Developer seeks better tax break from Jersey City -- again

By Melissa Hayes/The Jersey Journal
April 04, 2010, 3:00PM

A waterfront developer is again asking Jersey City to reconsider the terms of its tax abatement.

Developer K. Hovnanian is set to appear before the Tax Abatement Committee April 15 for its second attempt to change the deal it has for 77 Hudson.

The City Council backed Jersey City Mayor Jerramiah T. Healy in October in refusing to change the waterfront condo's abatement.

The developer and professionals argued that 77 Hudson, which is already built and selling units, should be given the same deal as competitor Crystal Point, which sought and got an amendment in June.

The abatement for Crystal Point, which was also already built, was extended from 20 to 30 years and instead of paying 16 percent of the project's gross income per year, the developer will pay 11 percent for the first five years and 13 percent for the next five before increasing to 16 percent.

Healy argued that the 269-unit Crystal Point complex on Second Street was in a more remote location and several blocks from a light rail stop.

The 460-unit 77 Hudson building is across the street from a light rail stop. Both are about the same distance from the nearest Path stations.

But Eugene Paolino, the attorney representing K. Hovnanian, accused the city of helping a favored developer.

The new application is similar to the first, but would not extend the abatement beyond its 20-year term.

K. Hovnanian is requesting to pay 12 percent during the first six years, 14 percent for the next seven years and then 16 percent for the remaining years.

The amendment would result in $1.17 million less annually than the existing abatement, for a total loss of about $11.1 million, according to a city memo.

Abatements can create cash infusions for cities like Jersey City, because the city gets to keep virtually all of the taxes collected instead of sending a portion to the school district and county.

Council won't alter deal for 77 Hudson

Thursday, October 15, 2009
By MELISSA HAYES
JOURNAL STAFF WRITER

The Jersey City City Council last night backed Mayor Jerramiah T. Healy in refusing to change an abatement for a waterfront condo development.

Despite arguments from the developer and professionals for 77 Hudson, the luxury high-rise will not get the same deal as its competitor, Crystal Point.

"What has happened is Crystal Point is a favored developer," said Eugene Paolino, an attorney for developer K. Hovnanian. "There's a bias now that has been given to the developer of Crystal Point that has not been given to 77 Hudson."

In June, the council granted Fisher Development Associates, the owner of the 269-unit Crystal Point complex on Second Street, an amendment to its tax abatement.

Officials from 77 Hudson sought the same deal, but were shot down.

"All we want is a level playing field," Paolino said. "I think it's a fairness issue."

Paolino and others argued that Crystal Point now has an unfair advantage. The original deal, which 77 Hudson must abide by, guarantees the city payments of 16 percent of the project's gross income per year for 20 years.

The amendment extends the abatement to 30 years with the first five years lowered to 11 percent payments and the next five at 13 percent before increasing to 16 percent for the final 20 years.

Healy sent a letter to the developer last month saying the city did not plan to grant 77 Hudson the same offer.

Healy argued that Crystal Point was in a more remote location out on a pier, while the 460-unit 77 Hudson building is across from a Light Rail stop.

Randy Brosseau, area president of K. Hovnanian Homes, said the company made a $300 million commitment to the city in building 77 Hudson.

Healy still against 77 Hudson Street abatement change

The grand opening of the two-tower 77 Hudson Street complex in downtown Jersey City happened on Thursday.

Attended by Mayor Jerramiah Healy, associates of K. Hovnanian and EQR, the developer partners in the project, and other guests, the opening for the two buildings ? a 420-unit condo building and a 481-unit rental building ? was not without some intrigue.

Last month, Healy in a letter to the City Council advised them to not vote for a change being sought by K. Hovnanian to the initial 20-year tax abatement. The change would extend the abatement to 30 years with the payments spread out to 11 percent for the first 5 years, 13 percent for the next 5 years, and then 16 percent for the final 20 years. He said in the letter that 77 Hudson Street is located in an area that will see a consistent stream of residents moving into the condo building and does not need the abatement to survive the tough economy.

However, Healy when interviewed said he will ?not change his mind? on the standing against the abatement.

K. Hovanian official Tom Graham said at the opening that his company will make a presentation next week in City Hall to convince the council to approve the change when it comes time to vote on the abatement when it is up for a vote at a future meeting - RK

Since when did living ON THE RIVER become a hardship?Or indeed, when did living next to a railroad track become an ADVANTAGE?
Remember the people living at the "foot of Green Street" screaming about all the noise the light rail was making.

Yes, Healy has temporarily stopped taking bribes.

Three blocks from the light rail? Those poor people! That's two whole blocks farther than 77 Hudson! And those blocks are windswept and exposed to rain and humidity. And mosquitos.

