Sunday, July 26, 2009

Tax Abatements

Generally speaking Plainfield should not be categorically for or against tax abatements. Each situation should be carefully analyzed for benefits and disadvantages to Plainfield. The best tax abatement is a wise investment of taxpayer resources for current gain and increasing future benefits. The worst is an ill conceived special interest benefit that saps resources from our city. The two tax abatement proposals on the July City Council agenda are somewhere in the middle.

First the senior citizens apartment tower proposal on Park Avenue. I voted for this and it extends the current tax abatement by an additional 16 years and increases the owners annual tax payments. So property tax payers are seeing this apartment building pay a larger share of taxes but for a longer period of time. I did not like the idea of adding the 16 years, even with the increased tax payment. But I voted yes. I am not a fan of apartment towers. They have a higher potential for crime and drug dealing when located in low income neighborhoods. We are seeing some demolitions nation-wide and I think it is a good trend. The tower in question is for senior citizens and with proper maintenance such an apartment building has good prospects for staying a good neighbor. This tax abatement, I am told by our city administrators, will inject needed funding for building upgrades. So my yes vote is an ambivalent one but based on the future benefit of a well maintained, viable senior citizen apartment building.

The more controversial tax abatement is proposed for the Monarch on East Front Street. I voted yes on first reading to keep the door open. It is in Plainfields interests to do what we can to support this project. We have already contributed the land with the benefit of a new senior citizen center. No additional assistance was requested by the developer when this project was approved. Now we find ourselves in a down economy and the developer has come back wanting more from Plainfield property tax payers.

I have requested a cost-benefit analysis from the City Administrator. That will be a major influence in my vote on second reading. It has to be clearly demonstrated that the 5 year tax abatement cost to taxpayers will be more than offset by the increased taxes from more rapid condo unit sales. I also have to be convinced that this ordinance will truly prevent a significant trend towards renter occupied units.

While I await more information from the city's administration, I have proposed to my colleagues the following amendments to the ordinance, should it be approved:
1- require unit owners to prove they are occupying their units on an annual basis
2- make the tax break available only for owners who keep their units for the 5 year period the abatement would be in effect.
Thanks to Dan Damon for posting these ideas on his blog.

Last but not least, I asked questions at the last Council meeting about the property taxes on the land and improvements for the Monarch and when the taxes on the building units goes into effect. Those questions could not be answered so I requested the Tax Assessor be present at the next meeting. This ordinance requires clear factual answers to the Councils questions. Anything less needs to result in the defeat of this tax abatement.