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Re: Fun with Abatements: Goldman Sachs
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Did anybody take notice of the article about Schundler confronting Healy on the mis-use of the West Side Waterfront for the proposed warehouse? Did you see Healy's response?

Forget what you think about Schundler OR this project...just focus for a second on what our mayor said in print.

Healy: Schundler did alot of talking in the meeting, he probably didnt hear what I said.

Ass.

You are the mayor of the second largest city in NJ. You talk like that to the media? You sound like a small minded, grudge holding little hick.
This is just as bad as his friend Troy who called Councilman Folup: "Stevie"

Come on people. Please just TRY to act like you know what you're doing. This isn't high school anymore.

Grow up. There are big issues on the table and some important decisions need to be made.

And somebody please tell the mayor to put on a long sleeve shirt. Please.

Posted on: 2006/8/4 13:21
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Re: Fun with Abatements: Goldman Sachs
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Please explain how tax abatements benefit the city more than the developer in the long, how can this be a win-win situation.

Quote:

JCLAW wrote:...

The so-called "abatements" benefit the city more than the developer. That is why the city is always in a rush to give them out. For more info, please read my post here: http://jclist.com/modules/newbb/viewt ... 29e446f20a#forumpost58135....


This is not what was reported in the JJ nor what the city had to borrow for to refund, we are not talking about the same thing.

From the Journal -

"2006/06/08 Thu Pg 8, 378 words No Headline
... a lot of citizens have never seen: Tax refund checks. The City Council voted last month to borrow $4 million to send out checks to the likes of Newport Centre Properties, Verizon and Sears. "It's most of them (wealthy commercial owners) that get the refunds," said Jersey City Tax Collector Maureen Cosgrove. "That's where all the money goes. Everyone else is peanuts." Newport Centre Properties, which owns land in the city's Newport section, reaped the biggest refund in the past...

Quote:


....The State provides these refunds (75% of actual payroll taxes collected by the State from employees who relocated from NY) under the B.E.I.P. program, not the City - it costs the City nothing. The State does this in order to compete head-to-head with the incentives offered in Lower Manhattan (which are actually much more generous)......

Posted on: 2006/8/4 2:34
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Re: Fun with Abatements: Goldman Sachs
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In response to alb:

"But it seems as if a good rule of thumb as if abatements ought to go to low-income areas that are fairly far from public transportation and have a lot of vacant lots. Or maybe some really seriously blighted areas near public transportation."


They do. The City grants abatements of all varieties to both the fancy parts of town and the blighted parts. You only hear about the ones on the waterfront because those are the only ones that are politically interesting. The ironic thing is, they give real abatements in the rough parts of town (eg. 6% of gross residential rent instead of 16%) even though those are the residents who use the most local government services (police, social services, municipal jobs, etc.).

"Awarding abatements to waterfront properties in the 1980s or early 1990s probably made a lot of sense, but offering those abatements just clearly makes no sense whatsoever, at all, given that developers are jumping over one another for a chance to develop downtown."


The so-called "abatements" benefit the city more than the developer. That is why the city is always in a rush to give them out. For more info, please read my post here:
http://jclist.com/modules/newbb/viewt ... 29e446f20a#forumpost58135

"Another argument against waterfront abatements is that, for whatever reason, the waterfront residential properties are attracting a ton of families with children, and those children have to go to school somewhere."

Waterfront residents don't use the public school system in anywhere near the same proportion as the people in less affluent areas. Moreover, the schools are paid for by the State, ever since the State takeover.

"Either the developers of nice residential units have to start suitable subsidized private schools,"


This was done at Portside with the Montessori and at Newport with respect to Stevens Coop and the River School. I don't think any of the other developers have the scale to try this idea.

"Sorry about my ignorance. Are you referring here to Corzine or to Healy?"


I was referring to our drunken Mayor who comes to work at 10AM and starts literally shaking from withdrawel symptoms around 2:30PM because he needs a drink so badly. Try to make an appointment with him one time around 4PM and see what happens.

"How bad are the hotel taxes? My recollection from this morning's Journal article is that the tax would be 6%, which doesn't seem to be all that terrible. But is the tax actually worse than that?"

