(Bloomberg)—Jersey City, whose three-decade boom in condominium and office towers dubbed it New Jersey’s Wall Street West, is chafing under demands to spread its tax burden more equally.
The newest property owners in the Hudson River waterfront community are either exempt from taxes or paying an amount based on a formula set 28 years ago. A state-ordered revaluation is touching nerves even before the numbers are re-jiggered. While residents in hardscrabble neighborhoods say it will shift the burden to the pricey downtown, the city’s mayor warns that it could raise supporters’ bills as values increase, uprooting long-timers.
In the U.S. state with the highest property taxes, Republican Governor Chris Christie identified 31 towns -- home to one in nine New Jersey residents -- that have shirked their fair-taxing duties for as long as 44 years. Though some are doing evaluations now, or are under order to, none has as much valuable real estate as Jersey City. Homes there are assessed at just 27 percent of market worth. By the state deadline of November 2017, the figure must be at least 85 percent.
“That would create one type of person living here -- not from a racial standpoint, but from an economic standpoint,” Mayor Steven Fulop, 39, said in an interview. “I don’t think that’s healthy for any city.”
Under legislation signed by Christie in 2010, annual property-tax increases are capped at 2 percent. A recent review by state tax officials, though, showed that some municipalities were failing to keep the local burden equitable, with 31 having skipped revaluations or reassessments for 25 years or more. It’s a popular political maneuver with an economic downside: While real estate in those towns has a combined worth of $132.6 billion, it’s assessed for tax purposes at just 34 percent of that total.
Other municipalities have gone longer than Jersey City’s 28 years without an adjustment, or have wider gaps between assessed and market value. None, though, comes close to Jersey City’s $21.6 billion in property worth. The average homeowner pays $6,772 annually, or 24 percent less than is typical for New Jersey.
The owner of a $1.1 million row house listed for sale in the Hamilton Park neighborhood pays $7,692 in property taxes. That’s $162 less a year than for a fixer-upper with a $395,000 asking price in the poorer Heights section.
“There’s no way to justify that,” Bill Matsikoudis, 44, co-founder of the Jersey City Civic Committee, a non-profit group that’s critical of Fulop. Downtown residents are bracing for higher bills, he said, though “they still recognize that it’s wrong that other people may be paying disproportionately higher taxes because there hasn’t been a revaluation for so long.”
Fulop, a former Wall Street equities trader elected to the City Council at the age of 27, in 2013 blocked fellow Democrat Jerramiah Healy’s bid for a third mayoral term.
As the waterfront has filled out, Fulop has pushed rebirth in the downtown’s blighted Journal Square, where the state’s tallest residential project is under construction. That property alone will have more than 1,800 rental units.
Those tenants will be steps from train service to Manhattan. Other pockets of the city, without such ready access to mass transit, remain true to their working-class roots. At a community meeting in April, Fulop faced residents unhappy with their tax burden.
“In 1988, many people throughout Jersey City lost their homes, and the reason they lost their homes was it was a similar situation on the gap of time between somebody doing a reval and not doing a reval,” Fulop told an audience of more than 800. “I need to make sure any reval is done responsibly and fairly.”
The Rev. Alonzo Perry Sr., the pastor of New Hope Missionary Baptist Church, showed the crowd the similar tax bills of homes priced at opposite ends of the real-estate market, and said the delay was causing more hardship.
“People are losing homes now, Mr. Mayor,” Perry said. “People are leaving the city now, Mr. Mayor. There’s a crisis in the city today, Mr. Mayor.”
Fulop has been wresting with the issue since 2013, when he halted a city-wide revaluation in a dispute with the contractor. This past April, after a seven-day breach-of-contract trial, Superior Court Judge Francis B. Schultz ruled that the administration was wrong to stop the process, and that the city “simply does not want a revaluation.” The finding came a week after the Christie administration order to finish the assessments.
Fulop, in an interview, said he would comply, though he questioned the deadline’s timing, around Election Day for the governor’s office. A possible candidate for the state’s highest office, he said he would make his decision after this year’s presidential election.
“The ordered timing happens to be suspicious and, from the governor, seems overtly political,” Fulop said. “Not September, not October, not January. They picked the election month.”
Joe Perone, a spokesman for the state treasury, said nothing sinister was at work. State regulations require revaluations to be done by Nov. 1, he said, and bills can’t be mailed to homeowners until after Nov. 10, “to remove politics from the revaluation process.”
“Jersey City is not in compliance with state law because of repeated delaying tactics by the Fulop administration, which received state aid under questionable pretenses by claiming it was conducting a revaluation that it actually halted in 2013,” Perone said in an e-mailed statement. Dunellen and Westfield, two Republican-led towns that had gone longer without reviewing assessments, and with tax ratios lower than Jersey City’s, now are starting the process, he said.
Fulop said his greatest concern is a loss of the city’s identity. Home to Ellis Island, the one-time U.S. entry point for immigrants, Jersey City is one of the most diverse cities in the country, he said. The ethnic, racial and cultural pockets “create an energy level and interesting place to live,” he said.
“When you start to fluctuate tax rates, which a revaluation can potentially do, a byproduct of that is some people end up being forced to sell their places,” he said.
To contact the reporter on this story: Elise Young in Trenton at [email protected] To contact the editors responsible for this story: Stephen Merelman at [email protected] Stacie Sherman, Michael Marois
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