The Bayonne City Council voted unanimously (5-0) to approve a 25-year tax abatement to build 1,100 units at the former Military Ocean Terminal, but not before some residents complained about the governing body granting another tax break.
The developer, Mahalaxmi Bayonne Urban Renewal, LLC, plans to start construction this year and complete the project by 2021.
Perennial activist Peter Franco has been an outspoken critic of Mayor Jimmy Davis’ redevelopment plans that he says gives too many incentives to developers that have no ties to Bayonne.
In an interview, he first noted a report produced by the former state Comptroller Matthew Boxer written nearly 10 years ago about the efficacy of tax abatements, arguing that “abatements take tax dollars away from schools and counties, [thereby] displacing the tax burden.”
“We went from five-year abatements under a previous administration and mild development to a whole host of developments; there’s over 60 re-development agreements that the [current] administration has passed, and there’s no study that says whether is it effective and working,” Franco exclaimed.
In that vain, fellow Bayonne resident Bruce Piggot believes that the city should slow down overall re-development to ensure that new buildings match a neighborhood’s aesthetics.
“On 46th street, they’re putting up a 10-story building with 90 units. Instead, they could have built six-story brownstone-looking structures with storefronts that would have had as many units rather than placing this ubiquitous building in the middle of Archie Bunkerville: they’re all two-family houses up and down the streets.
“I don’t think the city should allow contractors to run ramshod over the town. Everybody is getting 25-year to 30-year abatements, I don’t know if they work. I ask them [the council], how do you figure out how much somebody should get.”
However, Michael Miceli, a private attorney representing developers that are applying to the City for project approvals, said that tax abatements have played a crucial role in Bayonne’s renaissance, making the comparison to Downton Jersey City.
“It’s a necessary tool in today’s world, especially when we’re staring at a revaluation, where the tax situation really is not clear. Lenders get very nervous about lending when they don’t know what the tax structure is going to be. So, the PILOTs particularly now are incentivizing and stabilizing the lending market for Bayonne,” said Miceli.
“It does incentivize redevelopment in areas that need it. Bayonne was stagnant, was dying on the vine. They said, ‘look at Jersey City.’ Indeed, abatements have rebuilt Downtown Jersey City and it’s a vibrant community now.”
We followed up to ask why is it necessary for developers to seek tax abatements rather than rely on their own capital to redevelop properties.
“I think that people should understand is that developers generally wind up funding all development through banks. There are very few people who can fund them as individuals. There might be a few billionaires who can do it on their own, but you’re always going to a bank with hat in hand, explaining that it will make money and this is why. If [developers] can’t fill the numbers in with long-term projections, a bank is going to be skittish about investing in a project,” Miceli stated.
In addition, he said that the city’s regular use of tax abatements has gotten the attention of other developers who otherwise may have overlooked Bayonne.
“That was a problem. Bayonne stood pat, and didn’t really give PILOTs or abatements. The program has really started interest here, and when I tell you that one developer talks to another developer, that’s how I get calls. So it has created a market that didn’t exist before in Bayonne.”