The first rule to remember is: if the announcement of a Big New Project is made on a Friday, be very wary. The folks making the announcement are probably counting on little attention in the press, and a distracted public audience thinking about the weekend.
So, with that rule in mind, yesterday’s news, by way of a City Press Release, should set your Spidey Sense a-tingling. The City of Trenton and Thomas Edison State College (TESC) announced a partnership to develop the long-vacant and crumbling Glen Cairn Arms property at the corner of West State Street and Calhoun. The plan is for the City of Trenton to turn over the Glen Cairn Arms to TESC. The college would raze the existing structure to the ground at an estimated cost of $1.2 Million or so, and build a $16 Million Nursing Education Center. The City of Trenton would receive a one-time payment of only $300,000 to, in the words of the press release, “mitigate any future property tax loses.” I think the release meant to say “losses.”
This is a bad, bad deal for Trenton taxpayers. It is a long-term giveaway and rip off. It should be rejected or, at the very least, re-negotiated to give the City a much better and a much fairer deal.
In today’s Trenton Times, an article by Erin Duffy quotes the President of TESC, George Pruitt as saying one of the college’s objectives in this project was to make a good deal for the City. According to Duffy, “While other downtown properties were considered, Pruitt said he would rather build on a tax-exempt site the city already owns than develop a new piece of land and take it off the tax rolls.” – [Emphasis mine. – KM]
That’s the problem. Even though the City currently owns the lot, the property at 301 West State Street IS CURRENTLY ON THE CITY TAX ROLLS. It is a taxable property. As is true of all of the other hundreds of city-owned properties, abandoned by their previous owners or, as in the case of Glen Cairn, purchased by the City at a cost of $1.4 Million nine years ago, the intention of the City’s redevelopment plans is to hold on to these properties only long enough to be able to auction them off or otherwise dispose of them so that they can be privately re-developed and restored to the City’s tax rolls and contribute to the city’s tax revenues.
Yes, this property has been vacant for 20 years or more. Yes, it has not been generating any tax revenues during that time. But remember, that 20 years encompasses the Doug Palmer years, when re-development meant accepting all of the Regional Contribution Agreement monies he could – to disastrous result for this city – or building Big Projects like the Ballpark, the Arena and the Hotel. All these projects are nice for what they are, but they have all done little or nothing to invigorate their surrounding neighborhoods and, in the case of the Hotel, suck increasing amounts of cash from this pauper city to keep the doors open. And the last few years of that period include the Administration of the Indicted Occupant of Trenton’s Mayor’s Office. They can’t even even be counted on to write a press release without several typos, let alone get their sums correct.
Dan Dodson yesterday wrote an excellent financial examination of the project on his blog, and why it doesn’t make sense for taxpayers of the city. Let me summarize as follows:
The City is proposing to give away the property for a one-time $300,000.
If a $17 Million Taxable project were to go up on that site, it would generate over $940,000 per year at our current tax rates. Even at a much reduced PILOT (Payment In Lieu of Taxes, a mechanism by which non-profits or governmental agencies defray the cost to a local city of hosting the project ) rate of 1/4 or 1/3 of that, that would mean an annual payment of nearly $300,000. That’s what the Administration is willing to settle for on a one-time only basis!
In proposing this, the City of Trenton is working in the opposite direction of current trends. Hundreds of other cities across the country, faced with the same kind of financial distress that Trenton does, find themselves seeking PILOT payments from non-profit organizations within their borders. Non-Profits are generally exempt from property tax, but localities still provide fire and police protection, hookups to local utilities, and often other services such as trash pickup. Cities are simply unable to provide those services without trying to offset their costs by getting paid for them. Thus, PILOT payments.
For example, in Massachustts, several towns are either already charging or in the process of designing, PILOT payments from non-profits, calculated at around 25 percent of what commercial or residential property owners pay. These towns vary in size and include Jamaica Plain, Lowell, and Boston. Other Northeast state capital cities, such as Hartford, Connecticut and Providence, Rhode Island are doing the same, also based on the 25 percent figure.
Closer to home, last year the NJ League of Municipalities, of which Trenton is a member, called for a statewide task force to look into the matter. And in next-door Lawrence, that town’s Council last year sent letters to their non-profits, mainly Rider University and the Lawrenceville School, to make “voluntary” payments to the Township based on 25 per cent of what their tax bill would have been were they commercial.
Some of these moves have not been successful, and others are still under way. But few towns, if any, are proposing NEW giveaways of taxable properties to non-profits as we just heard yesterday.
At a hearing of the state Senate Budget and Appropriations, Senator Jennifer Beck of Red Bank said, “Red Bank now has 16 percent of tax-exempt properties. In Newark, I believe that close to 40 percent of land is tax exempt or tax abated, so how can they become self-sufficient if only 60 percent of their properties pay taxes?”
