The Jersey City Independent "

As we reported yesterday, Jersey City’s unemployment rate is nearing double digits, and is currently at its highest point since July 1999. The city is faring a bit worse than the nation and New Jersey as a whole, but better than cities like Trenton, Paterson and Newark.

Throughout the campaign, several of the challengers have pointed out that the city’s unemployment rate is far worse in the poorest neighborhoods. Smith says that the rate in those areas “can be as much as double the national rate.”

Any potential mayor’s economic development plan has to address the realities of the unemployment situation here, and try to mitigate a problem with global roots from a local perspective.

In this fourth installment of our series on the key issues in this election, incumbent Jerramiah Healy and challengers Dan Levin, Lou Manzo and Harvey Smith share their views and ideas on economic development, housing, taxes and city budgets with us. Phil Webb did not respond to requests to comment. Look for our fifth and final installment — on transportation — next Friday.

Economic Development

The candidates’ ideas on economic development are similar — spread it citywide, focus on small businesses — but slight differences have emerged in the course of our conversations.

Healy defends his record, touting the success of his administration’s “pro-business, pro-development philosophy.” He says his administration has created more than 9,000 new jobs in four years, and adds that jobs for local residents trickle down from the white collar jobs created (or brought to Jersey City) on the waterfront.

“According to industry guidelines, each worker creates two to three other jobs — the local restaurants, cleaners, shoe repair shops,” Healy says. “These are owned and staffed by Jersey City residents.”

Smith says that waiting for a trickle of service jobs isn’t enough.

“The city needs a mix of economic development, from finance to factory,” he says. “Back in the day, the waterfront was a source of good jobs for our residents, but they have not benefitted from the recent waterfront development.”

Levin stresses the need to create a long-term strategic jobs creation plan, starting with a thorough analysis of the city’s strengths, weaknesses, opportunities & threats. In particular, he thinks that Jersey City, with abundant warehouse space, easy access to highways, rail lines and ports, and proximity to New York City, is well-positioned to create economic growth in the light industrial and small manufacturing sector.

“We need to assess the value of our legacy assets” like vacant warehouse space, he says, “rather than accept the first development that comes.”

He notes that New York City recently changed the zoning of large parts of industrial Brooklyn and Queens to residential, which means many small speciality manufacturers are looking elsewhere in the region for their new homes.

“This is the opportunity Jersey City has,” Levin says.

Manzo also stresses the need to restore old warehouses so they can house non-polluting light industrial operations. Both he and Levin also point out that these are the types of jobs — living-wage opportunities that often don’t require much education or English as a first language — that Jersey City residents need.

Manzo says he wants to “bring a recession-proof industry” — the entertainment industry — to Journal Square.

His plan centers on the Square’s two historic theaters, the Loew’s Jersey, which the city already owns, and the Stanley, which the Jehovah’s Witnesses bought in 1983.

“Entertainment was always the mecca for Journal Square,” Manzo says. “With those two venues, not only will we get artists over here to perform, but we’ll also bring related businesses, like recording studios and back offices.”

In addition, Manzo says he’d create a performing arts high school in the building next to the Stanley (also owned by the Jehovah’s Witnesses) and try to build a soundstage for film and television productions on the Hackensack riverfront. When asked if the Stanley was really available for the city to purchase, Manzo says he asked back in 2004, and the church gave him a price tag at the time of $24 million.

Levin also says that the arts industry in a centralized arts district “is a must,” but his focus is not in performing arts but in small-scale arts manufacturing, like set building and other light industries. He says the entire New York City film and television market could be served by Jersey City’s arts manufacturers. “That will bring real investment,” he says.

Smith’s economic development plan focuses more on small neighborhood businesses.

“We need to take advantage of whatever federal dollars are available to stimulate economic activity west of Marin Boulevard,” he says. “Our commercial districts — West Side Avenue, Martin Luther King Drive, Summit Avenue, Newark Avenue — need our attention. We need to stimulate local small business growth, which can hire local people.”

While saying he “is proud of his record to date,” Healy admits “there is more to be done.” He says he will “continue to encourage smart growth development around transit hubs” if elected to a second term.

Helping Small Businesses

All the candidates agree that small business stimulation is key to the city’s economic development.