Pathetic, Healy. Fulop is clearly on the mark.

Healy sending 77 Hudson developer, K. Hovnanian, a message: Crystal Point did not set a precedent

More like the FBI is on my butt, temporarily not taking bribes so your screwed.

Maybe so (to an extent), but "Crystal Point is in a remote area" seems a bit disingenuous, no? Couldn't he come up with something that isn't quite so absurd?

I agree. Khov will get what they want in the end. Perhaps Healy's team is working on setting up foreign bank accounts.

C'mon - what did you expect Healy to say? "Mr. Paolino and the KHov people failed to make the expected $7500 contribution necessary to purchase such an amendment. Precendent has been set with Crystal Point - prices were established and given the current environment they've gone up, if anything. Developers know what is expected if they want to buy the type of services they desire. It would hardly be fair to Mr. McCann and his client if we changed the rules know."

Something like that?

Yeah, Crystal Point is in the boonies, alright. It must be at least 4 or 5 blocks from the mall and the Newport restaurants. It probably takes over half an hour to get from there to New York City. I believe they get their mail via RFD. The residents also need to know Morse Code to communicate with civilization in case of a storm.

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Can anyone say political posturing?

The heat is on Healy, he knows he better watch his P's and Q's.

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Don't count your chickens before they hatch! The matter still needs to be voted on by the Council. This could be a ploy by Healy to be able to claim that he was opposed to the idea but was overruled by the Council.

Regardless of the outcome, the newly-stated rationale for approving the modified abatement is laughable, at best.

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Fulop said exactly what I was thinking as I read this article. Is there anyway to go back and look "redo" Crystal Point, or is that water under the bridge?

But it DID set a precedent and now the city has stated in writing that the criteria for lowering PILOT payments is based on distance from the lightrail (is that the best you could come up with?). That Crystal Point decision will be a great boon to the real estate law profession. BTW - I'm about a half mile from the lightrail, a remote area accessible only on horseback, I'm going to appeal my property taxes.

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Light Rail aside, Hudson River waterfront is faaarrrrr from a remote location.

Wow, never thought I'd see the day. Healy must really be feeling the heat. Still, I wouldn't be surprised if KHov somehow gets what it wants in the end.

HEALY: NO DEAL -- 77 Hudson asks to alter abatement

Wednesday, September 23, 2009
By AMY SARA CLARK
JOURNAL STAFF WRITER

Jersey City Mayor Jerramiah T. Healy might be sending developers a message: Crystal Point did not set a precedent.

In June, Fisher Development Associates, the builder of the 269-unit condo complex at 2 Second St., came to the city and asked for a better tax abatement deal - and got it.

But K. Hovnanian, owner of 420-unit luxury condo building 77 Hudson, might not be so lucky.

Even though 77 Hudson asked for the identical deal the city gave Crystal Point, Healy shot off a letter to the developer Monday saying the city plans to stand pat with its original 20-year abatement agreement, which guarantees the city payments of 16 percent of the project's gross income per year.

In his letter to 77 Hudson officials, Healy stated "the award or modification of tax abatements is not a matter of right" and the fact that the building is already completed means that the justification for the tax abatement "is absent."

Crystal Point is nearly complete, but Healy says he recommended approval of that building's request because it is "in an area that is clearly more remote than 77 Hudson."

Crystal Point is about three blocks from a Light Rail stop, while 77 Hudson is across the street from one. The buildings are roughly the same distance from the Exchange Place PATH station.

Downtown Councilman Steve Fulop said he doesn't buy the mayor's explanation, saying the rejection was less about location than timing.

"Two months ago, he supported Crystal Point's abatement deal," Fulop said. "I think any reasonable person would say that if he supported the same situation weeks before the arrests and subsequent to that his position changed - it makes one doubt further the legitimacy of the Crystal Point approval."

Several Jersey City municipal employees, including Deputy Mayor Leona Beldini and City Council President Mariano Vega Jr. were arrested July 23 as part of a massive FBI investigation into corruption.

Crystal Point's adjusted tax deal extended the length of the abatement from 20 to 30 years, and reduced the percentage of annual gross revenue paid the city to 11 percent for the first five years, 13 percent payments for the next five years, and 16 percent for the final 20 years.

According to Eugene Paolino, the attorney for 77 Hudson, his building asked for the same agreement in order "to level the competitive playing field."

He said yesterday he had just found out about the mayor's rejection of the application and wasn't prepared to comment.

The City Council has to vote on this matter. It's unlikely, but the council could vote as early as tonight.

The City Council meets tonight at 6 at City Hall, 280 Grove St.

So, does anyone know conclusively, is this matter scheduled to appear on the Council agenda this coming week, August 12? [Online, it does not seem visible under "First Readings," but one can never be sure.]

