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.