1) I do a lot of work with the city and the Mayor’s vindictive,
2) I don’t believe in recalls,
3) The recall committee didn’t print their reasons on the ballot,
4) I don’t know whose running,
5) It will cost the city money,
6) I work for the Mayor.

The first thing to remember is that the recall petition isn’t even a vote to recall. It’s simply a request to formally put the question forward. It’s quite possible that if the recall petition drive is successful, we’ll have a special election and Tony Mack will win the special election. The recall committee and the 8000 or so people that have already signed think there’s enough doubt though to warrant a vote on the subject.

Therefore I’d like to address the reasons not to sign, one by one:

First “The Mayor is vindictive and he’ll hurt my business”. Well, that should tell you something. Aren’t we done with bullies in this society? If you’re not the one to stand up to a bully, then who is? And who’s to say the Mayor’s not bullying someone else that is less able to stand up to it than you. This is exactly the reason to put the Mayor’s status up for a vote.

Second, “I don’t believe in recalls”. What’s not to believe in? The NJ legislature has provided this very democratic method for correcting terrible mistakes. The fact is that a Mayor can do significant damage to a city through mismanagement without doing anything illegal. In four years that damage can become irreparable. That’s where Trenton is heading. If you think our Mayor has behaved ethically, is managing the city well and has a plan for its recovery, that’s one thing. If you don’t then not believing in recalls is like believing your city is doomed.

Third, “The recall committee didn’t print their reasons on the ballot”. I actually heard this. Hopefully, the committee has hand-outs. But if not, their web site is trentonrecall2011.wordpress.com. Let me also suggest kevin-moriarty.com.

Fourth, “I don’t know whose running”. You should venture out from under your rock. Jim Golden has announced. Eric Jackson may be in the race. I didn’t support Jackson in the first campaign because he was a re-hash of Doug Palmer. However, he was worlds more suitable than Mack and did run the public works department. Golden is interesting. He comes across as thoughtful and it doesn’t hurt that he’s run the police department. I’ve not met with Jim to discuss all of his policy thoughts but from I know so far, we’re on the same page.

Fifth, “It will cost the city money”. A recall election will cost about $100,000. That’s small change compared to the $2M in transitional aid we already didn’t get this year because the Mayor has consistently thumbed his nose at DCA. It’s small compared to the ground we’ve lost in our efforts to revitalize because we don’t have a plan, or the misspending of our budget that’s happened either because of fraud or, more importantly, because we don’t have a high quality set of department Directors in place. Trenton’s budget is $185,000,000 next year. $100,000 is a small price to pay to get a Mayor qualified to spend that amount to our mutual benefit.

Sixth, “I work for the Mayor”. If you do, I apologize on behalf of all voters. You probably shouldn’t sign unless you’re looking forward to getting to know “wrongful termination” lawyer George Doherty a lot better.

There’s hardly a reason not to sign the recall petition. It’s only a petition to request a vote. If during the special election Tony still winds up being the best choice, then so be it. But, if you think Trenton is on a terribly wrong course, then recall is the only rational answer.

For most people this sounds like good news, and in general it is. The second most important thing a city can do to revitalize is to provide job training. So MCCC’s decision to increase classes in Trenton where they can be easily accessed by Trenton residents is a great thing.

So why in the world would a guy like me who does almost nothing but lobby for smart revitalization in Trenton complain?

Because, the school is making dumb revitalization claims. MCCC argues that in addition to promoting the benefits of education to Trentonians, it is also providing an economic stimulus. They are not.

By expanding their programs, the college claims that more students will be milling around downtown presumably buying things. Here’s where MCCC logic breaks down. They are arguing that by students shifting their spending from one part of Trenton to the downtown it will have a marked effect on our economy. Somebody at MCCC needs to retake Economics 101.

The second point MCCC makes is that they will be spending money on construction on the expansion. I should remind readers that MCCC is funded with taxpayer dollars and that the proposed expansion will be tax exempt. So even though over half of Trenton’s property is tax exempt we’re going to get even more at the expense of Mercer County taxpayers.

I’ll give a couple of examples of what’s happened in downtown Trenton. Several years ago I made an offer on a building that’s since become part of the Daylight Twilight School. I was outbid by the school system. My project would have paid taxes, the school does not. The same happens with MCCC, they will outbid private investors using taxpayer money and we’ll be left with no new revenue. We’re also building an expensive new County courthouse on Market Street and county officials have the nerve to call this revitalization as well. Trentonians need to stop drinking the Kool-Aid of government spending. We need to elect officials who understand this and will be skeptical to the point of being openly hostile to the idea of anymore tax exempt development in our city.