Just to put this in context, New York's hotel tax scheme is as follows:
Real Estate taxes: NO real estate taxes for years 1-11 after construction, PARTIAL real estate taxes for years 11-20
Room tax: 5% of room rate tax contributed to NYC & Co. citywide hotel tourism marketing fund.

JC's tax scheme is as follows:
Real Estate taxes: FULL or PILOT (same as full if you do the math) taxes from day 1 after construction
Room taxes: 6% of room rate contributed to general revenues of Jersey City. JC spends $0 on tourism promotion and marketing.

As a result, Jersey City hotels will literally pay DOUBLE the taxes of NYC hotels. What makes JC think it can charge higher taxes than NYC - the tourist capital of the world - and expect to see hotels be developed? Hubris or insanity?

In response to danl:

"Occupancy and resulting revenues DO impact commercial property taxes and PILOTs under abatement agreements."


Only in residential abatements. Office building abatements pay a flat fee regardless of occupancy.

"The city recently provided tax refunds to a number of commercial property owners."

The State provides these refunds (75% of actual payroll taxes collected by the State from employees who relocated from NY) under the B.E.I.P. program, not the City - it costs the City nothing. The State does this in order to compete head-to-head with the incentives offered in Lower Manhattan (which are actually much more generous).

"Are tax abatements and PILOTs sound tax policy?

Then, with the abatements negotiated by elected officials and those appointed by elected officials whose campaigns are funded by the same developers being granted the abatements, how is the city able to ensure negotiating the best possible tax abatement agreement.? Should tax abatements not be vetted by an independent analyses?

No one from the city has ever laid out a rational explanation to these issues. It would be beneficial if someone could."


Yes, Yes, Yes and Yes. I totally agree with you on this statement Dan. The local pols are too cowardly to admit that they NEED the PILOT programs to keep the city budget balanced due to their own mismanagement of the municipal finances. I think an independant accountant's analysis of every PILOT approval would be a great way to settle the issue to the satisfaction of the public. Meanwhile, the City will claim they don't have enough money to pay the accountant to check if the PILOT approval makes sense! :(

In response to GrovePath:

"So JCLAW, I assume agree with former Jersey City Mayor Bret Schundler."


Not really. I think the site should be zoned for a nice retail/residential development like Liberty Harbor North and then sold to the highest bidder. That way, the city would get cash up front for the sale and future tax ratables as the property is developed out. It would also set a standard for further high quality development on the city's West waterfront. The half-wits at the County want to make it into a golf course - for special use by elected officials, of course.

Obviously this is just my humble opinion.

Hope this helps. My hands are tired from typing now.

Posted on: 2006/8/1 23:53
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Re: Fun with Abatements: Goldman Sachs
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How can someone possibly believe that leasing out, what, at least 25 floors, is a huge loss versus paying taxes to a municipality?

Do people really think waterfront commercial real estate is that cheap? Or that taxes are *THAT* out of control?

Posted on: 2006/8/1 18:04
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Re: Fun with Abatements: Goldman Sachs
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Quote:

DanL wrote:

We keep hearing that the city benefits and receives more taxes, but what is the imact on the homeowner who pays city, county and school taxes and the citizens that use / impacted by city, county and school services. Are tax abatements and PILOTs sound tax policy?


It seems as if it's probably hard to get a good, honest, unbiased, unaccurate prediction about something like this. Even if you get an economist who is genuinely neutral, the economist could just plain be wrong. Maybe if you use one plausible interest rate assumption, PILOTS look great, and, if you use another plausible assumption, they look terrible.

But it seems as if a good rule of thumb as if abatements ought to go to low-income areas that are fairly far from public transportation and have a lot of vacant lots. Or maybe some really seriously blighted areas near public transportation.

Awarding abatements to waterfront properties in the 1980s or early 1990s probably made a lot of sense, but offering those abatements just clearly makes no sense whatsoever, at all, given that developers are jumping over one another for a chance to develop downtown.

