Paterson demands jobs for residents in return for hotel project tax break
By Jayed Rahman
Published: May 25, 2016
The city council demanded a guaranteed percentage of jobs for residents in return for a 30-year tax abatement agreement for the South Paterson hotel and conference center project close to St. Joseph’s Regional Medical Center.
The $129 million Hamiltonian project being built by the nonprofit Medical Missions Inc. will create 450 construction jobs and another 257 to run the 14-story hotel.
“How does a Patersonian get access to these jobs?” asked council president William McKoy beginning an almost two-hour discussion on ensuring city residents and local companies benefit from the project.
Attorney for the nonprofit Steven Maierella of Sills Cummis and Gross said the redevelopment agreement will require the developer to make a good faith effort to hire local residents.
“I know a linguist can make a lot out of a good faith effort,” responded council president William McKoy. “We’ve become skeptical of the promises.”
Maierella said the agreement can be altered to read “good faith effort to best efforts.” McKoy suggested a “good faith effort” is not enough noting phrases like “extent practicable” are almost always vague to protect a developer who fails to live up to promises.
“We need to have some specificity,” said McKoy. He said too often city residents are given the shaft with guarantees and promises that are not set in writing.
Michael Jackson, 1st Ward councilman, suggested having at least 20 to 25 percent of construction and post-construction jobs be allotted for city residents. He also wanted some of the electrical, plumbing, and construction work to be given to qualified local businesses.
“Everything you said we can work out,” said Steven Mauer of Red Bank-based Torcon which is serving as the general construction contractor for the project. He said 15-percent of workers will come from Paterson. “Our goal is to exceed that to 20 to 25 percent,” he said.
The council president created an ad hoc committee with Andre Sayegh, Maritza Davila, and Jackson to work with the developer and the administration to hammer out an acceptable agreement.
McKoy said the public has high expectations for the project.
The nonprofit is working with the Paterson Task Force and the School of Culinary Arts, Hospitality, and Tourism at Eastside High School to train local residents to fill the hospitality jobs that will open once the hotel project is completed.
Council members gave preliminary approval to the 30-year tax abatement agreement for the project. A public hearing and final approval of the abatement is scheduled for next month. Under the agreement, the city will receive 10-percent of the hotel’s gross revenue for the first 15 years, which amounts to an average of $666,000 per year, according to documents.
In years 16 through 21 of the agreement the city will get either the 10-percent of gross revenue or 20-percent of the taxes on the property whichever is greater. In years 22 through 27 the city will receive 10-percent of gross revenue or 40-percent of taxes. In years 28 through 29 the city will either receive the revenue percentage or 60-percent of the taxes.
In the final year of the agreement, the city will receive either the 10-percent of the revenue share or 80-percent of taxes, according to the agreement.
The council was unanimous in its support for the project. “This is a project we long to see happen,” said McKoy.
“The land where the hotel will be located is currently not generating any revenue,” said Sayegh. To start generating revenue the developer will have to quickly obtain approvals from the council to begin construction or lose $105.5 million in Urban Transit Hub Tax Credit Program tax credit from the New Jersey Economic Development Authority (EDA).
The developer is hoping to break ground in July of this year on the 300,000-square-foot building which will contain 145 rooms, 11 conference rooms, a grand ballroom, a 420 seat restaurant, and a sky terrace.
The project has been approved by the planning board. The developer expects to open the hotel in October of 2018.
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