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Jersey City Under-Estimating Abatement Costs
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Posted on: 2014/5/20 14:30
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Re: Abatement Series on CivicParent.org
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Hi - my latest article on abatement is posted, and it look at the issue of transparency (a noted issue with abatements statewide), using Mayor Fulop and the KRE abatement as a lens into the issue.

http://civicparent.org/2014/03/tax-ab ... 1-the-transparency-issue/

Thanks,
Brigid

Posted on: 2014/3/25 15:47
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Re: Abatement Series on CivicParent.org
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Most people think when an abatement is granted the city gets 95% and the county 5%. The original agreement was an extra 10% to the county but politics have involved so it was reduced to 5%. It is 105% not 95%. This extra 5% is not applied to affordable housing. It doesn't apply to older abatements.

Posted on: 2014/2/19 16:47
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Re: Abatement Series on CivicParent.org
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Quote:

Brigid wrote:
Hi, my 3rd article is now posted and it is specifically about PILOTs - the pros and cons. The link is here: http://civicparent.org/2014/02/17/tax ... -sides-of-the-same-pilot/


Quote:

This may make sense from a municipal governance perspective, but does it make sense from the perspective of the public schools or other city services that lose revenue due to PILOTs?


Is it really "lost revenue", or are the costs just unfairly allocated to regular County and state taxpayers? Two sides of the same coin - but fairer cost allocation would be a more neutral statement. Whether regular taxpayers save money, or whether County & schools get additional funding, is a separate issue.

(Great series btw)

Posted on: 2014/2/18 17:34
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Re: Abatement Series on CivicParent.org
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The mayor created a new policy on Christmas Eve 2013 based on Tiers. You can "buy" an abatement based on the tier which is 1 to 5.

Posted on: 2014/2/18 17:32
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Re: Abatement Series on CivicParent.org
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Hi, my 3rd article is now posted and it is specifically about PILOTs - the pros and cons. The link is here: http://civicparent.org/2014/02/17/tax ... -sides-of-the-same-pilot/

Also, in follow-up to Yvonne's post below, the 9th & Brunswick abatement really does beg for more information. I don't know if 20 years is merited or not; I'm emailing my city council reps separately to inquire for more information about this before the vote occurs. Hopefully others will do so too, because if there is merit to the abatement, then fine, but let's put the merits out there for public discussion, in advance of the vote itself.

Posted on: 2014/2/18 16:35
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Tax Abatement Policy?
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Why is the Ninth Street Urban Renewal LLC, 360 Ninth Street up for a 20 year abatement?


Posted on: 2014/2/18 0:41
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Re: Abatement Series on CivicParent.org
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To JSleeze, I told Brigid to check the county tax numbers not my numbers. I don?t produce the data but I refer to it. If abatements are great can you explain why local taxes rose nearly 85% between 2005 and 2010 for the municipal portion? After all, the city is getting all of this new money through abatements!

Posted on: 2014/2/13 16:55
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Re: Abatement Series on CivicParent.org
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Quote:

Brigid wrote:
Quote:

Wishful_Thinking wrote:
[quote]
We can continue to argue about ratables, % of properties being abated, etc., but IMO the more important question is what is driving JC's continued use of abatements? Is there a legitimate concern the level of development has not reached a critical mass, to sustain returning properties more quickly to the tax levy?

I'd love to know the city's stance on this, too. Case in point?there is an abatement at 9th & Brunswick that was up for 1st reading ordinance at this past Tuesday's City Council meeting. I assume it passed (though am not positive), so I assume it'll be up for 2nd reading at the next meeting. It's a 20-year abatement in Hamilton Park; on its face, I simply don't understand why any development in Hamilton Park needs an abatement at this point, though perhaps the city can make a case. Either way, I think many people need to be asking the city about it.


Jersey City's government would never admit to the fact that they reap more tax revenue when they give out the abatements than they would if they didn't. They'd rather that Jersey City's citizens continue to focus only on the fact that developers are benefited.
The fact of the matter is that both the city and the developers are in bed together when it comes to the abatements. They are both benefited at the expense of Hudson County government and public schools.

Posted on: 2014/2/13 14:54
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Re: Abatement Series on CivicParent.org
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dtjcview and JCSleeze - Agreed, the PILOTs have an impact here and that is increased revenue to the city but a subsequent cost to the schools. I will be looking at the PILOT's in more detail in the follow-up post that will look at the blue slices of the pie. I'm aiming to get that out in the next day or so.

Posted on: 2014/2/13 14:26
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Re: Abatement Series on CivicParent.org
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yes, but only in the short/near term. and some of the estimated cost of incremental services in agreements is greater than the increased revenue.

