Over the years, much of the discourse between Jersey City residents and officials has swirled around the use of abatements. However, does anyone know the price tag of what abatements truly cost?
In this report, CivicJC will look for that number and share our findings. Not reflected in this report is the worthiness of abatements granted to any particular property.
The total difference between PILOT payment and conventional tax was $80,579,503 for 2014.
Jersey City receives $17,927,941 more in revenue through PILOT payments than conventional tax.
Under conventional taxes, the school system would receive $52,062,566 and the county would receive $46,445,077.
Under PILOT payments, the school system receives zero. Properties constructed after 2005/6 now pay 5 percent to the county.
Abatements can serve as a useful tool by acting as a catalyst. Areas that may be in need of development can use abatements as an incentive to facilitate development that might not otherwise occur. The greater the need for development, the higher the incentive offered in terms length of the abatement.
While abated properties do not pay taxes under the conventional taxation system, they do pay into the city coffers through PILOTs, Payment in Lieu of Taxes.
PILOTs differ from conventional taxes in how monies are allocated. Conventional taxes are divided between the municipality, county and school system. PILOTS go almost entirely to the municipality.
The PILOT fees would come at a lesser cost then if paying conventional taxes. This incentive attracts would be risk takers in developing areas that may otherwise go untouched. The municipality is able to receive a higher revenue then they would have had they shared with the county and school or if no development occurred.
CivicJC looked at the total abatement numbers for 2014.
The total number of abated properties provided to us was 146.
The total amount of PILOT payments in 2014 to Jersey City was $119,230,890.
Properties constructed after 2005/06 now pay 5percent.
CivicJC calculated the approximate equivalent that each property would pay under conventional taxes.
The total amount of what would have been paid under conventional taxes is $199,810,593 of which:
$101,302,949 would be allocated to Jersey City
$52,062,566 would be allocated to the school system
$46,445,077 would be allocated to the county
While many abated properties are residential, long term planning with the local school board to accommodate rapid growth of student enrollment does not appear to be factored into the abatement process.
Rapid growth in student enrollment within areas that are heavily abated and do not contribute to the school system puts increased dependency on state aid funding. A decrease in state aid would add an increased weight to the residents.
What you can do
Contact your state representative and ask for legislation that would set the parameters of how abatements are granted and keep within its intended purpose of developing in distressed areas.