Just wondering if -- like for the Crystal Point debate -- now is the time to mobilize interested/concerned citizens to attend. Or has the (all-too likely) rubber-stamp approval process been temporarily put in neutral, since the public (and press) might not respond too favorably to an ultra-sweetened PILOT deal in this ultra-soured political climate.

Enquiring minds...

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That's pretty much it, isn't it? Because the city has become addicted to abatements - due to the greater portion of funds it receives and the ability to accelerate a portion of the payments - it would be a tough addiction to break even if the desire to do so existed.

How many ways can be found to steal from the taxpayer? The idea that the mayor and his loving lapdogs can just reach into our pockets, via tax increases such as last month's 11.25% increase, and give the money away to K. Hovnanian is beyond infuriating. K Hovnanian is a publicly traded developer going through a down cycle - typical for its business and every developer knows full well that risk. And we are bailing them out???? WHERE IS MY BAILOUT?????

These big projects remind me of Wimpy

"I'll gladly pay you Tuesday for a hamburger today"

Then Tuesday becomes Wednesday and so on

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It's so much easier to have a closed-door meeting and get the city to give a bigger handout, right?

and the explanation comes from the nyt. http://www.nytimes.com/2009/08/02/rea ... 2njzo.html?ref=realestate in case you have not seen it ... IN THE REGION | NEW JERSEY A Tarnished ?Gold Coast? By ANTOINETTE MARTIN AMID the flurry of signs that much of the state home sales market began a recovery in June, there was pretty clear evidence that Hudson County, across the river from Manhattan, was undergoing no such thing. Condominiums make up roughly 80 percent of Hudson?s housing stock ? and across the price spectrum, they have sold poorly, according to the Otteau Valuation Group, which reports to the housing industry. Even for those priced under $400,000, Otteau reported an 11-month inventory build-up. Condos priced at $1 million and up weren?t selling at all; in June, there was not a single signed contract for a condo in that price range in Hudson County, although 86 were listed. ?We had one sell for $961,000 in April at Crystal Point? in Jersey City, said Adrienne Albert, the chief executive of the Marketing Directors Inc., the broker for the project. ?And we?ve had 13 sales in July, with an average sales price over $750,000.? comment - crystal point is selling. was the tax abatement necessary? NO. Also, at Gull?s Cove in Jersey City, the developer Dean S. Geibel of Metro Homes, said three contracts were close to being signed ? ?as in people measuring to see if their furniture would fit? ? for penthouses priced around $1 million. comment - are they asking for an abatement? NO. Nevertheless, the picture painted by Otteau?s latest numbers does not present a penthouse-worthy view of the Jersey City market, or that in neighboring Hoboken, or Hudson County as a whole, even though the area is known as the ?Gold Coast.? Countywide in June, there were a total of 2,335 condos listed ? 89 fewer than in May. But there were only 191 sales, four fewer than in May. During the housing boom years in the early part of the decade, Hudson County?s market was constantly the star in the monthly Otteau reports, and it did not begin to flame out until last year, about two years after the overall state market dimmed. In that trajectory it more closely resembled Manhattan?s market. For example, in the downtown section of Jersey City ? a district proudly known as ?Wall Street West,? until Wall Street had its meltdown last fall ? there were 404 homes on the market in June. Only 33 sold. ?That is a very low buyer-to-seller ratio,? said Jeffrey Otteau, the president of the Otteau Group. ?Only eight buyers for each 100 homes.? Hoboken used to be the top performer in Hudson County when the county was the top performer in the state in the early 2000s. But the story in Hoboken was similar in June: 575 homes listed, 87 sales, which means demand was 15 percent of supply. New listings continue to pour onto the county market, at a reported average rate of 499 condos per month, and 99 single-family houses per month, although Mr. Otteau said he believed those figures were somewhat inflated by the relisting of properties that had not sold at a higher price. David Barry, a principal of Ironstate Development, a builder based in Hoboken, said that despite Hoboken?s poor showing, the true ?perfect storm conditions? were for the condo market in Jersey City. ?It?s been a very pro-development city, where it was a lot easier to get projects approved than in Hoboken,? he said. ?Unfortunately, a lot of inventory came on the market just as Wall Street was crashing ? at prices that no longer made sense to the consumer. comment - no shit. ?Sales will go up after prices are adjusted, but that takes some months to work out. When the market froze up, some developers got caught, and they?ve been sort of paralyzed while they figure out what pricing now is appropriate and workable.? Mr. Barry said his company decided to take a hiatus from building condos more than two years ago, although it has a large rental building under construction in Jersey City. That 15-story tower, 225 Grand, is being built in partnership with SK Properties. During the boom, county condo prices rose rapidly and to unparalleled heights. A $1 million condo ceased being a bell-ringing rarity around the time Gov. Jon Corzine moved into his Hoboken condo in 2004. Early last year, the choicest units at several high-rise buildings were listed above $1.5 million, a few above $2 million ? and some even drew multiple bids. This June, the county still had four condos listed at $2.5 million and above, although five others had disappeared from the listings of the month before ? perhaps to be relisted for less, as Mr. Otteau suggested. In the price range below that, $600,000 to $1 million, 27 condos sold and 343 listed units did not. This alone created a 12-month supply of unsold homes on the market. By far the largest number of condos for sale in Hudson County are priced below $600,000. In June, there were 1,902 units listed in that range. Only 164 of those sold; the result was an 11-month inventory build-up. The picture was not much brighter in any other part of the county. A few statistical snapshots simply underscore the laggardly overall picture: ? In Bayonne, where prices generally tend to be lower than in Hoboken and Jersey City, 15 homes sold in June, leaving a 10.8-month supply. So far this year, sales contracts have been signed for 48 condos. ? In Union City, a lower-priced alternative to adjacent Hoboken, 62 new condo listings were added in June alone; there were eight sales that month. ? North Bergen had 47 new listings in June, but only nine sales.