Healy says he is working hard for small business, noting his support of changing the state’s Urban Enterprise Zone legislation, which allows businesses to offer reduced sales taxes to consumers. He says he’s trying to make it so that more small businesses in Jersey City can qualify for the program.

Healy also says his administration funds to nonprofits like Women Rising and Rising Tide Capital that offer business development services to the city’s entrepreneurs.

In addition, he says he’s “established a working group” made up of representatives from the Jersey City Economic Development Corporation and the Housing and Economic Development Department that will “coordinate and facilitate the zoning, permitting and approval process” for small businesses.

Levin, a small business owner, says the city’s main goal for small business cultivation should be as a connector, providing information, facilitating processes and paperwork, and bringing people together. He says creating a “stable community” — a city on solid financial footing, with good schools and clean streets — is of far more importance to small business owners than tax credits.

Manzo, however says “tax credit incentives” should absolutely be used for small businesses, even on smaller items like rent payments. Like Levin, he says the Economic Development Corporation should be the catalyst for businesses looking to open, giving them demographic information and market analyses and, as experts, suggesting what kinds of retail businesses are needed in certain areas.

“That’s the type of strategic planning we need in our business districts,” Manzo says. “We don’t have that currently.”

Smith also says the city could do a better job in simply providing free assistance to potential small business owners.

“I know so many young people who want to open their own businesses but just don’t have someone to say, ‘Come this way,’” he says. “We have city resources, computers and technical support people and lawyers and engineers. Their expertise could be put to use in small business development programs.”

Property Taxes

A hot topic on the trail this spring has been the city’s property tax situation. Specifically, many residents are concerned that Jersey City may soon face a large property tax hike like their neighbors in Hoboken and West New York have recently. They point to the weakening housing market, the global economic downturn, the reduction in state aid and the looming property revaluation as a perfect storm that could hit homeowners at the worst possible time.

The challengers all say these concerns are valid.

“Jersey City is not immune,” Levin says. “We’re going to hit the wall, and we’re probably going to hit it soon.”

Manzo and Smith agree.

“A revaluation would crush and devastate many neighborhoods in Jersey City,” Manzo says.

“Any mayor of Jersey City over the next four years has to expect some chickens to come home to roost, whether it’s the potential collapse of the commercial real estate market or a continued national economic downturn,” Smith says. “If there is a revaluation, we had better have our budgetary house in order. I’ll start from there and work the crisis as it presents itself.”

Levin says that by plugging budgets with one-shot infusions from PILOTs (Payments in Lieu of Taxes on tax abated properties), legal settlements, property sales, and, this year, the pension payment deferral, “we’re just pushing off a property tax increase for the future.”

However, Healy says a property tax increase simply isn’t in the cards. He says his administration has “restrained spending while seeking new sources of reoccuring revenue,” specifically a parking lot tax and a hotel tax, which together bring in close to $10 million per year. Going forward, he says, he “will do everything possible to keep taxes stable.”

But Levin stresses the need to form a budget and a long-term financial plan that forces the city to live within its means. He says much of that can be done by cutting expenses citywide.

“We need to control our municipal spending,” Levin says. “There’s no other alternative.”

He points to a number of areas for the city to save money, from cutting back on the automotive fleet provided to city employees, to reducing staffing levels to outsourcing services that could be better provided by other entities.

“It shouldn’t be the business of government to hire people to push a broom,” Levin says.

He also says he’d target politically-appointed employees for furloughs, a point echoed by Manzo.

“I don’t like these fluff jobs that the mayor’s created,” Manzo says. He points out that these positions could easily be filled by civil servants instead of political appointees, and that they often prevent longtime city employees from moving into supervisory positions.

Manzo says the real solution to Jersey City’s property tax problems — as well as those of other municipalities around the state — would be the passage of a bill he sponsored while in the state Assembly. The Save Money and Reform Taxes (SMART) bill, which didn’t gain enough steam to pass while Manzo served in Trenton, would have shifted the funding of public schools largely from property taxes to income taxes.

Manzo also touts a revenue plan for Jersey City that he says could generate $18.2 billion a year. Modeled on a tax anticipation note, the plan would take a small portion of the additional revenue anticipated when a property’s tax abatement expires and put it in the city’s budget now.