That said, job training is a still a good thing. However the article on MCCC points to unclear thinking about what is really important in Trenton’s revitalization. We can’t afford to be vague.

Desegregation in our state was done on a city-wide basis, unlike in southern states which were integrated at a county level. The differences in effects are stark. Southern schools achieved racial integration because county districts limited white flight. In New Jersey, white families simply moved over a city line and created their own new racially segregated school districts, like West Amwell, Hamilton, and Ewing.

As a result, New Jersey has 590 school districts for a population of 8.7 million people while North Carolina has 115 districts for a population of 9.4 million people. This is how schools became comparatively “separate”.

This system of city-wide integration gave rise to New Jersey’s current level of segregation, which ranks the state as 12th in black-white segregation and 6th in Hispanic-white segregation according to a study at the University of Michigan based on US Census data.

The 1985 “Abbott vs. Burke” decision by the NJ Supreme Court further adjusted New Jersey’s educational landscape. It mandated that poor districts receive equal funding to rich districts. This is how schools became “equal”.

For those who aren’t students of civil rights history, the US Supreme Court ruled in 1954 that “separate but equal” wasn’t good enough. While school systems across the country and particularly in the South resisted integration, forced school busing in these new county-wide districts, in many ways saved southern cities from the white flight that drained resources from their northern counterparts. It was a blessing in disguise.

Rather than propose ways to finish the job of racial integration in New Jersey, Senator Mike Doherty of Hunterdon County proposes to gut our “separate but equal” system of educational apartheid and replace it with a “separate and unequal” system.

Senator Doherty’s plan is called Fair School Funding. It seeks to equalize school funding from the State to a formula that equates to $7,400 per student no matter what school system that student lives in. In Senator Doherty’s PowerPoint presentation, he compares West Amwell (which is mostly white) to Asbury Park (which is mostly black). In his example, West Amwell would receive an additional $6000 per student from the State while Asbury Park would lose $17,000 per student. West Amwell could then spend $20,000 but Asbury Park could afford to spend only $10,000.

In the presentation given to a West Amwell Town Hall meeting, Senator Doherty uses a particularly “high handed” statistic that says 85% of school districts will get more money. However, I suspect that 50% of students will benefit and 50% will not because the large urban districts like Newark, Trenton and Asbury Park would be the losers.

The Fair School Funding web site is very well done and happily reports how much money every school district in the State would gain or lose. Trenton would lose over $130,000,000 (about 45% of its total) and Newark would lose over $370,000,000. Meanwhile, Princeton will gain over $23,000,000.

It takes a lot for me to call a thing racist but this plan just is. It’s based on the notion that it’s good that our schools are separate and furthermore that children in New Jersey’s poor (mostly black and Hispanic) districts don’t deserve the same public education afforded those in wealthy (mostly white) districts. If it weren’t, Doherty might have a Trenton or Newark co-sponsor to explain why property taxes would have to triple in those cities to make up for the loss in funding.

I fully expect Senator Doherty to trot out New Jersey’s Home Rule laws to defend his bill, much like George Wallace used “states rights” arguments to defend racial segregation. America has moved forward, leaving New Jersey behind, and now Doherty wants to take us all the way back to 1954.

Neither a State nor a civilization should want to institute a radical plan like Doherty’s Fair School Funding as it would effectively close urban schools. This proposal is like a “final solution” to the black and Hispanic urban populations.

If nothing else, this proposal shows how messed up New Jersey really is. The fact that a State Senator is proposing this should concern us even more. Senator Doherty needs to be called out. He apparently hopes to rise in the Republican Party and seek state-wide office. This should not happen.

It’s clear though that New Jersey needs to rethink how it wants to govern its society in order to overcome the fear and loathing that has bred Mike Doherty.

It’s fine to think that Asbury Park and Trenton need to do better at running their cities, they do. But really, other forces have caused West Amwell to be like it is and Asbury Park to be like it is. None of those forces have anything to do with how those cities are currently managed.

There are better ways to deal with schools and school funding and I call on Republicans of good will to lead the charge for a better New Jersey.

I’ll offer my counter-proposals.

New Jersey needs to fix its social fabric before the economic fabric of its cities and suburbs can work well together. The people of New Jersey need to reject segregationists like Doherty and embrace the goal of twenty-one modern, efficient and integrated public school systems.

References

Fair School Funding web site – http://www.fairschoolfunding.com/

University of Michigan Institute for Social Research – http://www.psc.isr.umich.edu/dis/census/segregation.html

We’re laying off 105 police officers because our municipal budget is over $200M and Trentonians already pay the highest tax rate in NJ just to contribute $70M of that amount. Contrary to popular belief, the State of NJ would pay almost that same total, plus almost ALL of our $300M school budget.

