Canceled tax break in Jersey City a warning to developers

BY Leah Mishkin, Correspondent |

The Fulop administration has been focusing its tax abatement policy away from Jersey City’s downtown waterfront and toward the rest of the city. It was a change from the standards that had been the norm for decades.

“What we started to do was to phase them out, incentivize development to other areas of the city, and then started an office of compliance to make sure they’re fulfilling their obligations,” Jersey City Mayor Steve Fulop said.

Like hiring local workers, for one. But noncompliance hasn’t always cost developers — until now. At its most recent meeting, the city council did something that it’s rarely, if ever, done before. It rescinded a tax abatement.

“If you don’t hire local workers, and you’re in violation of your abatement, we’re going to take it away,” said Councilman James Solomon.

Solomon says the developer of a building on 9th Street –The Shuster Group — failed to hire the number of local workers required by the terms of its 15-year abatement.

In a statement, the Shuster Group maintains it, “ … absolutely complied with the good faith hiring efforts, and will continue to have ongoing conversations with the city.”

Solomon says it’s not the first case of a developer not living up to the terms of its abatement.

“I can tell you previously that the city has found 14 other developers out of compliance with this requirement. So we know in the past they haven’t been following the rules, so now the question becomes what’s happening today. We’re going to ask for that information as a city council,” Solomon said.

“What we’ve tried to do previously is that if there is an opportunity to cure the infraction prior to cancellation of the abatement we’ve tried to pursue that,” Fulop said.

But Fulop says when it came to the development on 9th Street, “there’s nothing to cure because the building is already built.”

Developers want abatement because it allows them to pay a preset annual fee in lieu of taxes. Generally, less than they would pay in real estate taxes and it’s more predictable.

“If you violate these agreements, the abatement has to go,” Solomon said.

Fulop says the city has about 200 properties benefiting from long-term abatement, 39 of those coming since he took office in 2013.

“Out of those 39 that you mentioned, most of them are away from downtown. They are incentivizing areas that have never seen development, ever. Look at Journal Square, look at Bergen-Lafayette, look at Greenville, that’s the reason the tax abatements are there,” Fulop said.

Fulop says they haven’t issued any new long-term abatements in about two years. He says he plans to audit all of them and he says you can expect more cancellations in the coming weeks.