TAX ABATEMENT NIGHT

Since tonight is the Council's agenda fixing session, and since the "Monarch Ordinance" will most likely be a point of major discussion, I am reprinting what Councilor Burney wrote along with my rebuttal. I will concede that my points may be weak, but his have little substance. I am also aware that Councilwoman McWilliams posed 8 questions to be answered on her blog. Most are addressed in my comments.

This project must succeed and here are the reasons:

Current downtown development plans come to an end. The failure of this project will have a drastic effect on the future development of downtown. Right now, we are looking to develop over 160 units downtown. These units at best will break ground in six to twelve months and will come on the market 1-2 years after that. Hopefully the economy will have improved by then. But if this condo project fails, then banks will be reluctant to lend monies to other developers. This drought of financing will last 5-10 years and leave downtown in its current form for the next many years.

There is no proof that this project which is at the periphery of the downtown will impact on future development. The only plans are the Landmark projects which the developer has been having problems financing. In fact the administration tried to pass a resolution requesting $15 million stimulus money for those condos.

If the Monarch is rental or Condo will not make our morbund downtown more attractive for banks to lend money for new stores. The total atmosphere must be changed. Instead we should focus on a major revitalization of the central city commercial area as well as the RR corridor.

There is no 5 to 10 year plan nor has one been considered except approving various entrepreneurial developers who are very slow in producing anything, and are always asking for changes that will benefit them.

$6M in loss of new revenues. Take 160 units times seven-and-a-half years times annual tax roll and what do you get? 160 x $5,000 * 7.5 = $6,000,000 in tax revenues. I am not counting the commercial base of taxes on the ground floor of these units, and I am not including the employment and other benefits including the enjoyment and use of these commercial establishments by our residents. I am talking about resteraunts, night clubs, etc. etc. This is just the loss of revenue from our inability to secure financing for these projects.

Numbers and mathematics based on what? The ordinance is for five years and would be for taxes based at either 40% or 60% of the condo's assessed value-based on sales price. The restaurants and "night clubs" are a figure of imagination at present. None of the proposed condos seemed aimed at a population that would support such amenities. Nor would the present business district attract outsiders. The tax numbers that others have thrown around are just conjectures.

Risk of the Monarch turning into rentals. Don't know if the developer would ever do that, but one never really knows – if he is unable to sell them what should he do to pay his taxes and his mortgage? Rentals continue the city along a path that the political leadership have stated time and again that we do not want to do. We need a more balanced approach to development and more apartments are not the solution for us.

There is no provision that I or the public are aware of to prevent turning the units into rentals. The present on the table plans are for residential units with some commercial space in all new development. This is the path the city has entered. The residential units are supposedly to be for condos but the numbers are staggering so it is inevitable that if built many if not most will become rentals.

This project as well as the others as presented will only attract middle to low income purchasers. As a Transit Village the lack of direct access to the City will steer potential buyers towards the two routes that have direct access. The new tunnels and stations are years in the future and the conversion of the Raritan Valley line to accommodate trains that could pass through the tunnels is not even on the books.

Continued property tax increases - no relief – early this year, the Citizens Budget Advisory Committee advised the council that the Council should raise property taxes 5%. Such increases - higher than the rate of inflation will continue for the near future unless we are able to secure new sources of taxation. 160 condos downtown would mean new taxes. If they were not built – no new taxes and guess who gets to foot the bill?

What guarantee is there that 160 units as condos or rentals with tax abatement would generate enough taxes to support the necessary city services required?


Similar to Dornoch/Fishman's problems with projects in other towns, Landmark Developers, Frank Cretella's building enterprise, is also having problems raising capital for Plainfield and other New Jersey projects. These entrepreneurs are able to insulate each project to limit losses and stand to make a profit or be able to walk away. Plainfield taxpayers should not be required to provide for their profits.

I would suggest that a reading of recent and past postings on "Plaintalker" and Plainfield Today will help understanding some of the issues. Plainfield Plaintalker is non political and factual in her postings.

I admit that I paint a bleak picture but in this case the developer already has received tremendous perks from this city and we do not have to be his sales agent. If the units are saleable he should price them for the market.