Quote:

JSleeze wrote:
Brigid - from the examples you give, it seems like you are missing a very basic element in the equation: PILOTs are revenue. Developments with abatements pay PILOTs - which are every bit as much revenue in the city budget as property taxes are. Your simple math seems to indicate that the city would have to wait the term of the abatement for revenue from new development to hit the budget and that the full cost of service increases are borne by the unabated tax payer.

Every proposed abatement has an estimated cost of incremental services and PILOT revenue must cover these costs. Additionally, while PILOT revenue may only be 21% of the overall budget, PILOT revenue as a percentage of "taxes" on property (PILOT payments plus traditional property taxes) is roughly 35%.

That's the dirty little secret Yvonne doesn't want you to recognize: as a whole, people with abatements pay higher percentages in PILOT payments than the eatable folks pay in property taxes.

Posted on: 2014/2/13 14:20
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Re: Abatement Series on CivicParent.org
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In Tax Abatements 201: Abatement Impact on Conventional Taxpayers - misses the biggest impact - regular taxpayers shoulder the full burden of County and school taxes. It's like there are missing slices of pie on the County & school budgets that are filled in by increased taxes to regular taxpayers.

The City may see a net benefit. However regular taxpayers effectively subsidize the abatement through increases in County & school taxes.

Posted on: 2014/2/13 10:21
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Re: Abatement Series on CivicParent.org
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Brigid - from the examples you give, it seems like you are missing a very basic element in the equation: PILOTs are revenue. Developments with abatements pay PILOTs - which are every bit as much revenue in the city budget as property taxes are. Your simple math seems to indicate that the city would have to wait the term of the abatement for revenue from new development to hit the budget and that the full cost of service increases are borne by the unabated tax payer. Every proposed abatement has an estimated cost of incremental services and PILOT revenue must cover these costs. Additionally, while PILOT revenue may only be 21% of the overall budget, PILOT revenue as a percentage of "taxes" on property (PILOT payments plus traditional property taxes) is roughly 35%. That's the dirty little secret Yvonne doesn't want you to recognize: as a whole, people with abatements pay higher percentages in PILOT payments than the eatable folks pay in property taxes.

Posted on: 2014/2/13 7:05
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Re: Abatement Series on CivicParent.org
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To Brigid: It is called the abstract of ratables. The info is on page 6.

Posted on: 2014/2/13 3:35
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Re: Abatement Series on CivicParent.org
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Quote:

Wishful_Thinking wrote:
[quote]
We can continue to argue about ratables, % of properties being abated, etc., but IMO the more important question is what is driving JC's continued use of abatements? Is there a legitimate concern the level of development has not reached a critical mass, to sustain returning properties more quickly to the tax levy?

I'd love to know the city's stance on this, too. Case in point?there is an abatement at 9th & Brunswick that was up for 1st reading ordinance at this past Tuesday's City Council meeting. I assume it passed (though am not positive), so I assume it'll be up for 2nd reading at the next meeting. It's a 20-year abatement in Hamilton Park; on its face, I simply don't understand why any development in Hamilton Park needs an abatement at this point, though perhaps the city can make a case. Either way, I think many people need to be asking the city about it.

Posted on: 2014/2/13 3:26
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Re: Abatement Series on CivicParent.org
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Quote:

Yvonne wrote:
One of the things I suggested you do is talked to the Hudson County Board of Taxation, the Administrator is Don Kenny. On page 6 of 2012, 2013 is not out yet, it has the ratable base. That base shows $2.7 billion (tax abatements) is excluded from the ratable base. It is the reason our taxes goes up every year, it is the county not the city that strikes the budget. The county excludes all abatements. Therefore when Don Kenny strikes the budget, 2.7 billion is excluded and only 5.8 billion is the value. This is roughly $71 dollars per thousands. If all property was included perhaps the tax rate would be $50 per thousand. In order to do a valued report, you must include that $2.7 missing ratable base. The only thing I can compare this to is Secaucus, it has done a lot of spending in the last 5 years, but their tax rate has stabilize, Secaucus is fortunate to have an increasing ratable base. But unlike JC, there are no abatements so spending increases are absorbed by the ratable base that is not abated.


Thanks Yvonne, I will add this to my notes, this is very helpful. Right now I'm trying to keep my posts at simple as possible and engage others, because it helps build the discussion up and gets others asking questions. The nuance is extremely important though to have, as you stated, an accurate analysis at end of day.

