Thursday, December 21, 2017

Just vote NO!

Tonight, Thursday, December 21, 2017, the Trenton City Council will meet. On the docket is the second reading and public hearing of Ordinance 17-80. If passed, this ordinance authorizes Mayor Eric Jackson to enter into an agreement with Woodrose Properties Golden Swan Urban Renewal LLC for a long term (10 years) tax abatement.

Woodrose Properties Golden Swan Urban Renewal LLC is one of several property holding companies owned by former Senator Robert Torricelli. We've covered this before (most recently here) but we feel it is important to recap the matter once again before tonight's vote.

The property in question is located at the corner of Front and S. Warren Streets in downtown Trenton. Formerly known as "the Caola properties", the city acquired it in 2001 through condemnation for $164,000. Woodrose then acquired it from the city for $1 in 2005. 

Interestingly, in a Trentonian newspaper report from January 2005, then Mayor Doug Palmer told reporter Charles Webster that...
"Torricelli told us he's not looking at state leases, AND HE DOESN'T WANT ANY CITY MONEY OR TAX ABATEMENTS." {emphasis mine}
That very same article reports that the city of Trenton "will replace the roof and provide other upgrades." Additionally, it was stated that "a back portion of the building was removed" to stabilize the structure.

By March of 2005, the city was in negotiations with Torricelli about a possible tax abatement. In a March 4, 2005 article in the Times, Eva Loayza wrote:
"[City Assistant Business Administrator Dennis] Gonzalez said the city is still negotiating whether to give Woodrose a short-term tax abatement or start tax payments right away."

As it turns out, the city did grant the developer a five year tax abatement where it would only pay 15 percent of gross revenues rather than the full taxes. (We estimate that the tax abatement ran for five years from as early as October of 2007 until the end of 2012).

The city also awarded $202,425 in Urban Enterprise Zone (UEZ) funds to cover "cost overruns". Both were reported in a December 8, 2007 article in the Times.  (The city also granted $89,000 UEZ funds to another Torricelli project around the corner on W. State Street that same year).

Now, Torricelli wants to convert the office space in the building to more residential and he wants to make improvements to the HVAC system. The total project cost is estimated at about $230,500 and should take about four months.

Other than the short-term construction jobs, there will be no increase in employment associated with this project. The developer claims there is a demand for residential space downtown but the information provided with the proposed ordinance shows nothing to back that up.

And the council, so far, has not asked any probing questions about the application. In fact, when it was discussed at the council conference session on Tuesday, December 5, 2017, only Councilman Bethea asked about it. He wanted to know how long the abatement would be for (10 years) and how much the city would get.

Director of Housing and Economic Development Diana Rogers gave bare bones answers, merely explaining that the taxes paid would be based on a formula. The exchange between the two of them took an entire two and half minutes.(about 21:33 in the audio linked above) Two and one half minutes to discuss a 10 year tax abatement! (Compare that to the 15 minutes or so spent talking about an proposed BUT TABLED ordinance that would revise how the city towing contracts are handled!).

The formula, per the developer's application would be a 10 year tax abatement based on 10% of the annual revenue of the finished project minus a deduction for a vacancy rate. As proposed, the annual net income of the project would be $13,404.80 and if the abatement is granted, the city would receive $14,340 per year in taxes for the life of the abatement. If income on the project doesn't meet that projection, the taxes paid to the city would be less; if the income is higher, the taxes paid would be more.

If we were sitting on council, our vote would be an emphatic "NO".  The developer has utilized the generosity of the taxpayers in the city of Trenton for over a decade. In fact, in his little address to the council on December 5, Mr. Torricelli touted how he hopes there will be more tax credits coming so he can do other development projects in the city (specifically his now surface parking lot across from the Transit Center).

Mr. Torricelli knows very well how to play the system. He'd adept at using other people's money to meet his ends. It's time for him to pay his own way.

Tuesday, December 05, 2017

Get your hands out of our pockets!

Did you have one of those friends in college who, whenever a group of you were out together, either left his wallet in the dorm or was a little short or had some other excuse why he or she couldn't pay their share for the night's entertainment? And they always promised they'd make it up to you if you could just take care of their portion of the bill this time?

We kind of get that feeling all over again when we read through the documents that comprise Ordinance 17-80 on this week's Trenton City Council Docket.  Approval of this ordinance would grant Woodrose Properties Golden Swan Urban Renewal LLC a ten year tax abatement for the property at 101 South Warren Street.

Previously, we filled you in on some of the history of the the city has bent over backwards for the owner, Woodrose Properties. And we also noted how Woodrose's principal, former Senator Robert Torricelli, has had no problem contributing money to the campaigns of past and present mayors and council members in the city of Trenton.

