The members of the public in the council chambers Wednesday witnessed a vibrant discussion regarding a tax abatement for a proposed condominium project by Hoboken developer Dean Geibel on 3.75 acres of land on Luis Munoz Marin Boulevard.
The site is known as the Flintkote property, named for the company once located there.
The City Council meeting didn’t have the tension and controversy of the previous council meeting two weeks ago, when a vote to approve the Historic Warehouse District was tabled. That issue will be dealt with at a special council meeting on Oct. 6.
Wednesday, after an hour of public comment, the council voted 5-3 to award a 20-year tax abatement to Geibel. The vote put an end to a tumultuous issue marked by discontent over awarding abatements to developments in an area of Jersey City where there is no perceived need, and allowing a property owner to benefit financially due to possible political influence.
Abatements are awarded to encourage developers to build in certain areas. Instead of paying the regular fluctuating tax rate, a developer instead gets a different formula to follow, giving more of the money to the city rather than the county and schools. Abatements have become controversial because some claim they allow developers to avoid taxes that other people pay.
The Flintkote controversy
The Flintkote land had become a hot topic at City Hall as well, because of its history, the people involved, and the fact that the land went from being a $100,000 acquisition to having an asking price of $25,000,000.
Steve Hyman had been the owner of the property in question since 1981, when he acquired it for $100,000. Hyman spent many years and dollars trying to develop the property but was unsuccessful.
The city stepped in to claim the property under eminent domain for the Liberty Harbor North Redevelopment Plan. Hyman then sued the city, as he would not get a higher asking price if he had to sell to them.
However, Hyman’s fortunes improved when a seven-page amendment to the redevelopment plan was brought before the City Council at a January 2002 meeting. A sentence was placed in the amendment document to remove Block 60, Lots 28.D and 28.H from the plan, but didn’t use the term “Flintkote property.” When the amendment was approved, the property was safe from the city’s acquisition, and Hyman was able to keep hold of the property.
Later, city officials sought to determine who placed that amendment into the plan, and why. It became a financial boon to Hyman, as he planned to sell the property for $25 million to Dean Geibel. According to many council members, the offending sentence had been added by former director of Housing, Economic Development and Commerce Mark Munley, who had previous business dealings with Hyman. However, the state investigated over a period of months and found no wrongdoing on Munley’s part.
The deal was allowed to move forward. But as a prerequisite of the deal, Geibel had to be able to get an abatement, otherwise known as a “payment in lieu of tax” (PILOT) agreement, for the land.
He planed to construct a 16-story tower, an eight-story tower, and a four-story tower that would contain 432 residential condominium units, 35,000 square feet of space, and a parking facility for 442 cars.
PILOT introduced
An ordinance approving a 20-year tax abatement for the project was introduced for a first reading at the City Council meeting on Feb. 25 and was amended to include prepayments into the tax abatement, meaning payments made as collateral to insure development.
But at the Feb. 25 council meeting, some members of the council brought up possible ethics questions surrounding the abatement.
They focused on the sentence that was added to the amendment to the Liberty Harbor North Redevelopment Plan. Ward D Councilman William Gaughan charged at the meeting that the council had been “snookered” by “false advertising” when they approved the amendment in January 2002 and had asked for the State Ethics Board to investigate Munley’s involvement in having the property removed from the redevelopment plan and making a determination on the legality of the amendment.
On March 10, the ordinance was up for a second reading to insure final passage. But at that day’s City Council meeting, the council voted 7-1 against approving the abatement, with those opposed citing the prevailing ethics issue over the removal of the Flintkote property from the redevelopment plan.
The ordinance for awarding the tax abatement was re-introduced at the July 11 council meeting but was tabled until Aug. 11. The decision was attributed to Acting Mayor and City Council President L. Harvey Smith announcing at the council caucus on Aug. 9 that he would not vote for the ordinance due to lingering questions on the legality of the amendment.
However, in the time between the rejection of the ordinance in March and the tabling of the ordinance in August, the state’s Department of Community Affairs did an ethics inquiry on the role of Munley in the removal of the property from the redevelopment plan, no evidence of wrongdoing on Munley’s part was found.
This led up to Wednesday’s meeting, as the ordinance had been reintroduced at the meeting earlier this month on Sept. 8.
Critics speak out
The public weighed in heavily on this matter as over an hour was spent hearing from those for and against the approval of the abatement.
One of the most vocal critics since the council meetings in March and April was longtime resident and community activist Yvonne Balcer, who pointed out that one of the risks of constructing this building is that it would be located in an area that is always subject to flooding.
She noted the building would only add to that problem, as there would be “432 sinks and 432 toilets” resulting from the condominium project.
Balcer also brought up the issue of the abatement itself, pointing out that the city would be receiving less money under the tax abatement than through conventional taxation, which she said would only put more of a tax burden on the residents of the city as they would have to make up for the lost revenue.
A one-page document provided by Geibel’s lawyer, James McCann, outlined how the eventual owner and developer of the Flintkote property would pay at least $1.5M per year during the 20-year tax abatement that was approved by the council. If the abatement wasn’t granted, then about $2.4M would be paid in conventional taxes with 42 percent allotted for municipal uses.
Other residents voiced the common refrain that the abatement wasn’t needed in an area that is a magnet for developers who want to build on prime property located near the Jersey City waterfront, and some commented that this granting of the abatement would happen as a payback for political donations.
It has been reported in the local press two Council people who are mayoral candidates have received donations from Dean Geibel and Steve Hyman for past campaigns.
Some in favor, too
Other city residents were in favor of the abatements, including a number of people who recently moved into Downtown Jersey City buildings built by Geibel, saying that without abatements, the area where the Flintkote site is located would not be developed and would remain vacant.
One longtime denizen of the city, Gary Greenberg, came to show his support for the passing of the ordinance.
Greenberg is the executive director of the Boys and Girls Club of Hudson County, whose headquarters on Canal Street is adjacent to the Flintkote site.
Greenberg wanted the piece of land located behind the Boys and Girls Club building developed, which would give new life to an area that he has witnessed for nearly 20 years as being desolate and, at times, dangerous.
He said that Geibel has promised him that a road would be built through the area and he would help expand an existing part of the club building that is housing a charter school.
When it came time to vote, Lipski voiced probably the strongest approval for the abatement, saying that this is “a good abatement.” He also challenged critics of the abatement, including State Assemblyman Louis Manzo, who sent letters this week to the City Council criticizing the possible granting of the abatement and addressed the issue of this abatement as a possible pay-for-play issue. The implication was that a political action would be granted as a favor in response to a campaign donation.
But Ward E Councilman Junior Maldonado, who has been a consistent critic of the abatement because of the ethical issues pertaining to Hyman and Munley, said that he was opposed to the abatement only because of the ethical issues and was not opposed to Geibel.
Maldonado, chairman of the Jersey City Redevelopment Agency, along with some other council members, suggested that Geibel look into purchasing other land in the area rather than “putting $25 million in Steve Hyman’s pocket.”
Mayor Smith may veto
Acting Mayor Smith, acting in his role as council president, just offered a simple “no” when it was his turn to vote.
There is the possibility of Smith vetoing the ordinance since in order for the ordinance to become a legal document, it has to be signed by Smith in his role as mayor. Smith has ten days from the meeting to do so before the ordinance goes into law.
The City Council could override a veto and would need at least six votes to do so.