Trenton’s taxpayers are nowhere close to being able to pay for their own government. The state currently owns roughly 25% of property value in Trenton and pays over 40% of the cost of municipal and school budgets.

We could keep the police officers but our property taxes would have to go up an additional 12% or so, thereby bankrupting many of us.

How did we get here?

Its been ignorance and pride that have brought us to this point. At some point Trentonians will have to do the hard work of taking responsibility for their city. The State can be a partner but Trentonians must cooperate in good faith. We must show a plan for recovery. We need to lead.

* BTW – According to COAH’s Guide to Affordable Housing Trenton has 7799 affordable housing units (even before including Trenton Housing Authority or section 8). Readers should be aware that there are only 22,000 or so households in Trenton. This means that over 1 out of every 3 homes in Trenton is affordable housing.

We’re overburdened given our size and even with state and federal aid, our tax rate is high. The plain truth is that our tax rate for 2011 will be the highest in NJ.  In this regard, our property tax is definitely, “foe”.

Our ratable (the total value of all property in Trenton) has gone up only .6% per year over the last 10 years.  This is far below the state and national averages.  Our population has declined by 4,000 in the last decade.  But, our crime rate has stayed steady, due partly to a heavy increase in spending on police.

These numbers paint a picture of a city that’s not attracting its share of development, but isn’t as dangerous a place to live as some think.

The problem is that our economic situation is on a downward spiral that will be accelerated by higher taxes going forward.   Further, our government is short on ideas for how to address the problems.   We’ve reacted to our 2011 budget crisis with a haphazard approach and aren’t currently working from a strategic financial plan.

For the past 20 years, the previous administration failed to use the power of the city government to turn the city around.  They either didn’t know or didn’t care about knowing about the powerful tools at their disposal.

So what are these magical and powerful tools that have been lurking right under our noses all these years?

The first one all Trentonians should know about:  the budget.  Much has been said about the budget as a strategic tool and now, through the efforts of citizen initiatives, we’re learning and participating in the use of that tool.  For the 2012 budget year, Trenton will be better prepared to spend its limited resources in areas that will give the most “bang” for the buck and will hopefully lead to new development.

However, Trentonians have yet to be introduced to its new best friend:the property tax.

Our property tax or more specifically our tax structure is our single biggest tool in our effort to increase development.  It should go without saying that increased development is good for Trentonians who seek a better quality of life.  However, we need to remember that a significant portion of our population prefers a weak city where rules are not followed or enforced. 

For the rest of us, a healthy and growing tax base means a lower tax rate, more amenities and more local employment opportunities.  These are good things.  But how can our tax policy help make this happen?

There are two fundamental tax policy features that can be adopted that will make a difference.  For the first time in a public forum here they are together:

1)      Property Value Reassessment

2)      The Land Value Tax

It’s amazing that these power tools haven’t been engaged over the last year, much less the last twenty.  Compared to the other things we spend money on, none of these is terribly expensive.  It’s even worse in that our lack of reassessment and standard PILOTs, which could alleviate the problem for some developers, actually work to make our situation worse.  Yes, that’s right, our tax policy is currently working against us. 

Property Value Reassessment is only fair and is a needed step in our revitalization strategy.

Trenton’s last city-wide assessment was nearly 20 years ago. The way it’s supposed to work is that every property is assessed either when it’s sold (this is easy because the value equals the sales price) or every few years, by the assessor.  Cities do this so they can properly account for the real value of a property and in turn keep pace with inflation.   In the absence of regular assessment, a recently sold or built property will have a value reflective of current real estate prices while everybody else’s building will still show its 1990 value. 

There are many Trentonians who are paying much higher taxes than others with similar houses simply because they recently purchased or built their home.  Newer Trentonians are subsidizing long time residents.  This is just not fair.

It’s also not good strategy.  We’re penalizing new investment which is exactly the opposite of what we should be doing.  As a result of not doing assessments, our tax rate is extremely high compared to surrounding cities.  Hamilton has a rate of 2.5% while Trenton’s will be 3.63% this year.  All things being equal, you would invest in Hamilton instead of Trenton, as thousands have.  But things aren’t equal and Trenton has other negatives that Hamilton doesn’t.    So the tax rate imbalance just makes it worse.

A goal of the reassessment is to be revenue neutral.  We shouldn’t reassess to raise more money; we should do it to improve our attractiveness as a development option.    The end result will be that while many people’s homes will see an increase in assessed value, we will also have a lower tax rate to offset that increase.  We don’t know for sure until the impact can be studied, but very few Trentonians should see an increase or decrease in their tax bill.  But to the outside world of developers, Trenton will become a more attractive option.