Let's take a little deeper dive into the Torricelli/Woodrose request for the tax abatement.

On page three of Attachment "A" of the ordinance, the developer describes the proposed project as a
"substantial rehabilitation improvement and conversion of the existing mixed-use building."

 In essence, the building owner wants to update the HVAC system and convert the current commercial office space on the upper floors to residential space. The ground floor retail is currently occupied by a Subway sandwich shop (the "restaurant") and a dental office which opened in September of this year.

A little further down in the package, the developer estimates $181,000 in construction costs, $45,000 for professional fees and a marketing/advertising cost of $4,500. This brings the entire cost to $230,500.  And the work is anticipated to take 4 months.

They are asking the city to grant a 10 year tax abatement of 10% of the estimated annual revenue of the finished project minus a deduction for a vacancy rate. Per the calculations in the application, the annual net income of the project would be $143,404.80 and the city, if the abatement is granted would receive $14,340 a year in taxes.

Here's what has left us scratching our heads. The developer states in the application that...
...based upon the occupancy of the existing apartments...and the location in downtown Trenton (near multiple State Offices and private offices) ...there is a strong demand for market-rate apartments....

OK. If, and that is a big if, there is a strong demand for market-rate apartments, why are they calculating on a vacancy rate? Are they just being conservative in the figuring?

We happen to know someone with rental properties just a block away from the Golden Swan. We asked him about this alleged "strong demand" for market-rate apartments. He suggested that, based upon his experience with his two buildings, the assumption was not true. Our friend admitted that he hasn't under taken a recent study but he noted that Torricelli didn't offer up any proof either.
(NOTE: there is some sort of exhibit referenced in but not included with the documents we received that was pointed to as depicting this demand).

Just to make sure that the city administration on the governing body see how important it is for them to approve this abatement, Torricelli offers up this subtle threat:
Essentially, he says that without the abatement, there can be no conversions and without those, he will "shut down the building."

Does he not realize that the city has ordinances on the books about vacant and abandoned buildings and that should he "shut down" this one, he'd still have to maintain it and keep it secured unless/until it might be sold?

Is blackmailing the city council and the mayor the way to get what one wants?

Folks, we are talking about a private, for-profit investor who obtained the property for $1, had the city do some demo and remediation work for him, gave him various PILOTS on parts of the projects and who has the two large first floor spaces rented. His taxes went up and now he wants the city to cut him a break or he'll pack up and go home.

Not likely. He's got too much other property in town to just walk away.

Nothing about this project screams "revitalization".  The work of saving the historic building is already done. The "conversion" is not going to add to the city's employment rolls. Page five of the application clearly states that there will be no additional staff hired to manage the building (and, it should be noted, those that currently do are located outside of the city). They claim that the additional retail space when rented will bring jobs to downtown, but we believe the retail space to already be rented. (It appears as though this package was prepared last spring but only just recently submitted to the city and doesn't take into account that there is now a dental office located in the building). And, of course, there is the ever popular "construction jobs" that will be "created"; an estimated equivalency of 12 full-time jobs over the four month construction period. Is this really worth a 10 year tax abatement in a city strapped for cash?

Why can't Mr. Torricelli reach into his very deep pockets and fund the conversion himself? He certainly isn't shy about opening his checkbook.

A quick and by no means exhaustive search of NJ ELEC records show that since 1981, Torricelli has personally (this is his money, not the money in his various campaign accounts) given over $117,000 to various political campaigns (we actually have records of contributions he's made that for some reason don't show up in the ELEC database and thus aren't included in that number).  Over half of that amount, $64,500, was given out since December 24, 2013. (Yes, we thought that was an interesting date, too).

Why did we start counting on Christmas Eve of 2013? Because according to the ELEC records that was the date that Torricelli contributed $2,000 to Eric Jackson's 2014 run for mayor. Between that date and June 5, 2014, Torricelli (and his Woodrose Properties, LLC) gave a total of $6,200 to the Jackson campaign. He exceeded the $2,600 limit for the regular campaign (May election) by giving $1,000 from the LLC (an NJ ELEC no-no). Kevin Moriarty explained it here and here

As has been noted repeatedly, we have no idea who may have contributed how much to Eric Jackson in the last three years because it has been that long since he has filed a campaign report. 

North Ward Councilwoman Marge Caldwell Wilson also received a modest $250 contribution from Torricelli in May of 2014.

Campaign contributions are not the only way that Torricelli shows his generosity. After leaving the senate in the wake of a campaign finance scandal, he set up a private foundation with some of his unused campaign funds.

