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Jersey City To Sue Port Authority Over Unpaid Property Taxes

Mayor Says City Being Cheated Out Of Nearly $400 Million A Year
The PATH station at Journal Square in Jersey City - Dec. 4, 2012 (credit: Monica Miller / WCBS 880)

The PATH station at Journal Square in Jersey City (file/credit: Monica Miller / WCBS 880)

NEWARK, N.J. (CBSNewYork/AP) — Jersey City’s mayor plans to sue the Port Authority of New York and New Jersey for $400 million to compensate for what he claims the agency has underpaid in property taxes and other payments spanning several decades.

In a statement released Tuesday that was accompanied by a 26-page presentation featuring colored graphs and pie charts, Mayor Steven Fulop accused the Port Authority of using outdated or nonexistent agreements to avoid paying millions of dollars per year on properties it owns in the city. Fulop said he has attempted to speak or meet with Port Authority officials about his concerns but has been rebuffed.

“For years, in fact decades, the Port Authority has been derelict as a property owner in Jersey City,” Fulop wrote. “If this was any other property owner, legal action would have been taken much sooner. But because of the political influence of the Port Authority, Jersey City taxpayers have suffered. We intend to right this wrong.”

The Port Authority operates three major New York-area airports, toll bridges and tunnels into New York City, the PATH rail system and the ports of New York and New Jersey as well as the World Trade Center site, and annually reports revenues in the billions of dollars. Four of its PATH rail stations are in Jersey City, along with the recently opened PATH command center. Part of the ports complex also lies within the city limits.

Two years ago, the Port Authority implemented a series of toll hikes on its bridges and tunnels through 2015 that many criticized as too steep.

The Port Authority owns 32 plots of land in Jersey City, according to Fulop’s accounting. On eight of those properties, it pays the city about $2.2 million per year in payments in lieu of taxes, or PILOTS. Fulop claims the Port Authority has failed to execute PILOT agreements for the other 24 properties, which makes the agency liable to pay property taxes.

Fulop said if the Port Authority paid the taxes it should on its properties, the total would come to about $400 million.

“They feel like they don’t need to compensate their host communities with basically anything because they can just run over them, and it’s just wrong and we’re going to let the courts decide,” Fulop told WCBS 880’s Peter Haskell.

In another example, he cited the PATH Plaza at Journal Square, bought by the Port Authority in 1967. The city receives $87,000 per year in PILOT payments on a property that would now be taxed at $9.6 million per year, Fulop said. Though PILOT payments are based on the taxes on the property at the time of purchase, Fulop said a clause in the PILOT agreements prevents the property owner from hurting the host community.

“The law is clear: The intent was to avoid undue economic harm to host municipalities,” Fulop said in an interview Tuesday. “You can’t make the argument if you’re paying less than 1 percent of the value of that property while the costs for the city are escalating, that you’re not causing undue economic harm.”

A Port Authority spokesman said Tuesday the agency does not comment on pending litigation.

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