Municipal officials have been quietly giving 20-year property tax breaks to developer, according to records obtained by the Paterson Times through an open records request.
Paterson granted 50 tax abatements that run for 20 years between 2017 and 2021, according to records. Two thirds of the tax breaks were granted under mayor Andre Sayegh. His administration granted 32 long-term tax abatements. Before his tenure, Paterson granted just 18 long-term tax abatements from 2017 through 2018.
“It’s a very competitive market amongst municipalities and abatements are used elsewhere to incentivize investment. And in Paterson, we’re seeing record setting development,” said Sayegh on Friday.
Sayegh said Paterson has seen an “unprecedented” boom in investment under his watch. But the biggest single beneficiary of the long-term tax breaks has been prominent developer Charles Florio, who is a big donor to the mayor and other officials.
Florio was granted 13 long-term tax abatements in Paterson. Eleven of the 20-year abatements were granted by the Sayegh administration. Two were granted in January 2018 when interim mayor Jane Williams-Warren was in power, according to municipal records.
Florio and his company, JCM Investors, have given more than $16,000 to Sayegh’s campaign since 2014. In some cases, employees of JCM Investors, gave the maximum $2,600 contribution to the mayor’s campaign, according to campaign finance records.
“He and every other developer receives an abatement as of right if the state criteria is met,” said Sayegh.
Paterson is granting these lucrative tax breaks to developers under the New Jersey Economic Opportunity Act of 2013. This law, which was ratified by the City Council in late 2013, allows the administration to grant long-term tax breaks without seeking the approval of the City Council.
“All you do is hand in your paperwork, and you get your approval. It doesn’t matter if Ronald McDonald is the mayor of Paterson,” said Florio on Friday. “These properties are at least paying taxes on the land now.”
Abandoned properties do not pay taxes on the land or the improvements, said Florio. Properties with abatement have to pay taxes on the land — tax on land is minuscule compared to tax on improvements.
Florio said he utilized the available incentives to build and eliminate blight. He said he likely wouldn’t have put up the structures without the tax incentives.
The property tax incentives allowed Florio to shift his business strategy. Before 2015, Florio was building and renovating two-and-three-story buildings, he said. He renovated just one large apartment building during that time. After 2015, the abatements allowed him to move into building multi-unit apartment complexes.
Anyone who built or renovated a property had the ability to obtain a property tax abatement beginning in late 2013. Paterson signed onto the Economic Opportunity Act of 2013 in November 2013. First abatement under the law wasn’t issued until May 2014.
The law also allows the administration to give out five-year tax abatements. Paterson has issued 209 five-year property tax abatements. Florio’s businesses received 80 of the five-year property tax abatements, records show. Other Sayegh donors such as Mahmoud Aburoumi and Basem Hishmeh also received abatements, records show.
More than half of the 209 short-term abatements were issued under Sayegh’s watch. Records show 141 five-year tax abatements were granted from January 1, 2019 through January 1, 2021. Sayegh became mayor on July 1, 2018.
“We have a pro-growth agenda,” said economic development director Michael Powell, who signs off on every tax abatement granted under the law.
When a property receives a 20-year property tax abatement, it pays taxes on the land, but not on the improvements for 10 years. In 11th year, the property begins to pay 10 percent, then 20 the next year, then 30 and so on until reaching full taxation in the 20th year, said Powell.
Powell said anyone who meets the criteria for abatement can apply and get them.
Powell said it’s “insulting” to suggest the mayor’s donors are getting preference for the abatements. He said Florio is one of the more “capitalized” and more “aggressive developers” in Paterson that’s why he has been able to take advantage of the incentives.
Powell said the aim of the law is to create jobs and remove blight by luring developers using the incentives. He said there aren’t too many incentives that the city can offer to lure developers.
“That’s the only tool in the tool-shed,” said Powell.
Florio said his projects have created numerous construction jobs. Abatements are largely going to housing projects, suggesting there are small number of long-term jobs that are being created in Paterson through the incentive program.
Florio said he has to provide support services, such as onsite security in Paterson, that also creates jobs.
Florio has 7,000 properties in Paterson. He has 4,000 units of housing. He employs approximately 310 people, as many as 260 are Paterson residents, he said.
The five-year and the 20-year abatements are given by the administration. Powell said that’s what reduces red tape. Getting a tax abatement through the City Council typically requires long discussions and a public hearing.
“This is something to look at,” said council president Flavio Rivera. He and his colleagues on the City Council were not aware of the tax abatements that were being given to developers until late last year.
8 of the 9 council members, who were serving on the City Council in 2013, are no longer there. Sole remaining member is Ruby Cotton.
Rivera asked for a list of the tax abatements. His finance committee was provided the list late last year.
“Where’s the checks and balances?” said council vice president Lilisa Mimms. “There should be a level of transparency.”
Mimms said the administration should periodically inform the council about the abatements that are being granted to developers.
Sayegh administration officials can add information items to the City Council meeting agendas to inform the governing body, which controls taxation and spending, whenever long-term tax breaks are administratively granted.
Powell said the abatements will produce for taxpayers in the long run.
Email: [email protected]