Citizens of Hoboken:
The Roberts Administration recently started a process to designate the Maxwell House site on Hoboken's northern waterfront a "redevelopment zone" as governed by the NJ Redevelopment Law (NJSA 40A:12A-1 et seq.). This law is intended to encourage the redevelopment of "blighted" property by exempting it from property taxes and substituting substantially smaller Payments in Lieu of Tax (PILOTs) made to the municipality.
According to the Hoboken Reporter (10-13-02), "Roberts said that by creating PILOT agreements, the municipality gets a bigger piece of the tax pie and that will benefit Hoboken residents and create an incentive to bring major developers to the city. 'There is no question that the way to proceed in the future is with PILOTs,' said Roberts...' ".
There are two problems with this rosy picture:
(1.) A redevelopment project is exempt from the Zoning Law. Instead, developers and city officials negotiate the redevelopment zoning behind closed doors, with no public participation or scrutiny. Redevelopment projects which cause harm to the public, through loss of open space, giveaway of public lands, huge buildings, stress on infrastructure (sewer, water, parking, roads), environmental pollution, and extra traffic, escape the zoning process. These projects degrade our environment and lower our quality of life for the benefit of a few developers, and we have no say in the matter.
(2.) The redevelopment designation has been applied to Hoboken's most valuable property, waterfront property, violating the intent of state law and transferring the taxes of redevelopment property owners onto the backs of the other taxpayers.
Ordinarily, property owners pay municipal, county, and school tax. In contrast, redevelopment property owners are exempt from these taxes for up to 25 years, paying only PILOTs to the municipal government. To understand how redevelopment/PILOTs affects Hoboken property taxes, consider one redevelopment project, the Port Authority (PA) project on Hoboken's southern waterfront.
At full build, the PA project will consist of 2.315 million sq.ft., valued at about $300/sq.ft. (This estimate is based on a 1000 sq.ft. condo costing $300,000.) If the PA project paid full taxes at the current rate of 3.26%, its property tax would come to $9.78/sq.ft. Instead, the PA project pays PILOTs of only $2/sq.ft, only 20.5% as much tax as the rest of us!
At full build, the PA project will be annually exempt from $22,641,000 in property taxes, of which Hoboken taxpayers must pay the municipal and school taxes (60.86% or $13,779,000) and Hudson County taxpayers must pay the county taxes (39.14% or $8,862,000). Hoboken pays 14.96%, or $1,326,000, of these county taxes, so Hoboken taxpayers must bear $15,105,000 of the PA project's tax exemption. The $4,630,000 in PA project PILOTs offset Hoboken's share of the exemption, so the PA project increases Hoboken property taxes by $10,475,000.
This increase amounts to 0.46% of Hoboken's total property value of $2.279 billion, or 14.11% of your total property taxes. That's right! Your property tax would go down by 14.11% if the PA Project paid its fair share of taxes! If you own a $200,000 condo, $920 of your taxes goes directly to paying PA project taxes!
Now Mayor Roberts wants to turn the Maxwell House site, another prime waterfront property, into a redevelopment zone. If the 1.4 million sq.ft. Maxwell House project currently before the Planning Board were given the same PILOT deal as the PA project, it will underpay its taxes by $10,892,000, adding 8.53% to your property tax bill!
This scam is attractive to city officials because they can arrange PILOT payments to initially exceed full municipal taxation, bringing more money into city coffers without increasing the municipal tax levy, so it seems that municipal taxes are "stabilized" and the tax "problem" is with rising school and county taxes. But in truth much of this "problem" stems from transferring most of the redevelopment tax obligations onto the backs of the rest of the taxpayers.
Instead of promoting this redevelopment/PILOT scam, the Mayor and Council should immediately shut down all redevelopment projects, including the Northwest Redevelopment (which is still largely unbuilt), the expansion of the PA project, and the Maxwell House redevelopment designation (both of which are now before the City Council). These projects not only undermine the zoning law and our quality of life, they are ripping us off!
Sincerely,
Daniel Tumpson