Dear Editor:
I would like to clarify what I believe are some mis-statements made at a recent council meeting about the tax structure (P.I.L.O.T. payments) of the South Waterfront Project.
Blocks A, B and C (River Street, from First through Fourth Streets) are owned by the Port Authority of New York and New Jersey and leased back to the City of Hoboken for a term of 99 years for the nominal sum of one dollar per year. This lease arrangement was embodied in the Municipal Development Agreement for the South Waterfront adopted unanimously by the Council in December of 1995. Because the underlying property owner is the Port Authority, under state and federal statutes the property is exempt from any taxation whatsoever. However, the City with the concurrence of the Port Authority structured a payment in lieu of taxes program for the individual block developers for two reasons. The first is to allow this development to serve as an economic engine for the City and secondly, to allow the Port Authority to provide an infrastructure investment of over 45 million dollars to create such amenities as the waterfront walkway, Pier A, Pier C (which is going into the design phase now) and all the physical improvements to the area such as new water and sewer lines, sidewalks and lights.
If the south waterfront buildings were subject to regular taxation, our tax assessor as well as our tax consultants would have set an assessment on the property of $4.50 to $5.50 per square foot. With only 24 cents of each tax dollar collected going to the City, Hoboken would have netted only $1.32 per square foot using the maximum tax rate, with the balance going to the county and the schools.
Under Hoboken’s P.I.L.O.T. agreement, the City currently collects and nets $2.12 per square foot, over 60 percent more than regular taxation. In addition, the P.I.L.O.T. agreement does not add the value of these properties to the county’s ratable base. Therefore, the property does not affect in any way Hoboken’s county tax obligation. It does not cause an increase in our county tax rate. County taxes rise when county spending goes up or our tax ratables base goes up. These properties are not added to the county ratable base.
This year the South Waterfront will provide over $2,944,175 in P.I.L.O.T. payments as well as a contribution of $538,822 for upkeep and maintenance of the waterfront open public spaces. Upon completion, tax revenues will be over $4,748,800 per year.
Robert K. Drasheff
Business Administrator