Another argument against waterfront abatements is that, for whatever reason, the waterfront residential properties are attracting a ton of families with children, and those children have to go to school somewhere. Either the developers of nice residential units have to start suitable subsidized private schools, or they have to somehow figure out how to create nice neighborhood public schools and make sure the tenants have a shot at getting at least half of the seats.

Posted on: 2006/8/1 18:01
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Re: Fun with Abatements: Goldman Sachs
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No, ALB, you are correct. Occupancy and resulting revenues DO impact commercial property taxes and PILOTs under abatement agreements. The city recently provided tax refunds to a number of commercial property owners.

I still would like to hear a better explanation on how tax abatement agreements truly provide long term benefits. We keep hearing that the city benefits and receives more taxes, but what is the imact on the homeowner who pays city, county and school taxes and the citizens that use / impacted by city, county and school services. Are tax abatements and PILOTs sound tax policy?

Then, with the abatements negotiated by elected officials and those appointed by elected officials whose campaigns are funded by the same developers being granted the abatements, how is the city able to ensure negotiating the best possible tax abatement agreement.? Should tax abatements not be vetted by an independent analyses?

No one from the city has ever laid out a rational explanation to these issues. It would be beneficial if someone could.

Posted on: 2006/8/1 14:53
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Re: Fun with Abatements: Goldman Sachs
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Keep in mind that even though Jersey City gets this 6% - "Hotels are allowed to deduct their real estate taxes - or, if they are tax-abated, their payments-in-lieu of taxes - from the total."
Whatever that means!

------------------------------------
Hotel tax could bring in $5 million
Tuesday, August 01, 2006
By KEN THORBOURNE
JOURNAL STAFF WRITER

A hotel tax bill that could mean an extra $5 million a year to Jersey City cleared the state Legislature Friday and now awaits Gov. Jon Corzine's signature, officials said yesterday.

"I'm pleased," said state Assemblywoman Joan Quigley, D-Jersey City, the bill's prime sponsor. "I also feel good it does not impact local residents. They only get the positive impact, not the negative."

Quigley, who sponsored the bill at request of Jersey City Mayor Jerramiah Healy, said she expects Corzine to sign the legislation this month, "because he knows Jersey City needs the money."

A spokesman for Corzine, Brendan Gilfillan, said the Governor's Office is reviewing the bill, declining to comment further.

"Mayor Healy is a huge supporter of this (hotel tax legislation)," said Maria Pignataro, a spokeswoman for the mayor. "Instead of having to hit taxpayers up for more money, we get to receive additional money from visitors who are enjoying our city."

The bill, which applies to Elizabeth and Newark as well, would allow Jersey City to collect the full amount of a local occupancy tax levied on hotels, city Tax Collector Maureen Cosgrove said. Right now, hotel users are charged a 6 percent occupancy tax by Jersey City, Cosgrove said, but hotels are allowed to deduct their real estate taxes - or, if they are tax-abated, their payments-in-lieu of taxes - from the total.

State Sen. Bernard Kenny, D-Hoboken, sponsored the legislation in the Senate and Hudson County's other state representatives signed on as co-sponsors.

Posted on: 2006/8/1 14:48
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Re: Fun with Abatements: Goldman Sachs
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Quote:

JCLAW wrote:
Hi alb.

What you heard cannot be right. All so called "tax abatements" have no caps on occupancy levels.


Thanks for this correction. If what you're writing is correct (and it looks correct to me, but then, I believed the original rumor, too, so what do I know), then Goldman Sachs probably ought to figure out some way to explain the situation to employees, because the rumor came from Goldman Sachs employees.

If I were Goldman Sachs, I wouldn't want them to know the full explanation that you wrote, but I also wouldn't want them to come into work everyday thinking that the company was so crooked that even the way it ran its building was crooked.

On the other hand, maybe Goldman Sachs has reasons to want employees to think that it is really that crooked.

Quote:

1) GS expected to be able to move their Equity Division (ie. Stock Brokers) to their Jersey City office, just as many other firms like PaineWebber (to Weehawken), BankersTrust and DLJ Pershing had done. The swanky brokers at GS simply refused to move,


I understand this. Aside from the fact that the location is just not is prestigious, there are, comparatively speaking no shops or restaurants. That means it's really hard for Exchange Place to attract high-end offices from locations like Hoboken.

