The tide may be turning for real estate developers in Jersey City. For decades, city officials rarely saw a development proposal they didn’t like. Many were liked so much that generous tax breaks were given to the developers.
That all changed last week when the city council voted unanimously to rescind a tax abatement for a downtown project, the Jersey Journal reports.
The $30 million project, known as 372 9th Street, is the second phase of Shuster Group’s Hamilton House project. The 66-unit rental building launched leasing last summer and recently completed construction, according to the company.
A previously approved 15-year tax abatement was given to the project. This abatement would’ve saved the developer $6.7 million over the term. However, the city claims the developer failed to meet its obligations under the agreement. Specifically, a requirement to give Jersey City residents priority when hiring for construction-related positions.
After exhausting a local search for talent, developers can hire outside of the area provided they can prove they tried to hire locally first. The city claims Shuster never made such efforts. In their defense, Shuster presented a Craigslist ad that it posted in the final stages of construction seeking local labor.
Although not outright denying the claim, Shuster’s attorney Charles Harrington argues that the agreement allows for a remediation period for this type of infraction and that has not expired yet. However, with construction finished on the project, it’s unclear how they now plan to hire local construction labor for the project.
Predictably, Harrington told the council to expect a lawsuit.
This rare case of the city enforcing the abatement agreements may be a turning point for a city long friendly to any type of development. The council voting unanimously to rescind the abatement shows Jersey City is taking a closer look at how developers operate in the city.
Before this, the only significant recent scuffle over abatements is the ongoing saga of Kushner Companies One Journal Square project, which is now stalled, as the two sides battle it out.
