Say no to redevelopment agreements that do not specify PILOT agreements

Citizens of Hoboken:

This Wednesday, August 13, 2008, the Hoboken City Council will be voting on an “ordinance ratifying execution of a purchase and sale agreement and a redeveloper’s agreement … for the public works garage property”. I reviewed this ordinance and the attached agreement as well as the amended redevelopment ordinance and plan, and I found no mention of Payment in Lieu of Tax (PILOT) agreements referred to in any of the documents.

I asked Community Development Director Fred Bado whether this PILOT agreement could be passed at a later time, and he said yes.

Keep in mind that under NJ state law, a municipality can declare an area “in need of redevelopment” (i.e. a redevelopment zone) for as flimsy a reason as it being “underutilized” which gives the redeveloper enormous privileges including the ability to take over other properties in the zone by eminent domain, exemption from zoning and exemption from taxes. The City and the redeveloper can enter into a redevelopment agreement where the redeveloper pays no County or School taxes (which in 2002 amounted to 75 percent of property tax) and what little taxes he does pay all go to the City. In principle, such PILOT agreements could allow the City to receive more than full taxation, while the other Hoboken taxpayers have to pay the redeveloper’s unpaid county and school taxes. This perhaps accounts for why Mayor Roberts has twice referred to aggressively pursuing redevelopment and PILOTS as a way to solve the City’s fiscal woes, although the ability to bring in more than full municipal taxation appears to have done nothing but encourage irresponsible spending.

But it is not even necessarily true that the City even gets full taxation from a redevelopment project. For example, in the November 24, 2002 Hoboken Reporter I discussed the agreement between the Port Authority (PA) and the City of Hoboken for the redevelopment of the Southern waterfront (see “Port Authority Redevelopment PILOT Deal Adds 14.1 percent to Hoboken Taxes” in in which I showed that the PA project actual paid only about 20 percent of its taxes and as a result that one project alone, when fully built, will increase Hoboken property taxes by over 14 percent.

Given that PILOT agreements that allow redevelopers to underpay their property taxes can have so profoundly increase our taxes, it seems appalling to me that the City can nail down an agreement for sale of the public works garage without revealing what the PILOT agreement will be. Obviously, there is no reason to have any redevelopment zone in Hoboken, since it results in increased property taxes and a lowered quality of life from the increased density achievable in a project exempt from zoning laws. But minimally, the City Council should not approve a redeveloper’s agreement which does not even specify the PILOT agreement, since it gives neither the Council nor the Public the facts needed to make an informed decision.

Daniel Tumpson


© 2000, Newspaper Media Group