The Land Value Tax will build on reassessment to make Trenton especially attractive to high end development. 

At the same time, it will force land speculators to either develop empty lots or get out of town. 

Here’s how it works.  Today a Trenton property has two components to its property value, the land and the improvement on top of the land.  For example, if your house is worth $100,000 it’s likely the land is worth $10,000 and the building is worth $90,000.  In 2010 both were taxed at a rate of 3.33% for a total tax bill of $3,300.  If you wanted to make a $50,000 improvement we’d tax it at $1,650 a year.  Not a very attractive prospect.  Meanwhile the guy that owns that vacant lot (land valued at $10,000) next to you is skating by with taxes of only $330 a year.  There’s not much incentive for him to make improvements.

Consider what happens if we tax land and improvements at different rates.  Let’s say land is taxed at a whopping 25% and the improvement at only 1%.  Using the home value above, your home would now generate $2,500 on the land and $900 on the building for a total of $3,400.  As a homeowner you would be paying essentially the same.  But if you wanted to build that improvement it would cost you only $500 in additional taxes.  This is a pretty good deal. Furthermore the speculator next door would now pay $2,500 per year to hold on to that vacant lot.  This would make it extremely bad business for him to hold on to it indefinitely.

The land value tax encourages the kind of behavior we want in Trenton.  It encourages people to develop vacant land and to improve their homes.

It gets better.  Say you’re a wealthy person looking to build a $1,000,000 home.  You could build in Hamilton and pay $25,000 a year in taxes or you could save a lot by building in Trenton.  If we used the Land Value Tax as described, a $40,000 lot would cost you $10,000 in taxes, but the $960,000 house you build on top of it would cost only $9600 in taxes for a total of $19,600 in taxes.  You’d save $5400 a year in taxes.  That’s a lot of money no matter who you are.

The same holds true for developers looking to build apartment complexes, loft conversions and office buildings.  A $10,000,000 project in Hamilton would cost $250,000 in taxes but if the land in Trenton were $100,000 the taxes would be only $115,000.  This kind of savings makes a difference. 

With a land value tax we’d encourage development and especially high-end development which we badly need.  As Trenton is rebuilt, our land values will gradually increase and so will our tax base.  We will attract new residents and especially those with disposable income.  We need this type of immigration in order to support the new restaurants and stores we want in Trenton.   As Trenton begins to become attractive, success will breed success and we’ll become the desirable city in which we all hope to live.

Finally, the land value tax creates jobs.  There will be a construction boom in Trenton that will employ our contractors.  Someone’s got to build all of those new lofts and houses.  Also, as we attract business development, we’ll attract permanent jobs to Trenton.  This is all good for our economy.

Today, we use PILOTs to give developers a break.  This is a good thing and needed with our current tax system.  With the land value tax it is highly unlikely that we could give a standard PILOT that would be more attractive than the tax bill an investor would get with the land value tax.

The use of land value tax has been around for a long time.  Today, it’s used around the country and most notably in about 20 of Pennsylvania’s post industrial cities.  Pittsburgh, Harrisburg, Allentown and Altoona are examples of cities that have used a land value tax to stimulate their revitalization.  Studies have compared these cities to comparable towns and show higher increases in ratables, lower foreclosure rates and less vacant property.  Trenton could be a leader in New Jersey by adopting the land value tax as a key component of its revitalization effort.

Reassessment and land value tax are two good examples of how we can turn our tax system from redevelopment foe turn it into our strategic friend.

This coming Monday, February 7 that all changes.

Beautiful Trenton, TCCA and Fix Trenton’s Budget Committee are hosting a public information and planning meeting on Monday, February 7, to discuss Trenton’s municipal budget.  Doors open at 6:30 pm, with the program starting at 7:00 pm.  The meeting will be held at Mt. Zion AME Church, located at 42 Pennington Avenue in Trenton.

The meeting will focus on priority-based budgeting: setting priorities and making hard decisions.  Angela DeGraff will facilitate the meeting, which will include presentations by Fix Trenton’s Budget Committee and opportunities for participation by everyone attending the meeting.  All interested Trenton residents are invited to attend.

This meeting is the first in a series of meetings seeking citizen input and participation in the budget process, focusing on the 2012 municipal budget.  Future meetings will be held in the each of Trenton’s wards.

