Jersey City’s $15 Million Land-Sale Deal May Hinge on Tax Abatement

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UPDATE: SEPTEMBER 14 at 5:20 PM: The deal has been “put on hold indefinitely,” according to the JCRA.

New questions are being raised this week about a $15 million deal for land behind the Jersey City Medical Center after it was revealed that the deal may be contingent on the developer being granted a generous tax abatement.

As the Jersey City Redevelopment Agency (JCRA) and the potential purchaser of the land, Tessler Developments, talked to council members at Monday night’s caucus about the developer’s plans to build a massive proton therapy center on the site, Tessler’s representative acknowledged that it will seek a tax abatement for part of the deal, and may walk away if it doesn’t get one.

“We are going to apply for an abatement,” Tessler representative Charles Harrington said. “My client does have the option to waive the deal.”

The abatement will be sought for the approximately 1,000 market-rate housing units the developer plans on building as part of the $291 million complex, which will also feature commercial development and the area’s first proton therapy cancer treatment center.

“This is a very substantial investment and not just for my client,” Harrington continued, calling the deal a “job generator” that will bring nearly 500 jobs to Jersey City. “When you invest so much money, you look for as many constants as you can.”

Harrington, however, said there was no specific language in the agreement addressing tax abatements, and JCRA director Robert Antonicello said such language could not be put into a land deal agreement, a point echoed by city spokeswoman Jennifer Morrill, who stresses there’s no guarantee Tessler will receive an abatement.

“There are several steps prior to the granting of a tax abatement, including site plan approvals,” she says. “As with all tax abatement applications, [this] will be reviewed on its merits.”

The $15 million land deal, which city officials hope will plug a large hole in Jersey City’s 2011 budget, has drawn criticism from Ward E councilman Steven Fulop, who first raised the issue of the abatement on Monday. He says that the problems with this deal are a result of the city not having a firm grasp on the overall budget process.

“By relying on this $15 million to plug a budget hole as opposed to making cuts earlier in the year, the mayor is ensuring that the administration, council and taxpayers have no leverage when negotiating the tax abatement with the developer,” he tells JCI. “The developer knows the mayor put all the chips in this basket, so there is no way the city will have leverage to negotiate what is best for the taxpayers.”

In his comments to JCI, Fulop echoes broader criticisms of Jersey City’s tax abatement process, pointing out that a number of officials and advocates, including the state comptroller, have said the process is unfair in its current form.

The state comptroller’s 2010 report, for instance, suggested that “tax abatements should be used carefully and sparingly given the multitude of pitfalls, their far-reaching impact, and the reality that exemption from taxation is a departure from the normal allocation of tax obligations.” A report released in 2009 by statewide policy think tank New Jersey Policy Perspective said abatements should be used sparingly, and only in areas of Jersey City that wouldn’t receive developer interest to begin with.

“The land sale should move on its merits and the taxpayers should not have a gun to their head to give developers a tax abatement on 1,000 market-rate Downtown condos,” Fulop says. “It is not fair to force additional tax abatements on the residents that may not be the best deal for residents.”

The City Council will vote tonight on the introduction of an ordinance that would transfer the final 25 or 30 percent of the land in question to the JCRA, which is required to happen before the deal with Tessler can go through.

Rendering of the proposed development courtesy of the JCRA

Matt Hunger

is a former staff writer for the Jersey City Independent.