ATLANTIC CITY — This cash-strapped city recently tried getting more money from the state, but not in the form of municipal aid.
It wants the state to pay property taxes.
In April, City Council proposed a policy to make the Casino Reinvestment Development Authority pay taxes on unimproved land it owns in the city. The resolution urged CRDA’s board to adopt a phase-in program to have the authority pay taxes on 100 percent of the assessed value of such parcels after seven years of ownership.
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“This is the first time, to best of my knowledge, that a formula has been developed and proposed to treat this situation,” said Councilman Jesse Kurtz, who composed the resolution.
Kurtz said the resolution’s goal is to prod CRDA to sell or auction off their vacant parcels.
But CRDA isn’t interested in the policy. Like other redevelopment authorities, it doesn’t pay property taxes by state statute. And CRDA Director John Palmieri said the authority spends a lot of money preparing parcels for sale and development. He noted that the authority has spent more than $1 billion in improvements in the city.
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“The role, as a policy matter, of redevelopment authorities is to collect and remediate and clear property and remove hazards and assemble parcels,” Palmieri said. “I think it’s a bad precedent to begin to pay taxes.”
The proposal is a new wrinkle in an ongoing debate over CRDA not paying property taxes in Atlantic City, which has seen its ratable base plummet from $20.5 billion in 2010 to $6.6 billion today.
Many in the city have criticized CRDA for land-banking — buying properties with no plans to sell or develop them.
“The City of Atlantic City recognizes the value of CRDA assembling real estate parcels in particular instances, but opposes the general practice of holding vacant lots off of the tax rolls indefinitely,” the council resolution states.
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Most of the land CRDA owns — 75 of its 111.5 acres — is developed and would not be subject to the council’s proposed policy. CRDA says 26 of its acres have a potential for development. CRDA’s total land holdings amount to about 5 percent of the city’s 3.5 square miles of developable land. The rest CRDA classifies as remnant lots or right of way lots.
CRDA’s vacant lots have a total assessed value of $51.6 million before tax appeals. The city could collect $1.8 million in taxes on 100 percent of today’s assessed value. The city has $550 million in debt and a $100 million budget deficit.
Of much more value are CRDA’s developed lots. If taxed at current assessed value, the Convention Center would generate $13.5 million per year in total taxes and Boardwalk Hall another $4.5 million before tax appeals. Emergency Manager Kevin Lavin recommended that CRDA privatize those properties, something authority Chairman Robert Mulcahy said the authority would consider.
Under the council proposal, CRDA would pay taxes on 20 percent of the assessed value of a vacant parcel starting in the third-year it owned the property. Taxes would increase 20 percent each year until the seventh year, when the authority would pay on 100 percent of the assessed value.
“It demonstrates the need for some type of formal mechanism, a policy, that either has CRDA start to pay partial taxes on the land that it owns for multiple years, or that it will get them to a point that after four years or after three years of holding a vacant piece of land and being unable to develop it, that it should be a sign to put it out to auction and get it into the hands of a developer,” Kurtz said.
Palmieri said CRDA has tried to sell lots, but there isn’t much interest.
“It’s a tough economy. It’s not as though people are clamoring for lots,” he said.
Palmieri pointed to Bader Field, a 143-acre waterfront property owned by the city, as an example of land ripe for development but unable to be sold.
The city, though, is auctioning off Bader Field and more than 100 other lots June 17 at noon in city council chambers.