He says it will “lower the taxes today,” and that he’d structure it so that taxes stay stable, but Levin is critical of the plan, likening it to the now-notorious credit-default swaps that helped fuel the Wall Street meltdown.

“It’s an absolute Ponzi scheme, a quick fix,” Levin says of Manzo’s plan. “It would be a disaster to the people who live here.”

Tax Abatements

Healy says his administration would continue the “judicious use of tax abatements” and other incentive programs to lure development to the city in its second term, but other candidates say there needs to be a standardized process for issuing and monitoring abatements.

Levin says the abatement policy needs to be put back into a holistic development plan. “Establish the goals first, then use the incentives to support the goals,” he says. “Not the other way around.”

Tax abatements should be “off the table” in certain areas, such as the Hudson River waterfront, Levin says. He also says abatements should be capped at 10 years, shouldn’t be used for market-rate housing, and shouldn’t be allowed to be extended.

“We should be making money, not providing a level of subsidy,” he says. “We need to let the market work.”

Manzo wants to license all abatements in order to police the agreements better. He says the fees developers pay to obtain an abatement license would cover the costs of ongoing audits.

He says these tax breaks come with contigencies — to provide construction jobs to local residents — that developers too often haven’t followed. By licensing the abatements, he says he could make sure Jersey City residents were getting a fair deal. If a developer wasn’t following through with its promises, Manzo says, he’d suspend their abatement license.

Budgets

The budgetary process in Jersey City has been criticized by some as a mess. This year’s budget, for example, is set to be adopted next month — 10 months into the fiscal year. Critics maintain this process prevents the city from ever cutting the budget in a meaningful way, as the budget document comes out after the money has already been spent via “emergency temporary appropriations.”

Healy says the delay in the budget is because “the adoption of the city budget is dependent on knowing the amount of aid that the state is providing.” This year, he says, the state didn’t tell the city the amount of aid until April 21.

But the state aid figure is actually supposed to be for the city’s next budget — the Fiscal Year 2010 budget, which covers the period beginning this July 1.

Both Levin and Manzo say the city needs to step up and begin adopting timely budgets.

“I would put a draft in the City Council’s hands early and require them to approve it,” Levin says, adding that he would not sign off on any of the “emergency temporary appropriations” once the city was three months into the fiscal year.

Manzo says he wants to establish a three-year budget plan, so the city knows — as best it can — what revenues and expenditures are coming and can plan accordingly. He says he’ll take a no-nonsense approach to passing the budget.

“We’ll set it, we’ll stick to it, and we’ll pass it early on,” he says.

Affordable Housing

Healy says his record shows his commitment to his goal of “providing an array of affordable housing for Jersey City residents.” He says that his administration created 221 units of affordable housing last year, and that there are more than 700 units under construction or being planned. Healy also points out that the city teamed up with the state to implement the Live Where You Work program, a low-interest mortgage program designed for people who work and live in Jersey City.

But Smith says developers should do more to cultivate affordable housing throughout the city.

“Developers have gotten a great deal with tax abatements and other incentives, yet they pay very little into an affordable housing fund and then wipe their hands of their corporate responsibilities,” he says. “Big-time developers should do much more, should contribute more dollars and should embrace all of the city they build in.”

Currently, developers have to either set aside 20 percent of a building’s units as affordable or pay a meager $1500 per market-rate unit into the city’s Affordable Housing Trust Fund, which pays for the construction of affordable units off-site.

Saying there isn’t nearly enough affordable housing in the city, Manzo proposes that all new development should be forced to dedicate 30 percent of its units to moderate and affordable housing on site.

“We’ve got to stop concentrating poverty on the other side of town,” Manzo says.

He also suggests a way to create more affordable rental units that is independent of new development — issuing property tax credits to property owners as an incentive for them to keep rents at an unspecified low level. “This could create thousands of units of affordable housing without putting a brick in the ground,” he points out.

Levin agrees with Manzo that the affordable housing provisions for new development should be built on site, but he is comfortable with 20 percent of the units being designated affordable.

He adds the city needs to adopt a policy of replacing each affordable unit that comes offline with another affordable unit as public housing is transformed from high-rise towers to mixed-use low-rise communities, a point that all the challengers agreed on at a recent forum on housing.

MORE: For more of the candidates’ views on economic issues, click the following links: Healy, Levin, Manzo, Smith, and Webb.

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