Personally, I’ve spent quite a bit of time preparing for this meeting along with the Fix Trenton’s Budget committee.  As activists we’re doing our part to help illuminate the hard choices Trenton faces.  It’s up to citizens to engage and the administration to do its part in fixing the budget process.

Our Mayor and his housing director, Henrietta Owusu, don’t care about any of that. 

They’ve not only approved a giant HOPE VI government housing effort that is sucking up our most valuable land into a low income project but now they’ve approved the sale of 36 homes to a low income housing developer for $1 apiece.  This is the kind of project I’ve specifically warned them against.

Furthermore, after some careful sleuthing by a citizen activist it turns out the developer is engaging in “Pay to Play” with the Mayor.

Ms. Owusu has now officially made an enemy.  Her job is revitalizing Trenton and she doesn’t know what she’s doing and in fact is doing the opposite.  We don’t really need to fire her, just put her in a position where she can do no more harm.  I recommend City Council not approving her for any new position.  The Mayor is a more difficult situation. 

At some point activists need to stop trying to play nice and get mean.  I don’t know how long I can stay relatively nice.

More articles about this mess:

• Kevin Moriarty’s Blog: You Can’t Make This Stuff Up
• Trentonian Article #1: In Trenton, 36 houses or lots to sell for $1 each
• Trentonian Article (LA Parker):  36 for $36 is good deal for developer, bad news for Trenton
• Trenton Times Article:  Questions surround $6,000 campaign donation to Mack
• My previous blog on this: Discipline and Focus – Learning to say “NO”
• Trentonian Article #3:  Trenton Mayor Tony Mack’s campaign got $6,000 from outfit linked to developer in $36 land deal (DOCUMENTS)

The city effectively owns the hotel and manages it through a non-profit entity called the Lafayette Yard Community Development Corporation (LYDC).    The Mayor appoints the board and during the Palmer administration it was largely controlled by the city business administrator. 

A new year and a new political reality

Mayor Mack has appointed a new board and surprisingly included me on it along with Paul Anzano, Mike McGrath, Audrey Walker, Bill Watson and Cleve Christie (Chair).   In addition to the board, there is an asset manager, Acquest who represents the city’s ownership interests, a property manager, Waterford that runs the hotel and hires the GM (Jeff Zeiger – Shelly’s son) and an attorney for the board, Hill Wallack, who advises the board and organizes the board’s agenda and minutes.

Some of the people originally involved in getting Trenton into the hotel business are still involved including Bill Watson who’s still on the board and is also chair of the Trenton Parking Authority which has loaned the LYDC about $6M.  Shelly Zeiger is a consultant to Acquest though I’m not yet clear what his duties are.  Rocky Peterson of Hill Wallack is still involved.  Acquest itself was involved in the original decision to invest in the hotel.

Marriott does NOT own this hotel. 

This City of Trenton is the owner by virtue of its guarantee of $15M in revenue bonds.  Marriott was originally brought in to do two things, 

1. Manage the hotel and
2. Lend its name and operational support through a franchise agreement

Many hotels are run like this.  Investors will own the property, hire a third party to manage it and enter in to a franchise agreement with a chain (Marriott, Sheraton, Hilton) to provide branding, standards and national support (i.e. web site, advertising). 

Ten years later, Marriott no longer manages the property andWaterford was brought in 2 years ago to run the hotel.   The Marriott franchise agreement will expire in 3 years.

Palmer‘s plan didn’t work out. 

Now in addition to the $55M municipal budget deficit Mayor Palmer has left the city, he and his friends have also left us a mountain of debt on a hotel that is struggling to achieve profitability.

There’s a lot to say about the decision for a government to get into the hotel business, but its behind us now and we need to clean up the mess.  Needless to say, it was a reckless adventure funded with taxpayer dollars. 

The hotel’s situation is a challenge.

The City of Trenton is currently in debt to the tune of $15M on the hotel.  The Trenton Parking authority is owed $6.3M, the State of NJ (through various departments) is owed $8.2M and Acquest is owed $1M in back fees.  In total, the LYDC owes about $30M.

Our hotel, like the rest of the industry, has suffered through the recession.  For 2010, the LYDC will lose about $450K on $7M in revenue.  The hotel is projected to turn a small profit in 2011 but this is before debt payments of $1.3M to Trenton’s bond holders need to be made in 2011.  This payment will come from Trenton taxpayers.

The state and Trenton’s Parking Authority haven’t been very aggressive about getting their money back or even getting interest payments (thankfully) but the private revenue bond holders are dead serious about getting their money. 

Just to put this in perspective, if you’re a Trenton homeowner with a $100,000 home, of that $15M in city debt on the hotel, you’re personally on the hook for $790.  Mayor Palmer may have gotten us into this mess but now we’re all in it together.

