A Jersey City audit of its hundreds of property tax abatement agreements marks a promising sign for the city’s finances – and local school districts – according to a Wednesday analysis by Wall Street rating agency Moody’s Investors Services.
Jersey City city officials announced earlier this month that they would audit 178 active Payment in Lieu of Taxes (PILOT) agreements lasting between five and 30 years, which the city has historically used to lure business investments into the formerly economically depressed Hudson River community.
City officials hope to use whatever money they claw from developers to plug a $150 million deficit that the its school district will face within the next seven years as a result of 2018 changes to the state’s school funding formula. The city’s school district receives 25 percent of all PILOT payments.
A Board of Education report from last year found that since 2016, the city was missing out on $16.4 million a year due to inaccurate payments from companies taking part in the tax abatement agreements.
“While developers are responsible for making the correct payments, the city has not made a major effort to ensure developers have adhered to their agreements,” Moody’s said. “[T]he current effort will likely ensure developers are providing the city with the maximum amount of funding.”
The audit, by accounting firm PKF O’Connor Davies, honed in on 19 properties that made up “the largest difference between the PILOT billing and the fully assessed tax,” and should be paying a combined $41.4 million on property valued at more than $1 billion, according to the audit.
“While our administration has done away with granting tax abatements, we feel it is important to audit the abatements that were granted by previous mayors to ensure that those agreements are being upheld,” Jersey City Mayor Steven Fulop said in a Feb. 4 statement.
Some of the most valuable property sits along the Jersey City waterfront – including the Portside Urban Renewal project valued at $108 million; the Goldman Sachs Tower overlooking the Hudson River on property valued at $124 million; and Mack-Cali Realty Corps.’s Cal Harbor V Urban Renewal Associates project, sitting on a Hudson Street property valued at $94 million.