September 21, 2005

 

 Report Subject: Review of the Ventnor Northeast Redevelopment Plan

 In business I often find business proposals stretch the truth and even some times are filled with unbelievable promises. Hence I wanted to share with you my detailed analysis of the Ventnor Redevelopment plan. When under study and during the "justification" phase, the project was lauded due to its many goals to improve Ventnor and its surrounding area. Unfortunately as the plan is defined into an executable proposed solution, the plan does not meet any of the "key criteria" the public was told was absolutely needed; even worse, if executed as proposed by Pulte, Ventnor will suffer more damage than good. Anyhow, I present to you a "factual" review of the plan – I can back up all elements in great detail (Please call to discuss them). This is followed by open questions for the Commissioners and suggested changes for the NJ Legislature to enact to protect NJ citizens.

Part 1 - Background

Reviewing Ventnor’s Redevelopment adds insight into the flaws in NJ’s Eminent Domain system.

The NJ current process allowed Ventnor to declare this zone as being in "need of redevelopment" based on some very loose criteria; thus that definition and proof of need must be the initial focus. The targeted homes in Ventnor continue to increase in sales value (+25%/year) certainly not expected in a distressed area. Unfortunately, the NJ process treats value growth that is slightly less than adjoining areas (Ventnor proper +55% or more) to be equal and the same as abandoned housing as found in Camden! NJ has extremely liberal requirements that should two out of an allowable 8 criteria be met, an area may be declared "an area in need of redevelopment". Those vague requirements would allow Longport or Moorestown to be redevelopment candidates. Criteria often mis-used are an area having no air, wind or light, or an area with too dense a population or ground coverage. Where NJ’s process totally fails its citizens it there is NO or ZERO oversight to assure the public promised goals are met!

Part 2 – Plan Review

While Ventnor’s original studies had noble goals, they were based on the bad justification process discussed above and original justification goals are not close to being met! Ventnor followed the current NJ law to "justify" need for Redevelopment; however, after justification nobody is monitoring "bait and switch" tactics, where most original goals go unmet and are violated. Here is a mini-score card of the Ventnor Northeast Ventnor Redevelopment Plan (visit Ventnor City Hall for your own copy of the document):

Plan Justification Goals Facts of Proposed Plan

1) "To reduce the overall density of the area… 375 Condo’s replace 330 dwelling units;

Of concern is ...density of 35 dwelling yielding a density increase to 40 dwelling

units per acre" units per acre, a 21% increase NO reduction.

2) "To reduce the amount of Building Cover The Plan creates much higher lot coverage

and impervious cover" including even putting 11 townhouses on six currently empty lots; coverage is 100%

versus the current zoning of 60%

3) "To Increase the overall amount of air, light The plan will increase building height

and open space in both residential and from the current 35 feet to 40 to 55 feet

commercial areas" and removes current open space between

4) "To Increase the amount of air and light by housing (side-yard setbacks); while

regulating building height and by devising attractive in design, the result will be a multi-

creative design standards " block 55 foot wall mid-rise housing blocking

neighboring houses from the Sun and the added height creates a wind tunnel effect.

5) "To create housing for Senior Citizens" Totally dropped was this at Pulte’s request?

Can Seniors afford $350,000 range Condo’s?

 Other plan goals that seem to be forgotten or are missing from the proposal:

originally constructed as single-family structures".

The Redevelopment Plan errs in that is does nothing to reduce Ventnor’s density. The plan actually adds more dwelling units (375 replace 330), plus it displaces some 40 Hispanic families elsewhere in Ventnor. That sounds like an overall increase of approximately 100 families. We should not have a blind desire to effect a redevelopment at any cost. One cost that should not be accepted … is their dropping or ignoring the original goals.

The area needs change but why not follow the Margate model - In Margate Ventnor Avenue shopping and Washington Avenue Area housing were totally revised by private parties with NO use of Eminent Domain! The Ventnor Leaders seem to have erred as they simply followed a flawed legal process allowed by the NJ Legislature coupled with a blind desire to effect a redevelopment at any cost. The area needed help, however it may not need a community lobotomy.

Redevelopment zones create legalized "spot zoning". As the Ventnor plan documents, current owners are saddled with restrictive use zoning, yet Developers assume full relief from most current zoning regulations. Not one planned Condo or Townhouse meets current zoning! In addition, Ventnor is considering providing favorable financial arrangements for the Developer. Under NJSA 52:27D-459, Ventnor can provide several financial incentives to assist a developer, these include both Redevelopment Financing Tools and Payments in Lieu of Taxes (*). The first allows Developers support via the lower interest rates available through Municipal bonding, the second allows a Developer to use payments in lieu of taxes to fund their Development loans.

the land and/or redevelopment, it causes the remainder of the Municipality to actually fund all property based taxation without the assistance of any Redevelopment Ratables until such payment plan is completed. Thus, new ratables provide NO relief on Tax Rates until they the project completes its own funding and begins to actually pay property taxes! The document "Realtor Tax Increment Financing" found at http://assist.neded.org/TIFreport.pdf shows on page 9 that it typically takes a 25 year time frame before new assessed values become part of the paying tax base. Thus, Redevelopment would have NO or at best minimum impact on Ventnor’s tax rate until 2030!

