Paolino's letter criticized an article in the local daily newspaper reporting that MEPT-JS, the developers designated by the city to build the project, were seeking a loan for more than $40 million.
MEPT-JS is the collaboration between Journal Square-based Harwood Properties and Multi-Employer Property Trust, a $7 billion real estate firm located in Washington, D.C.
In the letter, Paolino slammed the article, claiming it "relied on information provided by the uninformed or the misinformed" and that the "loan" from the city would actually be a more complicated financing deal used often for projects in redevelopment areas, as is the case with the Journal Square project.
It turns out the letter was timely, as longtime resident and activist Yvonne Balcer complained at the meeting that the developer should not be receiving any money from the city.
At the meeting, Journal Square Councilman Steve Lipski defended the developer, saying the project will help revitalize Journal Square.
And Mayor Jerramiah Healy, in his State of the City address on Tuesday, had promised a commitment by the city to jumpstart the project.
"In the near future, I will present the City Council with a plan that will increase the revenues received by the city and help facilitate the construction of those two new towers at the old Hotel on the Square," Healy said at the time. "The redevelopment of Journal Square is key to making Jersey City even greater."The two towers of Journal Square
The towers will be built on 1.5 acres of land. They will be 60 stories and 40 stories containing 1,500 units on top of a seven-story parking deck.
Included in the project will be a ground-floor retail center, a rooftop fitness center, and 675 parking spaces on five floors. Typical one-bedroom units are expected to rent from $1,500 to $2,000 per month. It has not been announced if some of the units will be for sale or for rent.
The project will be built on what was once dilapidated property that was eventually demolished as the result of the city taking the prior owners to court.
The Harwood family, who has maintained their business in Journal Square for the last 70 years, was originally supposed to develop the project on their own. But as one longtime city official said recently, "they lost their nerve" and realized the project was too costly to build on their own.
The project site is adjacent to the Journal Square Transportation Center. When a loan is not a loan
Paolino submitted a letter to the council that spells out that the developers are discussing with the city a financial plan combining "tax increment financing" (TIF) and redevelopment area bonds.
"Tax increment financing" allows cities to create special districts and to make public improvements within those districts that will generate private-sector development.
During the development period, the tax base is frozen at the predevelopment level. Property taxes continue to be paid, but taxes derived from increases in assessed values due to new development go into a special fund created to retire bonds issued for development.
In other words, increased tax revenues generated through redevelopment activities are invested back into the project area to stimulate more development, as well as to pay the costs involved in undertaking redevelopment.
The bonds are called redevelopment area bonds, or tax allocation bonds. They are tax-exempt bonds repaid solely from tax increment revenue generated within the project area. Comments on this story can be sent to rkaulessar@hudsonreporter.com
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