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.


olddoc said...

Cory, I thank you for your commentary. I know that when these two and future ones are up for vote you will use your best judgment.

Personally i am against both. For the benefit of private investors we are giving away the farm for no material gain. I would need hard facts not words or threats to understand how the city is being benefited.

Anonymous said...

While I understand your position, how can this be good for Plainfield? You are bringing in people who will not be required to know their real financial situation until 5 years down the road. Do you really beleive they will put away the needed difference for taxes at a later time?

Also, why would you believe the cost anaylisis of the administration? As I recall, Dudly house was supposed to be off the bity books, and we are now "hoping" that it will be run by a non-profit by Jan'10.

I feel very stronly that the council take the lead. Do what you think makes sense, not what the administration will feed you, because their information has proven to be consistenly incorrect. Why don't you and the rest of the council ask for citizen volunteers to do a separate cost analysis due in 6 weeks from the time the volunteers are in place (no more than 4 need be on the committee - 1 from each ward). Then, at least, I would feel as thought there was some unbiased information.

And, how will you know if people are living there? Sub-lets are certainly not advertised.

Get people in there who have their own skin in the game. Then you will see property taken care of, and bills paid.

Bill Hetfield said...

You mean well and so does Annie McWilliams. However, your questions like hers, though well meaning, display a naivete that does not auger well in the decesion making process. For example, if tax abatement is such a great idea, why all the discourse? That should be enough for ones intuition, if wll honed, to say no! This isn't rocket science. Secondly, the conditions you would place on granting this abatement are not enforceable. Thirdly, to ask the tax assessor and the city administrator to go though a speculative cost benefit analysis is foolish; the finding, if not self-serving would be speculative at best. For not being a pay-to play politician, you are sure playing into their hands. From the beginning, this has always been rental quality housing. And thta hasen't changed.

Bill Hetfield said...

With Connolly going belly up in East orange, his Plainfield apartments could be next in line. He leveraged his assets to the hilt. With a bad economy and the accompanying deterioration in the demand for housing, including apartments, rents have declined and expenses are static at best or increasing at worse. This toxic mix is and will continue to drag on Plainfield's rental housing. The ramifications are frightening. This may require an active role by the city in the management of numerous apartment complexes. Then there are the smaller units which have always and contiune to be the favorite of the most unscrupulous lanlords. We are in a mess. Now is not the time to "bailout" Monarch. Monarch always had this abatement tactic planned - if the economy faltered. With or without the abatement, foreclosure is a possibility. It is not the time nor is it approprate for the tax payers to partner with any sinking ship.