So where do we go from here?

It’s not clear that the LYDC has ever been allowed to pull all the levers at its disposal to run a profitable business.  It’s not clear that Trentonians have ever understood that they have a financial interest in the hotel.

The LYDC board is forming a strategy to fix the ship and find a new owner

Mayor Mack wants to get out of the hotel business but it’s up to taxpayers to help make the hotel an attractive acquisition target.  This will require the board and management company to:

• Reevaluate its assumptions in order to generate profit
• Reengage the community to replace bad experiences with great new ones
• Find a new investment partner for Trenton

The board is working with Waterford and Acquest to find the operational sweet spot. 

Hotels operate in various niche segments each with their own set of operational assumptions.  For example, a budget hotel may operate with minimal staff and offer no incremental services (like room service).  A full service hotel typically has a restaurant, room service, meeting and convention space and accordingly, more staff.  Marriott, Sheraton and Hilton (and to a lesser degree Choice) have many different brands that fill the spectrum of hotel niches.  Marriott’s brands (Fairfield, Courtyard, Residence Inn and the Marriott flagship) fill different price and service needs in the market. 

The Trenton Marriott is a full service hotel and is therefore meant to offer a high level of service for a commensurate price.  As such, it maintains staffing levels meant to provide that enhanced level of service per the Marriott franchise agreement.

In addition to requirements placed on the hotel by Marriott, our hotel has also had various political pressures placed on it over the years.  It’s quite likely that while well meaning, this kind of pressure has been uneconomic for the hotel.

The new LYDC board and its advisors will challenge previous assumptions and look for a business model and budget that is more in tune with the Trenton market.   The good news is that we have an aggressive board teaming with an aggressive asset manager to make this happen. 

The hotel is reengaging with the Trenton community

There is no doubt having a hotel in the heart of our city is a good thing for residents.

Trenton’s hotel is a great space in a great location.  However it does have competitive pressure along many dimensions.  It competes with nearby hotels on Rt. 1, Pennsylvania and the nearby Marriott Courtyard for room-stays.   It competes with those same hotels and various other banquet facilities for meetings and parties. And it competes against every bar and restaurant in the area for food service.

Unfortunately, over the years the Trenton Marriott has built up a reputation for bad service with the local population.  This happened for a variety of reasons.  It’s now time for Waterford to turn the corner on customer satisfaction. 

As a board member, I’m taking the position that our hotel will be successful if the local population sees it as a destination.  It can and should be the coolest spot in Mercer County.  If we feel that we can recommend it for food, drinks and catered functions then we’ll also recommend it to out of town visitors.  Look for marketing efforts seeking to get local residents back to Archives Restaurant and the meeting spaces this year.

To that end, with the hotel management, I’m helping organize a focus group made up of local dining enthusiasts to recommend changes.  If you eat out a lot and would like to help, let me know.

We’ll give it wings and put this great asset in private hands where it belongs.

For now, Mayor Mack has stayed out of micromanaging the hotel.  Instead he’s appointed a relatively active board.  The Mayor has also given clear direction to all of the board members to get Trenton out of the hotel business. 

No city should be in the hotel business in the first place so it’s only sensible to want to get out of it.   Trenton’s hotel has a lot of upside to offer private investors.  It comes in three ways:

1. The hotel can be run better as a private enterprise rather than a quasi-public one.  For instance, a new owner will be able to start over in its labor negotiations.
2. It can better leverage its business related to the State of NJ and our local market. 
3. The hotel location will be in the center of Trentons’s eventual revitalization.  This is a more speculative upside of course.

Coming out of a recession, Trenton’s hotel is an attractive asset with agreeable debt holders and quite a lot of upside and in a market which a new owner can control.

I’m hopeful that our current city council will be inspired to act on these ideas as it has shown signs of willingness to move in a new direction.  I’m encouraged by many of their private and public comments especially around the subject of refocusing our economic development efforts on attracting disposable income. 

However, as promising as they are, they are still a legislative body and require leadership. 

If the Mayor chooses to exert leadership or at least anoints others to do so in his stead (perhaps citizen leaders), these are some of the big low cost ideas that we might pursue.  They are in no order and not mutually exclusive.

1)      Abandon residency restrictions

Our recent miss-steps and hiring disappointments should convince us that restricting employees to city residents is folly.  There are many smart public service oriented people out there that might help run a water department, a public works department or even a police department that for one reason or another can’t live inside Trenton’s city limits.  Trenton isn’t for everybody.