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As one paper put it, Kosher Nostra.

Many similarities to that other "secret society", La Cosa Nostra.

Vega really is a piece of crap.

Once again it is clear the only way the city gets out of banana republic status is to get rid of the crooks in office that run the show. The council in no way shape or form is representing the interests of JC homeowners/citizens...

If the federal indictments aren't enough to get rid of them, nothing will change. Property values will drop, taxes will go up.

Earl Morgan's Column:
No minutes, no votes - they always say 'Yes'
Tuesday, May 22, 2007

'If tax abatements are supposed to help the city, why are property taxes going up?"

"Where is the affordable housing for working class people and their families?"

These questions and others are being raised by Christine Carmody Arey, the lone civilian on Jersey City's Mayor's Tax Enhancement Committee, commonly, if erroneously, known as the tax abatement committee.

Besides Healy and City Council President Mariano Vega, the other 13 members who participate on the committee are all city department heads. Carmody Arey, a professor at New Jersey City University, was appointed to the committee by former Jersey City Mayor Glenn D. Cunningham when he created the entity nearly six years ago.

Carmody Arey is frustrated by the committee's failure to extract promises from developers to provide more low-income and affordable housing in return for the 20-and 30-year abatements they routinely receive from the city.

Carmody Arey said she is also distressed the developers aren't being pressed to develop apprenticeship programs and provide more jobs for city residents.

The committee's shortcomings are especially gauling to Carmody Arey given the 22 percent property tax increase the property owners who are not enjoying the exemptions were forced to absorb in the past two years.

"I see young families who would like to stay in Jersey City but can't afford it," Carmody Arey said. "When I ask other committee members or developers for the address or office of some central place where people can apply for affordable housing no one can give me an answer."

Carmody Arey said the tax enhancement panel hasn't denied any developer a tax exemptions, though on occasion it has required developers to revamp their application to provide more favorable terms for the city.

Contrast Carmody Arey's complaints with comments Jersey City Mayor Jerramiah Healy made in a recent interview in which he defended his policy to continue granting tax exemptions.

The mayor said the tax committee, on which he serves as an "ex-officio" member, is the initial clearinghouse for proposed tax exemptions.

"Here's what happens," the mayor said, "The committee, made up of some council people and others, make the initial determination if an individual abatement is going to be good for the city. It passes its recommendation on to the entire City Council and then it comes to me."

Yeah, but this thing is not called the Mayor's Tax Enhancement Committee for nothing. Healy is a charter member. It's not some independent body, making objective decisions on the merits of tax exemption applications.

The only City Council member listed is Vega. The four members aside from Carmody Arey and Vega head municipal departments and owe their jobs to the mayor. The directors also serve in "ex-officio" capacity, rarely attending committee meetings. So, they send proxies or designees, members of their staffs, to represent them.

Should you be curious and would like to see the committee at work, lots of luck, since its meetings are not open to the public. However, developers and their lawyers, always know when and where to show up.

The committee keeps no minutes of its meetings, nor do its members actually vote on an exemption application.

When asked, Vega confirmed that instead of a vote, the committee reaches a "consensus" to approve or reject an application for an exemption, making it impossible to hold individual committee members accountable for their decisions.

WTF??!! I guess being arrested and coming under intense public scrutiny isn't enough for Vega...He's either incredibly arrogant or incredibly stupid - or both most likely. You'd think someone in his position would lay low and play it squeaky clean if he intends to mount any credible defense at trial. This just goes beyond the pale.