Posts Tagged ‘Glen Cairn Arms’

On Friday afternoon, (Jan. 11, 2013) Trenton first heard that Thomas Edison State College was to acquire the former Glen Cairn Arms (GCA) building at 301 W. State St.

The deal is that they pay a one-time fee of $300K and then never another dime to Trenton for all eternity.  TESC wants to construct a nursing school on the site.

To those of us that have observed the RFP process for GCA and the city’s broader attempts to market the city over the years, we know that our failure to interest a developer was due to lack of imagination, financial acumen and hubris.   The city under Doug Palmer had paid a substantial amount of money to acquire and settle lawsuits regarding the building, in excess of $3M.   We always thought we were better than any developer thought we were.  A Walgreen’s wasn’t good enough or a developer wouldn’t pay enough of the demo cost.  Or maybe other payments weren’t made.

In 6 tries over 16 years the city has not found a proposal that it liked enough to accept.  They’ve turned down proposals that would have had a positive return on investment for the city (i.e. paid more in taxes that our cost to make the site read).   And meanwhile, they never presented a plan to make the area around the site attractive to developers.  Over the years both Palmer and Mack have slowly let the city deteriorate in general both in its ability to fight crime but also to function as a working government.

So here we are.

In comes George Pruitt to present a deal to the city for the site that gives us nothing and for all time.

Tonight’s City Council meeting was obscene in the degree to which those of us working to help fix our approach to government were dismissed.  It was as if we were on the wrong side of the negotiating table with TESC, City Council and the administration lined up jointly to oppose us.

George Pruitt and his subjects threw out comment after comment hoping to convince, I don’t know who, that the project was a good idea.  They didn’t need to convince Council because they’d already been dealt with before the deal was announced.   Council and the city administration have given up on the city’s ability to affect change in marginal areas of the city.

This is a scary thought.  By giving up on Glen Cairn Arms, which has quite a bit going for it in terms of location, they’re saying that they don’t know what to do in any marginal part of the city.  They don’t know how to stimulate development.   It’s a hard thing to accept especially when the city administration and council don’t even know that’s what they’ve done.

But back to Dr. Pruitt’s comments on the numerous benefits to the proposed project:  Bob Lowe called them second order effects, which is what they are if you could even prove that.

For instance, he insists that by erecting a shiny new building property values would go up.  However, there’s no evidence in Trenton to suggest that.  It didn’t happen with the ballpark, hotel or arena in the so-called opportunity triangle.  It didn’t happen with the Hughes Justice Complex and it’s not happening with the new County courthouse.   The theory just isn’t supportable with the evidence.  And even if it was, it wouldn’t help our revenues because we don’t revalue our property, ever.

Second, Diana Rogers of the CCRC strongly supported the project.  Well that’s wonderful but who cares.  Ms. Rogers’ contribution to the “logic gone wild show” was to suggest that students at the nursing school would move to Trenton.   Wow! That was a doozy.   So what she thinks is that nursing student from around the world will pass by all of the other nursing schools in between them and Trenton just to come to TESC so that when they get here they’ll need a place to stay.   It’s hard to believe that a person that calls herself a redevelopment professional actually said that in public.

Next we hear the obligatory jobs argument, both construction jobs and permanent jobs.  I’d like for just once somebody to put pen to paper and show exactly how that translates into municipal revenue.  Unless new workers are being recruited from other areas of the country and need housing, and then when they get her happen to decide they want to live in Trenton, new jobs don’t equal new revenue.   Or maybe Dr. Pruitt thought that TESC would be hiring unemployed homeless people already in Trenton.  I don’t know what he was thinking other than he knew the public would like hearing it.

Finally we hear the nursing school compared favorably to other schools like Princeton, Rutgers and The Naval Academy.  The argument goes that those schools spin off industry and stimulate the economies of their host cities.  There is evidence that research universities have contributed to the development knowledge economies.   There just isn’t any evidence that nursing schools do that.  If there was then wouldn’t we be experiencing the boon Dr. Pruitt and others predict given that Mercer County Community College already has a nursing school in downtown Trenton.  I’ve read a lot about the linkage between universities and economic development.  I just haven’t come across the same linkage for nursing schools.

So we’ve got $16.7M in state spending that will make Trenton look a little prettier, give students another nursing option and construction workers another 6 months’ worth of work.  But Trenton gets nothing.

But we expected those banal arguments.  It’s what people say when they have to run away from the hard truth that a public project won’t benefit the host community.  We’ve heard this story too many times to count in Trenton.

What we didn’t expect to hear was the outright hostility to the idea that maybe we should take some time to think about this idea before we act.  I suggested that we form a group to look into the claims that were made by TESC and their paid contractors.   Shouldn’t we verify that there is no hope for site?  Shouldn’t we calculate the city’s cost in supporting this building for all eternity?  Shouldn’t we find a way to determine how nursing student lunches will translate into municipal revenue?   TESC made a lot of claims and didn’t provide any calculations to show how the city would actually benefit.  Shouldn’t we look into that?

And what about the city?  How is it that an economic development department can go 16 years and not figure out how to turn around one of the most trafficked blocks in the city?   How is it that a Business Administrator can’t figure out that a demolition loan at 2% would be a bargain if it generated a 4% return in taxes?  It’s not hard math.

Shouldn’t we do a little due diligence?

Nope rather than allow citizens to help look into these questions, our city council angrily shut the door on meaningful analysis and research.  They literally suggested that if we wanted to, we could  try to come up with something on our own. We could, but we’ve only got two weeks.   I’m sorry but we have jobs.  TESC told the Council that they had been working on this plan for two years.  Trenton taxpayers working as volunteers have only two weeks.

