Sunday, August 16, 2009

Will Tax Abatement Plan Resurface?

Developer Glen Fishman at the July 2007 groundbreaking for "The Monarch."

Although there was not a consensus on Aug. 10 to move a tax abatement proposal forward for the condo buyers at 400 East Front Street, it is expected that the measure will reappear Monday for a vote. The regular City Council meeting will be held at 8 p.m. in Municipal Court, 325 Watchung Ave.

"The Monarch," as the senior center/condo complex is known, is the only major project under construction in the city and the administration says its success is important to attract or encourage other development. But in the current housing market, the project needs inducements to buyers, and officials want a five-year, 40 percent tax abatement that has become controversial since its announcement last month. An ordinance paving the way for negotiations with P&F Management LLC received City Council approval on first reading on July 20.

Since then, a public outcry and second thoughts by some members of the governing body have resulted in a standoff between the administration and the council. Some argue that the developer has already sweetened the deal for buyers by lowering the price of the condos, and first-time buyers also can apply for an $8,000 tax credit if they act before Nov. 30. Others call it unfair to single out new condo buyers for an unprecedented tax break while many longtime homeowners are suffering financial distress.

Glen Fishman at the May 20 one-day grand opening of the senior center.

Unless the developer gets a tax break, administration officials say, the project could turn into rentals, an undesirable prospect that would lessen the tax return. The senior center and veterans' center on the ground floor would be tax-exempt and the only revenues would come from the 63 two-bedroom condos on three upper floors. Tax Assessor Tracy Bennett gave figures on Aug. 10 that placed taxes at $5,432 per unit if sold, but only $3,000 if rented. The abatement would lower taxes paid by owners.

Council President Rashid Burney has said he wants the project to succeed, but asked for an independent appraisal of the condos to determine whether they were priced properly.

"If not, what is a tax abatement going to do for us?" he asked.

Councilman Adrian Mapp, who opposes the proposed tax abatement, held a town meeting Thursday to gather opinions of residents on the matter. A large turnout is expected Monday, when residents will be able to speak before any council action on the proposal.

--Bernice Paglia


Anonymous Anonymous said...

The contract specifically states that the residents will be condos. Doesn't there have to be an ammendment to the contract (translation council vote) before the residence can be rentals?

8:48 AM  
Anonymous Anonymous said...

In addition, 30-year fixed-rate mortgages are also at historic lows. I am refinancing right now for 4.625%, which is great. Now, new homeowners may not qualify for that rate, but they can certainly do much better than I did when I first bought a home, when rates were higher. So, with historically low interest rates and the federal tax credit, prospective condo buyers only need the 3rd element for the hat trick. The third element is lowering the price of the condos. I think an independent appraisal would be a good thing, but only if it's truly independent. There is a large degree of mistrust for the administration and the developer, and even the city council to have an independent appraisal because of corruption and pay to play. I think there should be three independent appraisals done. That's not likely, but maybe it could be suggested. I think that the fear on the part of the developer is that the appraisal will show that the units are priced too high for the market. Look at the average price of condos, co-ops, and private homes in that area. What are they worth? The fact that these units are not selling may be because the price is too high. I am very curious about the units that do have contracts. Is there a profile of who these buyers are? Single? Married? With or without kids? Live in the area? Relocating from another town? Would those people who currently have contracts qualify for an abatement retroactively? What about this hypothetical: I currently have a contract for a unit, the appraisal is done and I find out that I am paying too much, because the unit appraises at $30-40K less than what I thought. What then? Am I bound by my original contract?

If it were me, I would let the contract expire without doing anything more if they refused to renegotiate. The other part of this that concerns me is that the main sales agent steers prospective buyers to Wells Fargo Mortgage company and their title company, since they have a relationship with them. I would be concerned about that. I would much rather there be a list of possible mortgagors that the agents give, without steering the buyer to this particular company. Not saying it's dishonest, per se, but it definitely can give the impression of quid pro quo when trying to move units in a way that benefits the realtor, the developer, the mortgage company and the title company the mortgage company uses. One thing I would say to any prospective buyer is get YOUR OWN lawyer, YOUR OWN home inspector, and do NOT use anyone recommended by a realtor, the developer or any other interested party. The cozy relationships are often of no real benefit to you, because everyone just wants to close quickly so they can get paid. I once used a lawyer who was friends with the realtor. Bad idea. He didn't negotiate very much on my behalf but just said that these things (what I wanted taken care of) weren't worth breaking a contract over. I trusted him because he was supposedly MY lawyer. End result: a punch list that will NEVER get completed by the developer. Sometimes an unfinished tile floor or a leaky toilet or a couple of loose wires or an unpainted room only costs a little to fix, but sometimes it can cost a lot.

9:55 AM  
Anonymous Anonymous said...

To add to 9:55am for any prospective buyer, I would not get an inspector. Mine was useless (and recommended by my realtor). He flushed toilets and put in something into the sockets to make sure they worked.

Get a plumber, and electrician, an engineer and any other professional (roofer) to come in individually to look at their area of expertise in order to get a good picture of what needs to be done. Here's a trick to watch out for - an inspector cannot or willnot move anything out of the way. So, for example, if there is a ladder in front of your electric box, he/she will not move it. Ergo, you have no idea if the electrical box is up to date.

The cost of getting your own specialist is either the same, or not much more than an inspector. Learn from my mistake.

9:43 AM  
Anonymous Anonymous said...

To 9:43,

You're right, getting a structural engineer to come and take a look at a crack I was concerned about cost me $500, but it was worth it, because it had to be fixed, at the expense of about $1,200 by the seller. Getting a plumber, electrician, roofer, and so forth to come is good as well. I think a good home inspector can do a good job, but it has to be someone who is thorough about everything. The people who bought my former house hired an excellent inspector who pointed out some things that I, as the seller, was not even aware of but that had to be fixed. They were small things, like a tiny leak in a basement toilet, a poorly-secured and exposed junction box, some dangling wires, some loose washing machine hoses, some shingles that needed to be replaced, and a hairline crack in an upstairs back window. It actually helped me when I had my own home inspection on my new home. I had them all fixed, and the buyers were pleased. They were small things, but with each one, I could imagine a potentially serious hazard, especially with the electrical and plumbing. It also made me feel good to know that I was selling them a superior product.

12:01 PM  

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