The developer, Schenkman Kushner (SK) Properties based in Bridgewater, pursued a five-year abatement rather than their original 20-year agreement made with the city in 2004. They claimed 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 will 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.
The Grove Pointe, located at Christopher Columbus Drive and Newark Avenue, is a 29-story building that, when completed, 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.
Under the new abatement for Grove Pointe, 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. The full taxation, which is $1,512,358, will occur after that period.
But several City Council members were not happy with the abbreviated abatement, claiming it might set a precedent for future abatements presented to the council.A new kind of abatement
City councilmen Bill Gaughan and Peter Brennan voted against the abatement.
They claimed it will allow developers to change current abatement agreements with the city whenever it suits them.
City Councilman Steven Fulop, one of the six who approved the abatement, said the short-term abatement was "best for the long-term health of the city." He explained that long-term abatements of 20, 30, and 40 years were only allowing developers to send money directly into the city's coffers and not pay their share of county or school taxes.
Among those also applauding the abatement was longtime resident Yvonne Balcer, a critic of long-term abatements.
That led City Councilman Steve Lipski to quip, "I never thought I would see Yvonne Balcer clap." What was expected
SK Properties' attorney, James McCann, said the council approval was "what he expected."
McCann said recently that the original 20-year abatement for Grove Pointe would have made the developer 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.
McCann also said the abatement was approved because to the developer waived a pre-payment of $1.6 million to the city for the Grove Pointe project under the original abatement. 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 city will also retain a $750,000 contribution to its Affordable Housing Trust Fund. Ricardo Kaulessar can be reached at rkaulessar@hudsonreporter.com
Post a Comment