Fisher Development Company has requested a change to terms of their tax abatement for Crystal Pointe. The HPHA is opposing this request, and the text of our letter to the city council is below.

June 13, 2009


Honorable Council Members
City of Jersey City
280 Grove Street
Jersey City, New Jersey 07302

Honorable Council Member:

At the Historic Paulus Hook Association (HPHA) General Membership Meeting, held on June 4, 2009, members unanimously approved a motion opposing the Fisher Development Company’s request for changes to the terms of their tax abatement for the project at the eastern terminus of Second Street known as “Crystal Pointe”.

Published reports indicate that pre-sales of individual units have failed to meet the developer’s initial forecast. However, it seems that one of the key reasons for the (purportedly) lackluster sales is Fisher’s unwillingness to adjust their expectations, and thus offering prices, to what appears to be the new market clearing price for such units. Given that similar units, both in downtown Jersey City and perhaps more importantly on the same block*, have recently sold, it appears to us that Fisher’s only justification for this “hardship” claim is the lower return they will realize on their investment. The HPHA respectfully requests that the Council consider the fact that in “normal” (i.e. non-bubble) real estate markets, prospective buyers are generally not content to purchase their prospective homes (and largest single asset) based on a diagram of a floor plan. As such, in a market flush with excess supply, prospective buyers are always going to prefer to compare actual physical space and thus pre-sales are not an accurate measure of final demand.

The original intent of tax abatements was to provide economic incentives that encourage development in what otherwise might be viewed as undesirable locations. None of the HPHA members present at our meeting could recall any clause in the original abatement that guaranteed the developer a minimum return on investment. Real estate development, especially in a desirable and growing city such as Jersey City, offers developers the potential for very attractive rates of return on their investment to which they are entitled. However, such investment also entails substantial risk and it is explicitly not the responsibility of the City government, acting as representatives of the taxpayers, to subsidize these risks.

As taxpayers and voters in Jersey City, the HPHA membership strongly requests that the City Council, in an effort to avoid establishing what could be a very dangerous and expensive precedent, reject any attempt by Fisher or other developers to modify the terms of their existing tax abatements.

We thank you for considering our position on this matter and welcome any follow-up questions.

With kindest regards,

Jennifer J. Wagner
President
Historic Paulus Hook Association
201.892.2636

* 1 Second Street, Jersey City, NJ and 20 Second Street, Jersey City, NJ.

cc: DCNA; Bob Cotter; Jersey Journal; JC Reporter