The Beacon is a $350 million 1,200-condo project being developed by New York-based Metrovest Equities at the old Jersey City Medical Center property on Baldwin Avenue and Montgomery Street, a half-mile south of Journal Square.
The project currently has several 30-year tax abatements, allowing the developer to pay the city between 10 and 12 percent of gross annual revenue each year.
Tax abatements typically allow developers to work out a set schedule by which their tax money goes directly to the city, instead of also to the county and schools. In return, they are not subject to the fluctuations of regular property taxes.
George Filopoulos, a principal of Metrovest, confirmed last week that he is seeking a revision of the abatements. He cited the pressures of diminished financing from investors in a struggling real estate market.Renting rather than owning
According to Filopoulos, the abatements would reflect the fact that more rentals are being built at the Beacon rather than condos, since financial lenders are looking to finance rental projects instead. But Filopoulos did not offer exact details as to how the abatements would change.
"Basically, it's financially driven and any lender, regardless of your project, in today's market needs to modify their financing," Filopoulos said.
Filopoulos said he met with city officials on July 24 regarding the revised tax abatements.
Deputy Mayor Rosemary McFadden said last week that there have been "preliminary discussions" with Filopoulos, but McFadden would not comment further.
The City Council would have to vote on the revised abatements.
Sources in city government said the abatements could be considered as early as the City Council meeting scheduled for Aug. 20. A 'Beacon' of hope
The Beacon project will see the old 10-building medical complex transformed into 1,200 residential units, shops, a central courtyard, a dog run, a restaurant, and a grocery store over the next five to seven years.
At the present time, two of the former Medical Center's buildings have been renovated and transformed into 315 condo units known as the Rialto-Capital.
Filopoulos' attorney, Eugene Paolino, claimed that changes in the abatements have nothing to do with condo sales at the Beacon faltering in any way, noting that approximately 270 out of the 315 have been sold.
Paolino said, "It's not a Beacon issue, and it's not just a Jersey City issue. Every developer in this country is feeling the pressure because there is a credit and mortgage crisis, money is tight and lenders are not willing to finance condo-based projects." Why lenders prefer renters
Paolino said that prospective condo owners, like homeowners, will be seeking a mortgage or they will be borrowing money from banks to finance their purchase at a time when banks are more hesitant to do so.
Income from homeowners is not as steady as rental income, Paolino said, so lenders prefer the latter.
The Beacon is not the only project requesting a change. In June, the City Council revised the initial 30-year abatement for the 551-unit Canco Lofts project on Dey Street near Journal Square. The developer of Canco Lofts, New York-based Coalco, said the change would help boost lagging sales of the condos. Helping the developer
Back in January, the developers for the 47-story Monaco North and South buildings on Washington Blvd. sought a change to their initial tax abatement deal, citing increased construction costs.
The change called for 15 years rather than 20 years, and the annual service charge (a charge levied by the city against residential property exempted from conventional taxation) would be lessened from 14 to 12 percent of the annual gross revenue for the rentals.
The council voted against the change in January, saying the city would lose $6 million from the change.
But in May, the council approved the revised abatements.
City Councilman Steven Fulop voted against the change both times.
He said at the time, "If we open this Pandora's Box over here, we will be renegotiating every single tax abatement that we did."
But Fulop voted for the amended Canco deal, and said he'd listen to the Beacon's presentation.
City Councilman Bill Gaughan said last week, "The council has to make a decision, and that is we do not want to slow down the development in Jersey City." Comments on this story can be sent to rkaulessar@hudsonreporter.com
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