
"Financially, it doesn't work, and the developer has the right to end the abatement if it doesn't work," said McCann.
McCann said it wasn't easy to convince the city to agree to the new abatement.
"The city said no, initially, but the developer agreed to let the city keep the pre-payment," McCann said.
The developer makes a pre-payment to the city before an abatement goes into effect. That city then returns the pre-payment to the developer.
The pre-payment for the Grove Pointe project was $1.6 million. The city will also retain a $750,000 contribution to the city's Affordable Housing Trust Fund. Ricardo Kaulessar can be reached at email@example.com