Unlike Eric Jackson who can't seem to file any paperwork on time, you can find the tax returns from Torricelli's Rosemont Foundation online. Here are links to the ones from 2008, 2009, 2010, 2011, 2012, 2013, 2014 and 2015.

As we have stated before, foundations and other non-profits set up by public officials offer them ample ways to circumvent campaign finance rules and "spread the wealth." For instance, there was the infamous "Turkey Give Away"  on December 22, 2013.  We all know it was just a coincidence that he was seeking approval to build a "temporary" (it's still there today, four years later) surface parking lot on the old Pete Lorenzo's restaurant site at about the same time. The fact that his 2013 tax return for the foundation shows over $8,700 spent for the turkeys has no relation to him having gotten the go ahead on his plan.

When you look at the website for the Rosemont Foundation or any of the tax returns, you will see that Torricelli has a soft spot or animal welfare. It shouldn't be a surprise then that in 2014 the foundation donated $1,000 to the Lady Margaret Animal Foundation, set up by Trenton's North Ward Councilwoman, Margaret Caldwell Wilson.
 And of course, we cannot forget Mayor Jackson's no longer tax-exempt Moving Trenton Together foundation. The one that conned the good people at the War Memorial into only charging them the (half - price) government rate for renting the theater. Yeah that one.

Well, even though Mayor Jackson couldn't be bothered to file the required 990s, the Rosemont Foundation filed theirs. You guessed 2015 Moving Trenton Together received $2,500 from Torricelli's foundation.

Now, we are not saying that any of this is illegal. And we are not saying that any of Torricelli's largesse is meant to influence any decisions on the part of the Jackson administration, the council or any other government body that can give a thumbs up or down to things like planning and zoning approvals or tax abatements.

What we are saying is that Mr. Torricelli certainly has the ways and means to do the work at the Golden Swan himself. If it is such a good investment that will make the property profitable, then he should dig into his own pocket and keep his hand out of the taxpayer's!

{NOTE: while we were writing this, the Trentonian's David Foster posted a piece on the application for a long term tax abatement. He covers much of the same ground as we have here, but he's got a couple of interesting quotes from Mr. Torricelli.}

Monday, December 04, 2017

How much can the city afford to keep giving?

Former Senator Seeks Tax Abatement For Downtown Property

The above item appears on the docket for the December 7, 2017 Trenton City Council meeting. We find it appalling that Golden Swan Urban Renewal, LLC, whose principal is former Senator Robert Torricelli, would ask the city to reduce the property taxes for his "investment" property on S. Warren Street.

Back in August of this year, Kevin Moriarty, revisted the topic of what he called the Revaluation of La-La Land. It was a topic he'd written about it in January, twice in fact.  And now Torricelli wants a long-term tax abatement.

Well, we say "Too bad!"  Senator Torricelli has taken more than enough from Trenton. It's time he starts paying his fair share.

The Golden Swan property was acquired by Torricelli (through his Woodrose Properties Golden Swan LLC) in 2005. He bought it from the city of Trenton for the grand sum of one dollar. In December of 2007, the city granted Torricelli UEZ funds to do some of the renovation work on the buildings. (This was all covered in some of our earliest postings on this blog. You can find one story here and another here.)

EDIT: courtesy of Kevin Moriarty, we now have a copy of Ordinance 17-80 wherein the developer is requesting a 10 year tax abatement so he can essentially replace some of the buildings systems and convert rental office space to rental residential space. He is doing this under threat of abandoning the project altogether if he doesn't get the abatement because the properties are not profitable. 

It was pointed out at the time that there were some serious monetary contributions that flowed from Torricelli to then Mayor Doug Palmer's campaign and foundation. Not that that in anyway influenced the city's decision to sell the property for $1 and then throw in UEZ money later on.

After a decade, with a Subway store located on the ground floor and some office and residential space above, Torricelli is coming to the city, again; hand out; looking for a "long-term tax abatement."  All the while, the everyday folks are scrambling to meet their newly increased property tax bills. Doesn't quite seem fair, does it?

Now, we can't point to any possible contributions from Torricelli to current Mayor Eric Jackson's campaign or private foundation that may have influenced the decision to bring the tax abatement to council for approval. But only because Jackson has not filed the required tax returns and election reports where such contributions, if there were any, might show up.

What we do know is this, any member of Trenton's governing body who votes to approve this long-term tax abatement is showing that they care more for a non-resident investor who has continually made money off of the city's largesse than they do for the people who actually voted them into office. The best move the council could take would be to vote this ordinance down immediately.