The possible awarding of tax abatements by Gloucester Township to the proposed Gloucester Premium Outlets would be nothing new in southern New Jersey.  The 2010 report by New Jersey State Comptroller, Matthew Boxer, A Programmatic Examination of Municipal Tax Abatements,* makes clear that while many northern New Jersey municipalities use abatements to build market-rate housing to attract middle-income and high-income residents, southern New Jersey municipalities are more inclined to grant abatements for retail establishments to increase employment opportunities in those communities.

While retail establishments do increase employment opportunities, they have several drawbacks. Retail employment, in general, tends to be part-time jobs that pay less and offer fewer benefits and marketable skills than manufacturing, technology, health care, or similar professional jobs.

The report elaborates, “Such low-paying retail jobs oftentimes do not relieve many of the public costs associated with low employment, as those who are employed often remain reliant on government services. While retail establishments create commercial ratables, they often are less stable than industrial or other large commercial entities because the barriers for retail entities to exit the market are usually lower. Further, when large, national-chain retail establishments are lured through use of abatements, the result in some instances is mere displacement of smaller retail establishments and the accompanying jobs tax base. Therefore, while attracting retailers may provide a temporary opportunity to create jobs, those jobs frequently are not sufficient to develop and enhance a sustainable economic base in a community.”

In the report, 20 state municipalities were classified as having had granted many or high-value abatements for rehabilitation and redevelopment. Seven were in southern New Jersey: Atlantic City, Bridgeton, Camden, Collingswood, Gloucester Township, Millville, and Vineland. Of those seven, Gloucester Township was one of two that were more closely looked at.

The Comptroller’s report calls Gloucester Township’s use of abatements an example of “indiscriminate retail emphasis” and states that:

“In a span of six months from mid-2007 to early 2008, the township granted three separate short-term abatements to induce three Wawa stores to expand to become ‘Super Wawa’s.’ Each of these establishments was within two to four miles of the other. In fact, a search on Wawa’s website lists 22 Wawa locations within five miles of the area. The area thus does not seem to lack this type of establishment, bringing into question the need for the tax incentive to induce the business development.”

It must be noted that short-term abatements have specific criteria stipulated in a general municipal ordinance that must be met for a tax abatement to be awarded. This ordinance includes the eligibility requirements, procedures for approval, and any additional requirements imposed by the local governing body. If the applicant is compliant with all of the criteria in the ordinance, then, by New Jersey state law, applicants  “shall” be approved.

The preparers of the State report “asked a [Gloucester] township tax official about the impetus for the abatements, [and] he noted that all pre-established municipal abatement criteria had been satisfied in these instances and so the township was legally obligated to grant the applications.”

What is particularly disturbing is what the next two sentences of the report say: “The official further noted his personal view that national chains do not need these incentives. Nonetheless, the tax break was granted, in accordance with the law.”

So, we residents of the Township of Gloucester have three known five-year “short-term” abatements that have been granted since 2007, and we are looking at a possible 25-year “long-term” abatement to be granted to the new Gloucester Premium Outlets. I think it is incumbent on us to ask and receive answers to the following questions: 

1. How many municipally approved “short-term” and “long-term” abatements are currently active in the township?
2. Which businesses are currently afforded these abatements?
3. What is the yearly total dollar value of the taxes that are being abated, and how much, specifically, are the township schools not receiving because of these abatements?
4. What are the details of the township’s municipal ordinance governing tax abatements? We need to know in detail: the eligibility requirements, the procedures for approval, and all of the additional requirements that our township officials have put in place.

Only after we receive the answers to these questions can we determine if abatements are economically effective and truly beneficial to everyone in Gloucester Township.

* The full report can be viewed, and a PDF downloaded, at the official web site for the State of New Jersey athttp://www.state.nj.us/comptroller/news/docs/tax_abatement_report.pdf.

Next time: Millville and Tax Abatements – Doing It Right