These deals, or tax abatements, are granted by the City Council in order to exempt a developer from regular, fluctuating property taxes. The deals are an incentive to help a developer build in a blighted area, but some believe that too many are given out. Usually, a developer gets a separate deal to make Payments in Lieu of Taxes (PILOTs) to the city over 20 or 30 years. PILOT money is controversial because it goes straight to the city rather than being shared among the city, the county, and the schools. The public feels that they sometimes must end up paying a higher share of county and school taxes to make up for the loss.
The committee members will include Ward E City Councilman Steven Fulop, Ward C City Councilman Steve Lipski, and Ward A City Councilman Michael Sottolano.
Besides studying the criteria for handing out abatements, the committee will study the financial contributions from developers to the city's Affordable Housing Trust Fund.
That's a fund that developers are supposed to donate to when they are not able to build affordable housing units within their developments.
The proposed formation came after an April 26 meeting in which the council approved two rather controversial abatements. One was a 20-year tax abatement that will go to the Shore Club North Tower to be built at Newport, and the other was a 30-year abatement for the owners of the old American Can Company building on Dey Street near Journal Square.More money for affordable housing
According to City Council President Mariano Vega, the committee will hopefully draft legislation to increase the amount per unit that developers will contribute in a one-time fee to the city's Affordable Housing Trust Fund.
Then the money can help build more low- or moderate-income housing in the city.
Right now, developers receiving abatements contribute $1,500 per unit built and $1.50 per foot of retail space if they do not build affordable housing units.
Vega is looking to increase the amount up to $3,000 per unit.
For example, the first phase of the American Can Company project involves 202 condominium units and 1,187 square of retail space. The total contribution to the Affordable Housing Trust Fund would be $304,780. And the contribution to the Shore Club North Tower project would be $341,530 based on 217 condominium units and 9,687 square feet of space.
If the contribution were increased to $3,000 per unit, the American Can Company project contribution would be $909,000 and the Shore Club would pay $651,000.
Vega said dealing with the affordable housing contribution issue is important in light of the lack of affordable housing in Jersey City. He said the money would provide more funds to be distributed among the city's six wards for the construction of affordable housing.
"We have to look seriously at how much affordable housing we have," said Vega. "Right now the stipulation requiring $1,500 a condo is really peanuts." Checks and balances
Fulop also wants the committee to set the criteria for abatements on future projects.
Fulop voted for a tax abatement for the American Can Company project but not for the Shore Club. In past council meetings, Fulop voted against various abatements, particularly for projects to be built on the Downtown Jersey City waterfront. Fulop conceded that he voted in favor of the American Can Company's abatement because the company's givebacks of monetary donations totaling $185,000 went to five non-profit organizations throughout the city, three within his ward: the Jersey City Museum received $65,000; the Grace Seniors at Grace Van Vorst Church, $25,000, and Riverside Church, $10,000.
The donations came as the result of council members requesting a 30-year rather than the standard 20-year abatement for the project, as well as affordable housing to be built on the site.
But Fulop said those donations would not been given in the first place if the abatement had been studied more carefully by a committee within City Hall, which looks at every abatement before it is considered by the council for approval.
"I think if we had accountability checks, a real substantial approval process way before the council votes on abatements, then we wouldn't have the situation of only having two days to review an abatement to make sure there are no substantial givebacks," said Fulop. Money to help taxpayers
Last week, Sottolano explained why he voted in favor of the Shore Club project but abstained from voting for the American Can Company abatement based on the developer's contributions.
"Anytime someone is negotiating with a developer on givebacks, it should not be for specific items," he said. "It should go into the city's general fund and the city should disperse the funds where needed. There was $185,000. I feel the taxpayers can benefit better by that than earmarking it towards some special project in someone's ward or in some particular area. I don't think that is the way we truly wish to solicit funds from developers that are applying for abatement. It just doesn't look good."
Sottolano also said he would like see a study of pre-payments from developers seeking an abatement. The pre-payment is a payment of taxes owed on a building before it is completed, but that money becomes a loan that eventually has to be paid back by the city.
Sottolano said those monies have been used to help plug budgets, but in the future, there should be a new agreement that would allow both sides to benefit. Ricardo Kaulessar can be reached at firstname.lastname@example.org