The City Council approved on Wednesday tax abatements for a proposed 217-condominum development in Newport and for a 202-condominium development at the former American Can Factory.
A tax abatement is an agreement to exempt a developer from regular, fluctuating property taxes. It comes with a separate revenue deal for the developer to pay money to the city over 20 or 30 years – called Payments in Lieu of Taxes (PILOT).
PILOT money is controversial because it goes straight to the city rather than being shared among the city, the county, and the schools. The public feels that they sometimes must end up paying a higher share of taxes to make up for the loss.
The council voted 7-1 for the Shore Club abatement (Ward E City Councilman Steven Fulop voted against it) and 7-0 for the American Can Company project (Ward A Councilman Michael Sottolano abstained but Fulop voted for it).
A 20-year tax abatement will go to the Shore Club North Tower to be built at Newport, and a 30-year abatement will go to the owners of the old American Can Company building on Dey Street near Journal Square.
The renovation of American Can will be done in two phases, with construction expected to start this fall. The developer, New-York based Coalco Construction Services, seeks to build 202 condominiums and 145 parking spaces in the first phase, then add 309 more condos with 295 parking spaces in the second phase.
The Shore Club North Tower will be a 16-story building with 217 condominiums, a seven-story garage with 325 parking spaces, and about 10,000 square feet of retail space. Construction is expected to start this fall by Newport Development Associates – a subsidiary of the LeFrak Organization.Shore Club
Some residents opposed the abatement for the Newport project because the wealthy developer, who is already building on premier Hudson River waterfront real estate, would be exempt from paying its fair share of county and school taxes.
Jennifer Jin, a homeowner in the city’s Marion section, was angry that while her property taxes increased this year, the council gave long-term abatements to those who can afford to pay.
Dan Falcon, a 10-year Newport resident, asked the council to table the Shore Club abatement until an analysis from an independent accounting firm could show the abatement would benefit the city financially.
Falcon called the council members, except Fulop, “liars and crooks” if they can’t prove in writing that the abatements are fiscally positive for the city.
But City Council President Mariano Vega and Ward D City Councilman Bill Gaughan both said the abatements are an “economic engine” to spur development.
Sonia Maldonado, president of the tenants group Newport Waterfront Association (NWA), has criticized the LeFrak Organization in the past, but supported this abatement because LeFrak agreed to build a portion of the state-mandated Hudson River Walkway near the Shore Club.
Several construction workers voiced their support. Mega-developers like LeFrak Organization have used the strategy of having employees endorse abatements to ensure that construction continues in the city.
Most of the construction workers who attended the meeting were minorities, which could be seen as countering past objections to abatements approved for developers who don’t employ minority labor. American Can Company
Vega said after visiting the American Can Company site and seeing the cleanup work required for the first construction phase, he was convinced the abatement should be granted.
What also helped was the developer donating $185,000 to five organizations: the Jersey City Museum ($65,000); the Pershing Fields/Babe Ruth Little League ($60,000); Grace Seniors at Grace Van Vorst Church ($25,000); Pavonia Park ($25,000); and Riverside Church ($10,000).
Sottolano abstained from voting because he felt the donations should have not influenced the decision to approve, and instead should have gone into a general fund to help residents with tax relief. Fulop said after the meeting that the council is considering forming a committee to restudy how abatements are granted.
Jin complained at the meeting that homeowners should also get abatements to help them rehab their homes.
Charlene Burke, another Marion resident, pointed out that homeowners receive five-year abatements when they want to upgrade their homes, but not longer abatements. She added that developers can sell their condos at a much higher price, as new residents would pay lower taxes with the abatement, but her house would sell for a lower price because of the higher taxes levied on her property. Ricardo Kaulessar can be reached at rkaulessar@hudsonreporter.com