Quote:
Then again, the current administration, which is the most Anti-Jobs, Anti-Business since the Cucci era, is not exactly helping.


Sorry about my ignorance. Are you referring here to Corzine or to Healy?

Quote:
giant hotel taxes which stop the development of high class assets which DO generate the kind of economic activity such as tourism, trade, international culture, and growth oriented jobs, that a new city like JC really could use.


How bad are the hotel taxes? My recollection from this morning's Journal article is that the tax would be 6%, which doesn't seem to be all that terrible. But is the tax actually worse than that?

Posted on: 2006/8/1 14:27
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Re: Fun with Abatements: Goldman Sachs
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So JCLAW, I assume agree with former Jersey City Mayor Bret Schundler.

("haha tourism" - maybe but I think with all hotels going for at least $200 per night in Manhattan -- more and more people will be staying in Downtown Jersey City. Remember that Hoboken has NO Hotels, and everywhere else close by in Jersey has no good subways, -- so where else are people going to stay -- there are only a handful of Hotels in Brooklyn too. Don't sell Downtown Jersey City short! )

------------------------------------------------

Visions of Liberty State Park 'west'
Monday, July 31, 2006

Jersey City Mayor Jerramiah Healy is being shortsighted in championing a warehouse for the banks of the Hackensack River in Jersey City, former Jersey City Mayor Bret Schundler told The Jersey Journal last week.

Schundler, who favors using the land for open space, called the warehouse a "low-value investment" that would ultimately stymie the development of the city's western coast.

Schundler said Healy should think about the 87-acre PJP landfill as another Liberty State Park - an environmental oasis that attracts jobs and housing to the entire city.

The decision about what to do with the site is "hugely important," Schundler said.

"If you don't do it (use the land for open space), a lot of people are going to say the mayor doesn't have vision and sold out the west side of the city," he said.

Schundler said he's spoken to Healy about the issue and believes that Healy is operating under the false impression that the city would be stuck with cleaning up the landfill if the warehouse deal fell through - even though Waste Management, one of parties responsible for the site, signed an agreement with the state six years ago to pay to cap the site.

"I appreciate Bret Schundler's opinion as a former mayor and as a resident," Healy said. "However, I respectfully disagree with him entirely.

"It would be irresponsible of me . not to pursue economic opportunities for the blue collar residents of our city who have bills to pay and families to feed," he continued.

"As my administration sets out to reduce the financial burden on taxpayers set forth by previous administrations, I welcome the $100 million investment and tax ratables that Jersey City would receive on a property that has sat idly for over 40 years."

Healy said that he was aware of Waste Management's obligations and that Schundler, who "did a lot of talking" during their conversations, probably didn't hear him.

Posted on: 2006/8/1 13:28
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Re: Fun with Abatements: Goldman Sachs
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Re: Fun with Abatements: Goldman Sachs

"HAHAHAHHAHA "JC Tourism""

I like to laugh too - but seriously. JC has tourist destinations such as Ellis Island, LSP, and Liberty Science Center, et.al.. More importantly, NYC bound tourism that is priced out of the city choose Jersey City as a lower cost alternative. They sleep here, eat here, shop here, visit one or two local attractions while they are mostly visiting New York. Those tourist dollars are pure gold for JC businesses, because the people who spend that money do not consume local city services. They use school systems, social svcs, police, etc. in their home city of origin - not in JC. A hotel is like an export business. Imposing a tax on your own exports is moronic. No country would do it. And btw, New York's hotel tax (which is less than JC's) is specifically used to fund local tourism marketing ("NYC and Co." "I HEART NY") dollar for dollar. JC's hotel tax is just more money for the 3 job holding, free gas guzzling "elected" officials.

"Another informative post, you should post more JCLAW. There is a lot of speculation and misfacts flying around this board."

Thanks a lot, that's very kind of you NNJR. If you ever want me to try to answer something, start a thread with JCLAW in the title and I'll try my best.