We shouldn’t let a person’s address stop them from helping us manage our way through a very difficult period.  We need help and we should look outside our city limits for it.  The old rationale for residency has proven to be false, let’s not let our provincialism hold us back.

2)      Accelerate property revaluation

The County is doing us a favor by forcing us to revalue our property.  As it stands now we’ve implemented a Rube-Goldberg approach to setting tax rates and then discounting them.  We have no idea what our actual property values are except when a property is sold or renovated. 

It’s only when investment actually happens that we can properly tax the hell out of it.  Meanwhile, older properties of equal value skate by at a lower effective discount off of market value.

It sounds unbelievable but we’re actually using our single biggest policy tool (taxation) to discourage investment in Trenton.  A smart city administration and council will recognize this and rush to fix it.  This is a specific area in which Fix Trenton’s Budget seeks to work with the city.

3)      Create a Master Developer for city owned property

This is brand new idea at Reinvent Trenton.

I recently made a big stink about a non-profit call Trenton City Home that the city uses to dispose of some city owned properties.  That complaint had two parts to it.  First, no one on council (much less the public) knew what it was.  It’s a shadowy subsidiary of the city with no public board and likely no tax returns. The second complaint was that the city was using this entity to funnel property to other non-profits and low income housing developers.

My read of the public and city council is that they are through with stimulating low income property uses and would rather see Trenton attract high disposable income residents. 

The Master Developer idea is similar to Trenton City Home except it won’t be secret, won’t be non-profit and will be aligned with citizen goals for increased population and disposable income

I propose that Trenton appoint a Master Developer to form a for-profit company with a public board to develop ALL of the city’s abandoned property.  This is a bit like a land bank. 

The company will be partially owned by private developers, the city of Trenton and private investors (including Trenton residents).  The city will deed clear title to this company on property it receives.  The developer, in turn, will seek to maximize return either by developing property itself or selling it to third parties. It will undoubtedly do this by focusing on creating critical mass for development neighborhood by neighborhood, rather than in a scatter-shot method as the city currently does.  Furthermore, this entity will be free to move quickly to capitalize on opportunities.  Specifically, the developer will undoubtedly find it expedient to resell properties to smaller developers who will augment efforts in a neighborhood.

By the city taking an ownership position in the entity, citizen’s interests are aligned with the developer’s profit motive.  The developer may also operate an investment fund that could allow individuals to invest their own money into the entity and thus create an additional financial opportunity for Trentonians (I’d invest). 

There are a lot of details to work out in this plan, but the key idea to move fast and increase flexibility in order to attract middle and upper income residents.

4)      Establish a partial land based tax

Reinvent Trenton has written many times about the land tax.  It remains one of the most intriguing mechanisms for using our tax code to encourage rather than discourage investment.

Today we discourage investment with a progressive tax that taxes high value investment more than low value investment.  At the same time there are private speculators who own vacant land in Trenton and pay very low taxes. 

Vacant land brings down the value of neighboring property and thereby destroys value.

We can both encourage investment and discourage speculation by establishing a land tax.  The land tax would compromise only a portion of the property tax (say 25%) but in so doing would increase the tax on vacant land and provide a mechanism to lower the tax on property improvements. Most homeowners would not see a difference in their tax bill.

However, new development would tend to be high end (you’d be better off building your mansion in Trenton than Princeton) or dense (with a lower tax on improvements why not build a tall building).  Meanwhile, we’d increase our revenues by increasing the tax on vacant property.  Speculators would be forced to sell to someone who could actually develop the land.

5)      Create a Strategic City Budget

Trenton’s city budget and departmental operations are a collection of years of neglect and are hopelessly out of date as no top to bottom realignment has been done in recent history.  Now that we have to do more with less, we need a thoughtful approach towards aligning our operations with our civic priorities. 

The Fix Trenton’s Budget Committee has proposed a priority based budgeting approach and along with Beautiful Trenton and TCCA plan to assist the city in implementing it.  We’re only waiting for a willing partner in city hall to work with us.

6)      Dissolve the city or at least rush towards regionalization

I’ll call this the “Mickle Plan” in honor of The Trentonian editor who put it out there.  Why are cities in NJ knocking themselves out to run so many school districts, police departments and public works departments?   All of the municipal funding problems the state is wrestling with (including Abbott Districts) would vanish with strong county governments.  Counties would naturally include economically diverse populations that could take care of their own local affairs.  Let’s remember that with 21 counties and 8,700,000  NJ residents, no NJ county government would be larger than a mid-sized American city.  Our most populace county is Bergen and has fewer than 900,000 residents.