Current owners should be granted an opportunity to sell or rehabilitate their existing structures under the best zoning ever offered to a Developer. If the special financing shown above is needed fro Developers, why is not needed by existing homeowners to incent them to improve their properties? Has Ventnor tried offering similar financial arrangements to owners who improve properties as they plan to offer an out of town Developer? While owners may not want to invest $100,000 today, given equal zoning freedom and the same financial support…they certainly might.

Even if an area is shown to justify redevelopment there must be oversight so a City does not substantially change critical goals after approval (as found in the Ventnor project) unless done by referendum and voter approval.

 Remember here is what is really happening under the current Redevelopment proposal:

Density NOT Reduced BUT INCREASED – 21% or More

Building Cover NOT Reduced INCREASED many to 100% coverage

Air, Light, Open Space Increased  LOST six (6) empty lots become houses

Regulate Building Height INCREASED 57% now 35 feet – soon 40 to 55 ft.

Create Senior Housing – Dropped for Pulte

Part 3 - Questions for the Commissioners:

  1. Show the Commissioners the five goals and the related FACTS associated with each goal – then ask him whether any of this is in error? I’d want him to be specific in what and why he feels the points are in error if he says so.
  2. Based on the failure of the proposed plan to fix or improve the five key goals used to justify the need for Redevelopment – how can the city consider use of Eminent Domain?
  3. When the public sees that the Pulte/Superior plan fails the key five goals used to justify the Redevelopment, rumors grow that the Commissioners are getting something on the side or for their next election from continuing such a path – to close this down, will the Ventnor Commission pass "Play to Pay" legislation to clear the air?
  4. Why did private development work to revise Margate but Ventnor must throw long term citizens out via use of Eminent Domain – is the Margate Administration more favorable to private development?
  5. Will the City offer to existing homeowners the same zoning changes and freedom required to implement the proposed Pulte plan? To be specific, will Ventnor allow existing houses to be converted into five story condo buildings using 100% lot coverage and built to 55 feet high as long as one parking space per Condo unit is included?
  6. The Ventnor Redevelopment Agency has mentioned using financing options under NJSA 52:27D-459, if such approaches are to be utilized, will Ventnor submit such actions to voter referendum as part of the actual utilization process? If not why not?
  7. If such financing options under NJSA 52:27D-459 are used –
    1. When specifically will the ratables from "Redevelopment" actually be used in calculating the Ventnor Tax Rate? Ten years, 25 years or More?
    2. There will be a time period when the current properties will be taken off Ventnor’s ratable base – who will pay Ventnor that missing tax money in its budget?
    3. What tax increase will an average existing homeowner experience under item B?
  8. Will the city offer existing homeowners similar financial incentives as available under NJSA 52:27D-459 as is will to the developer?
    1. If done in concert with similar zoning freedoms, would this not provide homeowners an equal opportunity to fund and select improvements without losing their property?
    2. If Not Why Not? Do the Commissioners not want to place all parties on an equal playing field? Why do they want to give a favored position to the Developers?
  9. If the City insists on following the Plan that violates its own goals and it leads to Eminent Domain taking of properties – will the city agree that the compensation paid to existing owners be based on "Best Use" value under any proposed or required zoning changes? If not, does he feel it is fair to "give" the large increase in land value only to the developer when the City is recognizing such new land values as part of its plan?

 Part 4 – NJ Legislative Change Suggestions:

The fairest approach would be for the NJ Legislature to follow the actions of some 26 other states in rolling back or totally removing localities abilities to utilize Eminent Domain where properties are taken from one person and given or sold to another person or development firm for private development! Pragmatically and fully understanding the size of the money developers bring to bare on financing political campaigns, I see little reason for our Legislatures to actually do the right thing by outright removing such utilization of Eminent Domain.

Therefore, maybe an approach pleading Legislatures to bring or create a modicum of fairness is to any usage of Eminent Domain might be the better alternative path. Hence I suggest the following actions or items be included in changes to NJ’s current process for enacting Eminent Domain:

  1. Redefine the justification of Redevelopment projects areas to require such areas have 5 years of continued reduction in market value that is 50% worse than surrounding areas over the same period;
  2. Once an area has legally met a justification for redevelopment, the justification or project goals can not be "substantially" changed unless done by referendum.
  3. Where Eminent Domain is used, either the Developer must be restricted in use to the zoning at the time of its taking or the City must provide to the existing property owners the ability to redevelop their properties using the proposed or "to be revised" zoning regulations.
  4. Fair compensation must be based on the "best use" of the property under proposed

    5. zoning rather than current zoning, why give a Developer direct financial gain due to

    changed zoning usage, why not provide the benefit to the current owner?

  5. Rescind NJSA: 12A-28 wherein it states that "No ordinance, amendment, or revision of an

ordinance, or resolution under this act shall be submitted to or adopted by initiative or referendum, notwithstanding any other law to the contrary." Allow true public input!

Please note the above analysis is a work in progress and can be modified as new and better ideas are found. It is meant to show the failure of the current Ventnor plan to "met the Redevelopment goals used to justify massive Redevelopment" and more importantly to use Ventnor’s project to highlight necessary changes for the NJ laws covering Redevelopment !

Please contact me should you have any questions or issues.