"Re: your digression - what are you referring to that the mayor wants to build?"

It's called the AMB High Cube Warehouse. He wants to stick it right on the hackensack river (JC's "other" waterfront) on the old PJP landfill. It's the equivalent of letting Newport/Harborside/Exchange Pl. be developed as an industrial use in 1985 instead of a commercial or residential use. Could you imagine what JC would be like today if our waterfront's abandoned railyards were turned into big box factories instead of Wall St. West? Sorry to keep wasting letters on this mayor, but I spend too much time around these city people and they are the worst bunch of nincompoops in 20 years.

Posted on: 2006/8/1 13:21
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Re: Fun with Abatements: Goldman Sachs
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Great post, JCLAW, thanks for the info. Re: your digression - what are you referring to that the mayor wants to build?

Posted on: 2006/8/1 12:34
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Re: Fun with Abatements: Goldman Sachs
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Another informative post, you should post more JCLAW. There is a lot of speculation and misfacts flying around this board.

Posted on: 2006/8/1 12:14
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Re: Fun with Abatements: Goldman Sachs
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Quote:


Digression: And don't tell me the high cube warehouse the mayor wants to build for his paying cronies is going to generate the kind of economic activity that makes a city great - while he imposes giant hotel taxes which stop the development of high class assets which DO generate the kind of economic activity such as tourism, trade, international culture, and growth oriented jobs, that a new city like JC really could use.



HAHAHAHHAHA "JC Tourism"

Posted on: 2006/8/1 12:11
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Re: Fun with Abatements: Goldman Sachs
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Hi alb.

What you heard cannot be right. All so called "tax abatements" have no caps on occupancy levels. Whether the building has 1 employee in it or 10,000, Goldman Sachs pays the same fixed amount directly to Jersey City. Also, the "tax abatement" on the Goldman Sachs building is one of the later ones which includes the surcharge for county and school payments on top of the predetermined "tax abatement" amount.

If you are wondering why the building is not full, let me offer you the following explanations:

1) GS expected to be able to move their Equity Division (ie. Stock Brokers) to their Jersey City office, just as many other firms like PaineWebber (to Weehawken), BankersTrust and DLJ Pershing had done. The swanky brokers at GS simply refused to move, so GS could only convince their mid-office IT, HR and corporate services divisions to go across the river.

2) When GS planned the building in the go-go late 90's, they had 35,000 employees and thought the dot.com era would never end. Now they only have 25,000 employees and a lot of extra office space around the world.

3) GS has no incentive to lease out the rest of their space because the revenue they would get from it after paying for Tenant Improvements (build-outs) and brokerage commisions on 3rd party leases, the income would be lower than their own extremely low cost of capital (4.5%). It is financially more efficient for them to warehouse the space in case of future needs than to lease it.

4) For security reasons they don't want anyone else (especially a competitor) in their building spying on their sensitive information.

5) The stock market will whack them for sub-leasing the space at a low rent, because they will have to capitalize it and declare the charge as a big one time hit against annual earnings (GAAP rules for public companies).

Hope that helps. I agree its a shame that more people won't move over to our side of the river by the way. Then again, the current administration, which is the most Anti-Jobs, Anti-Business since the Cucci era, is not exactly helping.

Digression: And don't tell me the high cube warehouse the mayor wants to build for his paying cronies is going to generate the kind of economic activity that makes a city great - while he imposes giant hotel taxes which stop the development of high class assets which DO generate the kind of economic activity such as tourism, trade, international culture, and growth oriented jobs, that a new city like JC really could use.

Posted on: 2006/8/1 11:58
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Fun with Abatements: Goldman Sachs
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Someone told me that the management company that runs the Goldman Sachs building keeps the occupancy level just low enough that the building keeps its tax abatement.

It seems to me that, if that rumor is true, this is wrong on several levels:

- It cheats the Jersey City schools of tax money.

- It keeps rents for commercial tenants artificially high.

- It reduces the number of office workers milling around at Exchange Place restaurants and shops during the day.

- It may reduce overall employment levels in Jersey City.

Posted on: 2006/8/1 3:22
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