Thursday, March 2, 2017

Jersey City PILOTed Property is Worth $11.6 Billion

FYI, this article by Terrence McDonald of the Jersey Journal about Jersey City PILOTs is worth reading for several reasons, but I wanted to point out something from the conclusion of the article:

Last year Jersey City's PILOT program took in $127,800,476 from tax-abated properties. If all these properties were taxed conventionally, the total would be $211,967,791.
None of This Pays Any
School Taxes
(The relevance of this to state aid is that PILOTed property is "invisible" to the formula for Equalization Aid, thereby sustaining an artificially high state aid package for Jersey City.)

The State of New Jersey has no comprehensive database on how much property towns have in PILOT status, but the publication of  what Jersey City's PILOTed properties would pay if they were subject normal taxation allows one to calculate what the PILOTed properties are worth.

Jersey City's all-in tax rate is only 1.826%.

If Jersey City's PILOTed properties would pay $211,967,791 in taxes, that means that their full valuation is $11.6 BILLION.

$211,967,791 / .01826 = $11,608,312,760.10

This is up substantially from 2015, when Jersey City's PILOTed properties were only worth $8.6 billion.

$11.6 billion is a gigantic amount, it is equal to 45% of Jersey City's $25.7 billion in taxable property.

If Jersey City's PILOTed properties were an independent city, their Equalized Valuation would be the seventh largest in New Jersey.

Here are the top Equalized Valuations in New Jersey:

  1. Jersey City's (taxable) $25.7 billion
  2. Edison $15.8 billion
  3. Toms River $15.167 billion
  4. Hoboken $15.128 billion
  5. Newark $13.8 billion
  6. Ocean City $12 billion
  7. Jersey City's PILOTed $11.6 billion
  8. Middletown $10.6 billion
  9. Woodbridge $10.5 billion

At Jersey City's tiny 0.471% (Equalized) school tax rate, those PILOTed properties should be paying $54,675,153.10.

The $11.6 billion is also equal to 16% of Hudson County's $71 billion in Equalized Valuation.  At Hudson County's 0.458% tax rate, that means that that PILOTed property should be paying $53 million in county taxes.

Hence, the distortion of Hudson County's taxation cannot be ignored any more than the distortion of school taxes and school aid can be.

This means that taxpayers in Hudson County's several severely underaided school districts - like Bayonne, Guttenberg, East Newark, North Bergen, and Kearny - are victimized twice by Jersey City; first as state taxpayers who must subsidize Jersey City's schools, second as Hudson County taxpayers who must subsidize Jersey City's county services.

As Jersey City blogger CivicParent has documented, when Steve Fulop of Jersey City campaigned in 2013 for mayor, he attacked the incumbent (Jerramiah Healy) for granting PILOTs, saying PILOTs "robbed the schools."

If elected, Fulop swore he would share PILOT revenue with the Board of Education.

HOWEVER, after he won the election, Fulop immediately forgot that promise.

Although there has been an attempt to reduce downtown tax abatements - Fulop should get credit for not PILOTing the supertall skyscraper 99 Hudson Street - since Fulop became mayor Jersey City has given out 70 PILOT agreements, presumably worth billions.

Although the primary thrust of Steve Sweeney's state aid reform fight is to eliminate Adjustment Aid, Sweeney's effort to end the distortion of state aid that results from PILOTing cannot be ignored either.

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