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.
2 comments:
Your blog post misses the point of Mr. Torricelli’s request. Indeed, the very problem you point to — an overburdened tax base — is precisely why the City needs more projects like this.
Trenton is not the first NJ city to face a diminished commercial sector, lost industrial base, and shrunken residential population. Newark, Jersey City and New Brunswick, all struggled through periods of similar distress. But they turned things around by attracting new businesses and industries as well as recreating a downtown residential market. One of the key tools in that tool box is the tax abatement.
Warren St has been transformed because Mr. Torricelli invested $3M plus in the Golden Swan building, in partnership with the City which provided critical support some dozen years ago. This building stabilized a block. Now there are new businesses, including Mr. Torricelli investing $3 million more across the street to bring a statewide union headquarters and now Trenton’s first Starbucks.
But these projects require a partnership with the City. The office space market in Trenton has too much capacity. This office space has sat for nearly a year, empty. He already invested $250,000 to convert failing ground floor office space into the first new medical office in the City in years. Now Mr. Torricelli is ready to invest another $250,000 to convert these second floor offices into apartments. Succeeding with these downtown apartments can show local banks that residential living in the heart of downtown can succeed. He has asked the City to support that effort. Mr. Torricelli has been a good partner for Trenton - he has brought more than $10 million in investment to six projects in the City and this year alone has paid over $300,000 in taxes.
Trenton still get taxes from this project — a steady rate as the apartments are leased. As rents go up, tax revenue will go up. Partnering together, we can demonstrate that downtown residential living can succeed. That will encourage more development, and with each new project, we will broaden the tax base for the whole City, which will help to ease everyone’s tax burden.
Other cities in our State have successfully traveled this road. It’s time for Trenton to make use of the abatement tool to promote a stronger, more vibrant downtown.
Sean Jackson / Sr. Vice President - Woodrose Properties
There is no evidence that this conversion is going to change the fate of the property or downtown Trenton.
Mr. Torricelli is asking, again, for the city to help underwrite his experiment; to fund his theory that the residential rental market is there.
He has enjoyed enough of the city's largess over the past decade plus. It is time for him to fully fund his enterprises. He's in the business of investing and developing. He should be risking his money (or those of private investors) and not be coming to the city with his handout yet again.
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