A natural first step towards dissolving our municipalities is aggressive regionalization.  There are State sponsored programs encouraging this and though it isn’t likely that collapsing any service into a county-wide operation will save more than 10% in cost, 10% IS a big number.  Furthermore, we’ll be able to attract a higher caliber of management to a large county department than we could to a smaller city operation.

Other than a county-wide school system, which no sane person should oppose, complete elimination of our cities is a last resort or a far off goal.

There’s nothing on this list that can’t be done.  Even the “Mickle Plan” is within reach.  We just need leaders who aren’t afraid.

Editors Note:  I’m told John McManimon first laid out the ”Dissolve Trenton” idea  in a Trentonian Op-Ed last spring.  So all credit to him.  It must be the echo from him, as I bought my current house from John.

Most budget-minded Trentonians bemoan the high proportion of tax-exempt property in Trenton due to our status as a state capital.  Not only do we house a large number of tax-exempt government buildings but we also house tax-exempt buildings owned by non-profits.  Non-profit organizations tend to cluster in state capitals and in urban areas.  We also know that Trenton’s heavy proportion of subsidized low income housing has added to our cost structure without a corresponding revenue benefit.  Trenton outpaces all other Mercer County towns in low income housing combined.  As a result, our population can’t afford to support the services we all want.

City leaders wonder how we can limit our exposure to uneconomic uses of our limited footprint.  It’s a problem; and the Fix Trenton’s Budget Committee will be exploring options on behalf of City Council and the Administration.

HOWEVER, one option sits right in front of us. 

Don’t allow anymore tax-exempt or low income development on city controlled property!

And yet the Administration and City Council are doing exactly that.

I noticed on that night’s docket, Ordinance # 10-60 authorizing the sale of city owned property to Trenton City Home Corporation, a non-profit. 

There are several questions City Council and the Administration should clear up for the public:

1)      Is Trenton City Home owned by the city as some have said?

2)      If Trenton City Home rehabs the homes, will they be owned by a non-profit?

3)      If the homes are sold as subsidized affordable housing, will they be restricted to low income?

4)      And most importantly, will the homes generate more in tax than they consume in services?

A previous ordinance (#10-50) went through 1^st reading on Oct. 5^th and authorized another sale to the same group.  The accompanying memo from Housing Director, Henrietta Owusu said the homes were to be converted into low income housing.  Typically, low income housing receives both subsidies and is restricted in who can buy them.  This is the opposite of market rate.

If the answer to question #1 is “Yes”, this ordinance is a non-starter as the city should not be in the home construction business.  It’s far too risky.

If the answer to question #2 is “Yes”, the ordinance is also a non-starter.  Trenton can’t afford to add to the amount property off of the tax rolls.  We can sanction only development of taxable property for the foreseeable future.

If the answer to #3 is “Yes”, we have to question the impact of this policy on Trenton’s past.  Income restricted property tends to stay low income and forces us to answer question #4.

Will these homes generate more in tax revenue than they consume in services?

Based on my analysis, low income housing costs more for Trenton taxpayers to support than it generates.

Given projections for the 2011 budget, US Census data on Trenton housing and some basic assumptions about the consumption of variable cost services (police, fire, courts, health and human services)  the following table paints a picture of the economics of Trenton’s residential housing.

This analysis includes both owner occupied and rental homes.  It does not include the full cost of education which, given the distribution of children between higher and lower income households, will likely accentuate the impact.

This analysis points to a clear fact but one common to all cities.  Low income housing is costly for cities.  In our case, we lose over $6000 per year for every unit of low income housing.  In cities with a more normal distribution of income than Trenton the impact is lessened.  However Trenton, has more “COAH-defined” low income housing than the rest of Mercer County combined; by more than double.    Trenton has, through either federal or state programs or simply by virtue of its lower property value, most of the affordable housing in the county. 

This is a major contributor to Trenton’s economic problem.

The current Administration and City Council can’t afford to continue the policies of the past.  Trentonians have to understand that we simply can’t afford it.  Our resources (police, fire, schools etc.) will simply be drained to the point of not being able to adequately serve the population.  Some may argue we are already past that point.

Trenton residents of all incomes are ready for a new way of doing things and for bringing new disposable income to Trenton.  Our leadership needs to have the discipline and focus to create programs to do this.

In my 11 years in Trenton, I’ve seen city, state and federal programs fund housing for the poor in Trenton.  I have never seen an aggressive program to attract housing development for new residents with high disposable income (the Top 10% referred to above).  I humbly suggest that our programs to market the city and dispose of city owned property be redirected to that purpose.  This is a foundational policy for fixing our economy.

We can start our road to recovery by saying “No” to Ordinance #10-60 and all similar ordinances.