The Jersey City Independent "

It was called a bailout and a double-standard, a deal for a friend and unjustifiable, but only by four council members out of nine. And so Hudson Palisade Urban Renewal, LLC, the owners of the once dilapidated but now fixed up 70+ year old building at 325 Palisades Avenue, got their new tax abatement that they say will save the building.

“If I don’t vote for this I think it’s going to go vacant,” said Council President Brennan, who noted there are already vacant buildings along the avenue, before counting the 5th and final vote. “I don’t know the builder but I know he invested money into the city and that he took money to fix up a dilapidated building.”

But Brennan, who excused the developers as naïve in their initial projections about the feasibility of renting units in the neighborhood, said he was making his decision for the neighborhood and that he doesn’t “want to see the developer come back again” for a new deal.

It was the logic of the evening for the simple majority, with Ward A Councilman Michael Sottolano, Ward B Councilman David Donnelly, Ward C Councilwoman Nidia Lopez, and Ward D Councilman Bill Gaughan joining the Council president. At-Large Councilmembers Rolando Lavarro and Viola Richardson, Ward E Councilman Steve Fulop and Ward F Councilwoman Michele Massey all voted against the measure.

That developer, a David Depierro, came to the meeting to defend the decision, and did so by saying his motivation – which was apparently a euphemism “for not losing more money” – should “not matter to the Council.” Rather, he said, the Council should do “what’s in the best interest of the city.”

Depierro said the Hudson Palisades Urban Renewal, LLC was caught between losing propositions either way. Lowering rental prices is not an option, he said, because then the project wouldn’t earn the necessary amount of money to survive. Opting out of the rental-based tax abatement to conventional taxes would end in the same way for the developers. The only way the building doesn’t go vacant, he said, is by selling the units as condos and letting the developers wipe their hands of their failed investment.

“Nothing can be done to rip up the abatement that’s in place, it’s here to stay, we just want a modification,” he said.

Depierro said that “long after” the developers are gone, the condo owners will still a “vested interest” in the area and their building.

“And when they move on they resell the unit and the values can only go up from this point on. There’s added value on the resale and the city gets more money,” he said.

In fact, Depierro said the project “as a profitable enterprise was doomed from the beginning.” To recap, the building was purchased in 2006 for approximately $1.85 million, an amount some in the city felt was too low a price tag for the building. After a year of negotiations the developers agreed to pay an additional $245,000. At this point, explained Depierro, the developers applied for a long term tax abatement, but they “could see the market conditions were taking a turn for the worse.” What might have been a profitable project, he said, was obviously no longer going to be the case.

Enough on the Council agreed, like Councilman Sottolano, who echoed that homeownership is “preferred” to a rental. “Rentals are transient, homeowners stimulate an area,” he said.

But that was nothing more than a convenient excuse for Fulop, who at Tuesday night’s caucus meeting argued that the deal was a favor for a friend of the administration that ran contrary to the very purpose of granting a tax abatement. City Spokeswoman Jennifer Morrill declined to comment on the accusation that the city has a relationship with the developer.

According to Fulop, the Council tries to “justify” why the new abatement “makes sense today.”

“Now it’s homeownership that we’re looking for,” he said, referring to the common refrain among the yes-voting Council members. “But we’re still approving rentals all the time.”

There was “not one word” about why “homeownership is the way to go” when the rental abatements are approved, he noted.

Added Richardson, “We’re a city plagued by people who lost jobs, who can’t afford to pay taxes, with no opportunity to do anything but lose their homes. We’re not going take the abatement back [from the developer,] but I’m not willing to amend it because there’s no one to amend the rest of the folks’ taxes when they’re unable to pay.”

New Jersey Policy Perspective, a left-leaning think tank that studies public policy decisions, also criticized the move, describing the city’s approach to abatement policies as problematic.

“While we believe some kinds of incentives should be used in areas of cities that actually need redevelopment, like the Heights in Jersey City, the issues arising this week show that the city’s abatement policies are incoherent and inconsistent,” said Deborah Howlett, president of the NJPP. (Disclosure: JCI co-founder Jon Whiten is now NJPP’s Director of Communications and Technology.)

“Real estate development is an important part of any city’s economic engine, but City Hall shouldn’t be bending over backwards for developers who make poor decisions,” she continued. “Unfortunately, this is par for the course, as we have seen the city’s leaders capitulate to a number of developers who come back to the city, hat in hand, asking for better deals. That’s no way to run a city, as it only serves to encourage even more developers to follow suit.”

As we pointed out in our 2009 report, Jersey City needs to drastically revise its abatement policies to ensure it is putting the needs of its residents before the needs of its developers.”

Photos by Steve Gold.

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