And to top it off, it was suggested that if we as taxpayers were so concerned why we didn’t do something about it before.  With whom?   Tony Mack hasn’t had the same person in the same job for more than 6 months for the past 2 ½ years.  Activists have tried to work constructively with the administration but it’s like walking on quicksand.   Further, I’ve been writing about this very subject for years.   I’ve written post after post about how to deal with land that has negative value.  I’ve proposed that we subsidize demo costs as early as 2008.  I’ve written extensively about neighborhood level development and land value tax.  These are measures to which the Palmer or Mack administrations or Council could have listened.  But instead they’ve chosen to chase business as usual and cede more Trenton land to the State of NJ.  They’ve chosen to be influenced by the same people who have influenced Trenton into the hole it’s in.  They’ve chosen to make us more dependent on the State, not less.

The lack of questions, the suspension of logic and the shutting out of meaningful public comment is proof positive that once again, in Trenton, the fix is in.

Other blogs/write-ups on the subject:

Jim Carlucci’s write-up of the Council meeting

Reasons to be Cheerful. Not.

Glengarry Glen Cairn

Tony Mack’s Worst Deal Yet

Today, Tony F. Mack announced that he wanted to give the Glen Cairn Arms building to Thomas Edison State College (TESC).  They want to put a $16.7M nursing school of some sort on the property.   Right off the bat, unsophisticated Trentonians started messaging that this was progress.

It’s not progress; it’s more of the same.

Every single politician and activist in Trenton for the last 12 years has complained that the State of New Jersey doesn’t pay its fair share in Trenton.  And this deal is simply more untaxed State land.  Do we need another tax exempt property?

Let’s do the math

TESC wants to give Trenton a one-time payment in lieu of taxes (PILOT) of $300,000.  One time!  That’s essentially free.

That $300,000 is to cover taxes for all time on a $16.7M building? Spread over 10 years that’s a 0.2% tax rate. Spread over 20 years that’s 0.1%.  Trenton’s tax rate for the rest of us is 5.5%.   Put another way, the State would be paying 1/50 of what you and I and every other private property owner pays in taxes. That’s essentially nothing.    Many private homeowners in Trenton pay more in taxes than this deal will yield.   It comes nowhere near the cost of paying for the police, fire and public works costs to support the building.  The new building’s direct support costs for just those services would be around $700K per year.

Trenton’s City Council should NOT approve this.

Instead, City Council should do what Fix Trenton’s Budget recommended two years ago and approve a standard PILOT for all new development in Trenton.  That standard PILOT should be based on taxing land at 30% of assessed value and improvements at 1.5% of assessed value. This PILOT should be available to all developers.   A standard PILOT like this would be welcome by developers and go a long way to encouraging new taxable investment in Trenton.   It would also serve as a reasonable basis for PILOTs for non-profits and eventually for a Land Value Tax for the rest of us.   This is important in our effort to have our tax system work for us rather than against us.

“Isn’t something better than nothing?”

It’s true that Glen Cairn Arms has sat vacant for many years.  But, as the math above shows, we lose money on this deal.   So no, “Something is NOT better than nothing”

Why hasn’t the building sold?

The City of Trenton owns the building and has been unsuccessful in selling it for many reasons:

1)    The City has maintained a poor development environment for many years due to crime, ineptitude in city government and lack of a plan to improve.

2)    The city always tried to sell it rather than give it away.  It’s obvious the building is a mess and therefore has no value and maybe negative value.

3)    We don’t have a standard PILOT that makes sense for a developer. I’ve proposed one above.

4)    We may have to demolish it ourselves (i.e. because as the building stands it has negative value)

There are several options

• We sell it to TESC using a standard PILOT. The current assessed value of the land is $500K. With a $16.7M improvement and using the suggested standard PILOT rate, we receive $400k/ year in revenue. This is what we should get.   It still doesn’t cover all of our direct costs, but it’s closer.

• We sell it to a private developer with a new package. We would spend the ~$1.4M * it would take to demolish the building in anticipation of a private developer putting a $5M building on the land. With the standard PILOT in place that would yield $225K a year in tax revenue.  This is a 16% return on investment and a pay-back of 6 years.

• However, we should NEVER approve another tax exempt property deal. Increasing ratables in Trenton should be our #1 priority. This deal with the State of NJ is the opposite of that.

But there’s more

Do we as citizens really want to let Tony Mack negotiate development deals for us?  Time and again, we’ve seen in New Jersey that government money is rife with corruption.  Tony Mack has provided us a case in point.  We have no reason to trust him and every reason not to.

Our Indicted Occupant of the Mayor’s office will do anything to make himself look good to unsophisticated voters.  In this case, it appears that he’s working to curry favor with TESC and let that organization’s patina rub off on him.   The leadership at TESC should know better.   Furthermore TESC and Mack are using State money as part of this scheme.

But I’m really confused about the choice of Glen Cairn Arms?
Trenton has a large unused medical facility with multiple buildings that could certainly be converted into a nursing center.  Why not encourage TESC to purchase all or part of the Capital Health Mercer campus.   Isn’t this exactly the use we’ve all talked about for that site?

Finally …

This deal has been presented to citizens without any economic impact assessment.   Certainly our City Council has come too far with this corrupt and incompetent Mayor to allow him to get by with this. But more importantly, if you support this deal, then you have no business complaining about the State not paying its fair share in Trenton. This is just making it worse.

* I originally estimated $300K based on numbers from a previous bid, but understand that TESC thinks the cost is $1.4M so I’ll use their number to be conservative.