Quote:
Originally Posted by drumz0rz
Jersey City is definitely pro-development. They're wise to realize that the market is waking up to the fact that JC is closer to Manhattan than most of the outer boroughs. People (millennials mostly) are flocking to the city, so why not try to capture as much of that as possible?
The trade off is that they're giving out multi-year tax abatements to the developers so they're bringing in lots of new residents without increasing the tax revenue to fully support them all. The good news is that they have scaled down the length yet it hasn't seemed to slow developers down at all.
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Yeah, the tax abatements are a hot topic, and I'm not sure how I feel about them.
The theory is that property taxes in New Jersey are so high that tax abatements are a necessity for development to occur, especially in an up and coming area like Journal Square.
Some of the arguments in favor of abatements are:
The regulatory and tax environment is so burdensome in NJ that private development would never happened on its own.
Therefore, areas would still be in decline because it's unable to attract private investment, and
It's better to collect partial taxes on a tax abated property than next to nothing at all from vacant land.
On the flip side, how much subsidy is too much subsidy? Would a 20-year abatement instead of a 30-year really discourage development?
How do we know these aren't just windfalls to developers who know how to play the game.
Personally, I wish there would be a state law which promotes development but takes the municipal politics out of the deal. If you construct a new building, the taxes are automatically abated for x years. If you construct a new building in an area in need of redevelopment, your taxes are automatically abated for a longer period of time, y years.
Having each municipality come up with how long they want to abate each separate development proposal is just inviting so much abuse.
Specifically, for the Journal Squared development, even though much less taxes are collected because the property is abated, I wonder if what is collected still contributes more to city in taxes than it costs to service this development. For example:
Residents of this development are likely to be millennials without kids. This doesn't create an additional burden on the public schools. Waste disposal services will be paid for privately by the building, so the costs to the city to provide garbage trucks to handle the thousand or so residents will be nil. And so on...
In 30 years from now when all current tax abatements have expired, Jersey City is going to be sitting in a sweet place among NJ municipalities. The property tax burden from howmeoners will probably be among the lowest in the state thanks to the large tax base due to all these high-density luxury condos.