Trenton, remember, is already a town where over 53 percent of the city’s properties are tax-exempt. How can Trenton ever hope to become self-sufficient if only 47 percent of our properties pay taxes?
I have no beef with Thomas Edison State College. It is as fine institution doing good work. But if President Pruitt truly believes, as he is quoted in the Times this morning as saying, “We don’t want to hurt the city. We want to add value to the city,” then TESC must stand up and be a good neighbor to this City. If this new Nursing Center is an essential project to the future of TESC, then they must seek out other alternatives.
Either TESC finds another site, permanently removed from the City’s ratables, to build their Center on. Or lease, and renovate if they have to, a vacant commercial property down town – and we have plenty of those! Or the College can negotiate a fair and annual PILOT payment to the City of Trenton.
Right now, the deal as proposed to us on a dead Friday afternoon, is a bad one. It’s one that would create an awful precedent for future deals in the next several years.
And as such, it’s far worse than no deal for the Glen Cairn Arms. At all.
besides the questionable finances, i understand that the nursing shortage is more a function of a lack of qualified instructors. i.e. MCCC has a nursing instruction shortage, which is limited by a lack of qualified nursing instructors and has a 2 year waiting list to even enter the program.
building a new facility would be easy, staffing it will be the hard part, and attracting qualified students to enter the city, would be problematic, parking etc.
would not the existing empty buildings (mercer hospital/ capital) and the potential tax rateables for an otherwise tax-exempt building, be a better site.
imagine, teaching nursing in an actual hospital, i would think it would be way better than a sterile classroom
Trenton is quickly becoming a city of abandoned buildings. This building has been a permanent eye sore on route 29 and a bad advertisement for the city as people pass it each day. The college is one of the few active site developers who are willing to invest millions in new buildings in the city. The city desperately needs a comprehensive program to deal with overwhelming number of abandoned properties. For the first time is eight years, I am going to have to agree to disagree with you on this one. If it were me, I would take the $300,000 for a city that is strapped for cash – and move on to far more pressing matters.
@ Jack
I don’t believe the nature of the discussion is against the building of that site, per se.
In my opinion, the objective of RE development should be discovering the highest and best use of land in harmony with its surroundings; in this case, some valid argument could be made that this isn’t the case for the school and that the Capital Health site is instead (sans us having insights to the costs of adopting that location, we don’t exactly have the pro forma in front of us). Equally, valid argument also exists that Glen Cairn is as good an option. Outside of that toss up, at its root no one is (or should be) objecting that Glen Cairn Arms should be redeveloped.
The issues is in the terms of the deal, which exemplifies one of the root causes of Trenton’s issues – and that is the lack of rateables. You’re essentially solving one problem with short-sighted terms that will exacerbate another deeply underlying problem. The main issue I see is, where was the negotiation?
It seems to me this institution had access to valuable information which enabled it to make a deal most favorable unto itself (which it is entitled to, assuming access to that information was ethical to begin with). However, where did the city come forth with a REASONABLE offer to represent OUR best interests? Solving one eyesore will not make up for the fact that our taxes may further increase to help support and provide services to the new site. TESC wants a fair deal for the city – so why not accept terms that ask for PILOT payments? Well… why should they if they weren’t even asked? It’s not in their best interest – that extra money could instead go to growing the institution or hell, paying out bonuses. Who knows?
That is why this deal shouldn’t be met with a “beggars can’t be choosers” approach. I understand the theory that improving that site could lead to further development, which could lead to further rateables. It’s a valid argument, however, things could equally go sideways and the institution could stand on it’s own – thus having the city hold the bag (ahem, cough, Marriott, cough, cough).
Also keep in mind this isn’t just developer’s money – read the Time article and you’ll see that TESC is only able to do it with the assistance of State funding at 75% of the deal.
But this is Trenton’s story, isn’t it? We’re a desperate city looking to eek by until next month’s rent is due. We’ll sell you our TV, we’ll sell you our couch, hell – if the price is right – you can have your way with my body – I just need a few bucks to get by… and instead buy dubs for my ride so I look hot cruising the block. This is a showpiece for the city
every one whats a special deal, i agree that any reasonable development in the city would be beneficial. however since the city cannot even get the state to pay (in lieu of) property taxes, what hope can the city realizing getting any sane development occurring, when the mayor was just caught with his fingers in the cookie jar.
my earlier entry was primarily focused that existing learning institutions would willingly expand their programs, but for lack of qualified instructors. a national issue that should still be in contention as that is the primary focus of this deal.
so what will this project turn into after its working premiss is debunked? another municipal obligation/tax increase to benefit some out side speculator.
who is really pushing for this project, is TESC planning to become a bricks and mortar college?
thanks for the heads up
ed