I would like at some point to build up to an analysis of Jersey City's ratable base, and somehow show how each future abatement would impact (good or bad) the ratable base and revenues. I don't even know if this is feasible or possible given available data, the math involved, the many factors that may be required, etc. It's all admittedly so complex. I would love too to engage the city at some point, as I think it is incumbent on them to help show any future abatement's cost/benefit profile to the public, so that if a new abatement is granted, the impact to the ratable base is justified with a future benefit that we all can believe in.

Posted on: 2014/2/13 3:20
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Re: Abatement Series on CivicParent.org
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Quote:

Yvonne wrote:
One of the things I suggested you do is talked to the Hudson County Board of Taxation, the Administrator is Don Kenny. On page 6 of 2012, 2013 is not out yet, it has the ratable base. That base shows $2.7 billion (tax abatements) is excluded from the ratable base. It is the reason our taxes goes up every year, it is the county not the city that strikes the budget. The county excludes all abatements. Therefore when Don Kenny strikes the budget, 2.7 billion is excluded and only 5.8 billion is the value. This is roughly $71 dollars per thousands. If all property was included perhaps the tax rate would be $50 per thousand. In order to do a valued report, you must include that $2.7 missing ratable base. The only thing I can compare this to is Secaucus, it has done a lot of spending in the last 5 years, but their tax rate has stabilize, Secaucus is fortunate to have an increasing ratable base. But unlike JC, there are no abatements so spending increases are absorbed by the ratable base that is not abated.

So, keeping Brigid's simple but clear article in mind, it seems that it's not all about the math; rather, at some point someone in JC needs to make the decision (as in the Blightown' example) the situation had 'stabilized' to the point where further abatements are not needed. We can continue to argue about ratables, % of properties being abated, etc., but IMO the more important question is what is driving JC's continued use of abatements? Is there a legitimate concern the level of development has not reached a critical mass, to sustain returning properties more quickly to the tax levy?

Posted on: 2014/2/12 18:28
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Re: Abatement Series on CivicParent.org
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Quote:

Brigid wrote:
Hi - the 2nd article in this series is now posted on CivicParent.org.

http://civicparent.org/2014/02/10/tax ... n-conventional-taxpayers/

In this post I looked at the ratable base and how abatements affect the tax rate.

Thanks!! Simplified, yes - but effective in explaining the basics.

Posted on: 2014/2/12 18:22
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Re: Abatement Series on CivicParent.org
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One of the things I suggested you do is talked to the Hudson County Board of Taxation, the Administrator is Don Kenny. On page 6 of 2012, 2013 is not out yet, it has the ratable base. That base shows $2.7 billion (tax abatements) is excluded from the ratable base. It is the reason our taxes goes up every year, it is the county not the city that strikes the budget. The county excludes all abatements. Therefore when Don Kenny strikes the budget, 2.7 billion is excluded and only 5.8 billion is the value. This is roughly $71 dollars per thousands. If all property was included perhaps the tax rate would be $50 per thousand. In order to do a valued report, you must include that $2.7 missing ratable base. The only thing I can compare this to is Secaucus, it has done a lot of spending in the last 5 years, but their tax rate has stabilize, Secaucus is fortunate to have an increasing ratable base. But unlike JC, there are no abatements so spending increases are absorbed by the ratable base that is not abated.

Posted on: 2014/2/12 15:58
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Re: Abatement Series on CivicParent.org
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Hi - the 2nd article in this series is now posted on CivicParent.org.

http://civicparent.org/2014/02/10/tax ... n-conventional-taxpayers/

In this post I looked at the ratable base and how abatements affect the tax rate.

Posted on: 2014/2/12 14:58
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Re: Abatement Series on CivicParent.org
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I have no problems with 5 year abatement but just like other politicians in the past, Council Osborne justified the 272 Grove Street abatement because it is not on the waterfront (I believe it is 6 blocks from the Hudson River.) Ironically, Councilman Fulop did not vote on waterfront or downtown abatements. That is prime property and does not need an abatement. But different administrations find different excuses to give the ratables away.

Posted on: 2014/1/31 20:55
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Re: Abatement Series on CivicParent.org
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Quote:

Brigid wrote:
Yvonne: The 2 articles you provided in this thread were what I used as primary source/context for my post. I'm familiar with them both, have read them, and cited with footnotes in my blog post where I reference them. Just wanted to clarify this for benefit of anyone else reading this thread.

Thanks, Brigid - I found your post and link helpful. I had looked at purchasing a condo when I moved to JC, that had benefited from a 5 year tax abatement. It was my understanding there are a lot of abated condo developments that have 5 year terms, so the initial saving to the new homeowner fairly quickly gives way to "normal" taxes being paid to the city.

I would like to see you, Yvonne, the others that are more knowledgeable about this break this down some more - number of developments getting abatements, what the cumulative impact is on JC's tax levy over time.

