The city’s governing body voted down a 30-year tax abatement agreement on Tuesday evening that would have paved the way for a $29 million affordable housing renovation and expansion project at a series of buildings on Mill and Market Streets.
Council members gave preliminary approval to the tax abatement agreement, but changed their minds on the final approval. Some cited unfairness in granting a developer 15 years of stable taxation while homeowners are hit with tax increases every year.
“I don’t believe this is palatable,” said Andre Sayegh, 6th Ward councilman. He cited a six-percent tax increase mayor Jose “Joey” Torres’ administration is seeking to levy on homeowners.
The developer Longstreet Development Corporation proposed to pay 10-percent of its annual $1.87 million anticipated rental revenue under the PILOT (payment in lieu of taxes) agreement for the first 10 years.
The city would have received $174,771 per year at 10-percent of rental income, according to city records. This is far less than $347,797 the developer would have paid at the old 2.90-percent tax rate, according to an estimate that was completed prior to the tax rate change late last year.
Longstreet Development Corporation would have paid 12.5-percent of its revenue beginning the 11th year through the 20th. And 15-percent from the 21st through the 30th year, according to the city.
George McLoof, owner of the corporation, which owns both the Cook Mill and the Hamilton Mill apartment complexes, said the city gains much benefits from the agreements because it would be able to keep 80-percent of the money paid by the Cooke Hamilton Associates.
The three buildings located at 21 Market Street, 20 Mill Street, and 21 Mill Street would have been expanded from 102 units to 132 units of housing, according to city records. The 21 Market Street building was occupied by St. Joseph’s Family Health Center, but after the hospital vacated in 2013, the space has remained vacant.
McLoof said the construction work at the three buildings would have created 100 prevailing wage construction jobs and 7 permanent jobs. He also pointed out the units would be deed restricted for low-income individuals and families.
“Some of the benefits, I don’t think are benefits at all,” said Julio Tavarez, 5th Ward councilman. He thought the affordable housing would only further concentrate poverty in one of the poorest cities in New Jersey.
Council members Tavarez, Sayegh, Ruby Cotton, 4th Ward; Alex Mendez, at-large voted against the tax abatement agreement.
Michael Jackson, 1st Ward councilman, abstained. He said he does not know enough about the project to cast an informed vote.
Mohammed Akhtaruzzaman, 2nd Ward councilman, and Maritza Davila, councilwoman at-large, were the only two votes in favor of the project.
City residents Tom Fuscaldo and Rafael Fontana urged the council to reject the tax abatement agreement prior to the vote.
“Why do we want to do a 30 years tax abatement when the city is in financial trouble,” said Fontana.
“It’s a mistake. It’s a long lasting mistake,” added Fuscaldo.
“This project cannot proceed without the PILOT,” said Timothy Eismeier, senior vice president of Hoboken-based NW Financial Group.
Eismeier serves as the city’s consultant on the project. His costs are paid by the developer, said officials.
McLoof was surprised at the council’s rejection. He said he did not expect the council to reject the project after it gave preliminary approval back in September.