Mayor Andre Sayegh’s administration faced a barrage of questions from members of the City Council over a novel discounted tax lien sale approach, where the administration sells the tax certificate based not only on the price offered, but also by considering the development project proposed for the site.
A 60 by 100 lot at 52 North 6th Street is being put up for a discounted assignment sale. The lot is assessed at $110,300, according to municipal records. Municipal officials said the city has $205,537 in outstanding liens against the owner, 56 N. Sixth St. LLC of Hawthorne, for demolishing the structure that stood on the lot and other expenses.
Bids would start at $22,000.
Under the new approach, the acting tax collector, finance director, and economic director will determine who gets the lot by considering the price being offered and the development project being proposed for the site that “would be in the best interest of the city of Paterson.”
Except, council members do not see the Sayegh administration running the process for the best interest of the city.
Sayegh administration officials have already met with developer Andre Yates of Yates Realty. Yates proposes to build a low-income housing project at the lot. His proposal is for a 24-unit complex that will cost approximately $4 million to build for low-income residents and veterans. He is likely to seek state and federal funds to build the low-income housing project, according to officials.
Yates and his team spent the night at the council meeting on Tuesday to secure support for the proposal.
“The process is tainted,” said Flavio Rivera, councilman at-large. He suggested Yates is likely to get an advantage over other developers for his ties to administration officials.
“You may have a lot of people that have an interest, but you have to run the race,” said William McKoy, 3rd Ward councilman. He said opening up the bidding and request for proposal resets the process and does not grant the party that met with officials an advantage.
“I don’t think it’s been fair and open,” said council president Maritza Davila.
Yates also has ties to business administrator Vaughn McKoy, according to multiple municipal officials. It’s not clear what the nature of the tie is. Both attended Rutgers University together and both played for the school’s football team.
Business administrator McKoy did not respond to a call for comment for this story on Thursday.
“We have people that have met with them about this property,” said Al Abdelaziz, 6th Ward councilman. “I go out there and bid for this property; I don’t know the economic director; I don’t have an inside track; I don’t know what the city is looking for; and the ultimate decision falls on the economic development director. That’s not fair.”
“You should not give anybody an advantage in the bidding process,” said Rivera. “That’s my concern.”
Rivera said the Sayegh administration will pull the same trick it did on Hinchliffe Stadium. In that case the mayor obstinately backed a developer, who had previously defaulted on a loan, to renovate the stadium using more than $50 million in state tax credits rather than a project in downtown Paterson that would have created far more tax tax revenue and jobs.
“I don’t think it’s fair to the other entities,” added Shahin Khalique, 2nd Ward councilman.
Law director Farrah Irving said the business administrator has agreed to let a member of the City Council on the committee that will review the proposals to assuage their concerns.
The business administrator had left the chambers when the council took up the item for discussion just before midnight on Tuesday.
Some council members wanted the city to foreclose on the property and take ownership.
“That would not be a financially prudent decision,” said assistant corporation counsel Ben-David Seligman. “We’re foreclosing on an empty lot. An empty lot is not worth that much.”
Seligman said the city would lose out on tax revenue during the nearly year-long foreclosure process. Selling the liens would bring in immediate revenue and on top of that, with the novel approach, tax revenue from the structure that goes up on the site.
“This is the best method to getting a building as quickly as possible,” said Seligman.
Michael Jackson, 1st Ward councilman, said the proposed project is a poor fit for the area. He said the neighborhood already suffers from a scarcity of parking spaces and the development will worsen the problem.
The city has never used such a process in the past. A municipality is allowed to take into account both the offer price and the development proposal submitted by the bidder in accordance with a case called Kanter v. Rockaway Township. A city does not have to sell to the highest bidder, according to that case.
Council members tabled the measure after their discussion.