Finally, what exactly is the definition of "blight", as it applies here? Some municipalities have, for the purposes of eminent domain, defined it so "... a piece of land was not being put to the best and highest use" was enough to warrant a blight designation.

Posted on: 2014/1/31 18:52
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Re: Abatement Series on CivicParent.org
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There is also another fact sheet from the county, it lists the dollar amount that is exempt from taxes, outside of churches, schools, pubic buildings, etc. The last time I saw that figure it was $2.7 billion. The ratable base is $5.8 billion. Abatements are not included in the $5.8 figure. Actually, JC was close to $7 billion after the 1988 reval but through appeals the value has dropped. If you look at the agenda for the recent council meeting, there are two refunds. When an abatement expires, the first thing a developer does is run to tax court to appeal their taxes. So not only are they sheltered from taxes, the city eventually float bonds paid by taxpayers to refund them. This is items 10 A and 10 B on the Jan. 29, 2014 agenda.

Posted on: 2014/1/31 14:51
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Re: Abatement Series on CivicParent.org
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Yvonne: The 2 articles you provided in this thread were what I used as primary source/context for my post. I'm familiar with them both, have read them, and cited with footnotes in my blog post where I reference them. Just wanted to clarify this for benefit of anyone else reading this thread.

Posted on: 2014/1/31 14:04
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Re: Abatement Series on CivicParent.org
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Quote:

Yvonne wrote:
I think the article written by the State Comptroller is more accurate than Brewster. I have attached two independent sources of that are free of politics and have no political agenda.


I don't recall saying anything in conflict with the report. Perhaps you care to more specific. But the cover sheet says "abatements introduce tax inequalities that deserve closer scrutiny". My position has been the lack of a reval does precisely the same. And your jihad against one inequality while benefiting greatly from another is the height of hypocrisy.

Now, few of us aren't hypocrites in some way, but yours is in the big leagues for your decades of public outrage. It's kinda like the difference between a GOP congressman who's just in the closet, and one in the closet who's very outspoken against gay rights but picking up boys in the airport toilet.

Posted on: 2014/1/31 4:15
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Re: Abatement Series on CivicParent.org
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I think the article written by the State Comptroller is more accurate than Brewster. I have attached two independent sources of that are free of politics and have no political agenda.

Posted on: 2014/1/31 4:02
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Re: Abatement Series on CivicParent.org
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Quote:

JSleeze wrote:
Quote:

Yvonne wrote:
Brigid, you have no idea how abatements started.


Since she didn't talk about the origin of abatements in Jersey City, how the hell do you think you know whether or not Brigid knows how they started? More important - why do you feel it's necessary to spew the Britt shundlah, jirry mccayan history lesson that you just can't stop yourself from delivering. Give it a rest - you have become a caricature of yourself. Whether or not Newport needed/received/asked for an abatement 30+ years ago has little to nothing to do with anything.

Why don't you listen to someone for a change rather than flapping your gums endlessly at the drop of every hat, telling the same old history lessons that are typically of little relation to the topic at hand. You might learn something.


Slow clap....

Brigid: bravo to you for your energy to actually start to pull apart the tangle. I wonder how to collect the numbers required to compare the apples to apples of tax vs PILOT per sq ft of residential RE. We've heard anecdotal numbers all over the place.

Keep in mind that while Yvonne has spent decades raging about how abatements are hurting the taxpaying residents, she and the other owners of $1m+ Downtown properties were paying effective rates 1/3 or less of what owners in other wards are.

PM me if you want a primer on why we need the reval.

Posted on: 2014/1/31 3:30
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Re: Abatement Series on CivicParent.org
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Here is another article already on abatements. Between the two of them your work should be done.
The one thing these article do not mention - abatements are not ratables so they do not stabilize the tax rate. Which is part of the reason our taxes go up every year.
http://www.nj.gov/comptroller/news/docs/tax_abatement_report.pdf

Posted on: 2014/1/31 2:47
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Re: Abatement Series on CivicParent.org
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I respect Brigid's efforts to educate herself and help educate the community on the subject. I have been pulled into the vortex of thinking that abatements are bad for the City and simply handouts to wealthy developers. But truthfully am not educated enough on the subject to come so such a conclusion. So let the learning begin.

Posted on: 2014/1/31 2:46
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Re: Abatement Series on CivicParent.org
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Thanks Brigid for writing the series on the Abatement. As a resident of JC, I should know more yet it's something I have little knowledge of. I applaud you for allowing me to get my first engagement by means of reading your post. I look forward to reading more series in the future.

Posted on: 2014/1/31 2:41
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