Proposed Incentive For Gloucester Dave & Buster's Sparks Debate

GLOUCESTER TOWNSHIP, NJ — As businesses struggle financially amid the coronavirus pandemic, the debate about tax incentives flared up once more at a recent Gloucester Township Council meeting.

“The township is hurting for revenue,” resident Ray Polidoro said at the Nov. 23 meeting. “If you give someone a five-year abatement, we’re not getting revenue for our schools and fire department during that time.”

Officials argued that the abatements help attract business to the township, increasing ratables and taking some of the burden off residents who are struggling, particularly during the pandemic.

A tax abatement is a temporary reduction or elimination of property taxes. Municipalities use them to entice developers into their town, offering a complete elimination of taxes in the first year and slowly building so that the owner of the property is eventually paying full property taxes due.

Councilman Dan Hutchison said abatements can help new businesses. Giving them a tax break makes it easier for them to make money, and to ultimately survive in the township.

But resident Pete Heinbaugh argued that making it easier to open a business and lowering taxes would do more for a new business than a tax abatement.

He also called the abatements a “statewide giveaway,” and didn’t see how it would attract business to the township when every municipality in New Jersey offers tax incentives.

“If we don’t offer it, we’re at a disadvantage,” Councilman Dan Hutchison said. “If we don’t offer them, developers go somewhere else.”

And once you offer them, the offer has to be open to everyone, whether it is a small business just starting out or a well-known entity looking to expand into your area.

“Developers look to see what communities offer,” Township Solicitor David Carlamere said. “If they qualify for an abatement, we have to honor that. Once it’s on the books, you can’t discriminate against someone.”

Heinbaugh argued that Gloucester Township’s amenities, including access to major highways, work to its advantage, and that’s why the township doesn’t need an abatement.

This particular discussion began as council gave final approval to one business seeking an abatement, and introduced another.

Council unanimously approved a proposed ordinance on second reading to grant a five-year tax abatement for a building owned by Chews Landing LLC in an office complex at 1365 Chews Landing-Clementon Road.

The building is the last of eight projects that was started about 10 years ago, according to Gloucester Township Council President Orlando Mercado.

The five-year abatement would be on the improvements only, and not the land. Chews Landing would pay nothing the first year, followed by 30 percent of their taxes the second year; 50 percent the third; 70 percent the fourth; and 90 percent the fifth year. After the fifth year, they would pay the full amount in taxes on both the improvements and the land.

Council also unanimously approved a proposed ordinance on introduction to grant a five-year tax abatement to Dave & Buster’s for its new location at the Gloucester Premium Outlets, which is set to open Dec. 7. The public hearing on this proposal will take place at the Dec. 14 meeting.

The tax abatement program in New Jersey began in the early 1980s, and Gloucester Township was among the first municipalities to take advantage of it. Initially, abatements could be offered in blighted areas or areas in need of redevelopment.

In the early 1990s, the state deemed the term blighted to be too vague. The law was changed so that towns that wanted to offer tax abatements had to do so township-wide, making the entirety of Gloucester Township technically an area in need of redevelopment.

Resident Sam Sweet previously asked if the township could revise the entire township being designated as a rehabilitation zone, and he raised the issue again during this meeting. Read more here: Vote On Gloucester Twp. Development Sparks Tax Incentive Debate

“The Premium Outlets is a prime area, and we don’t need a tax abatement there,” Sweet said. “If we put Dave & Buster’s on Blackwood-Clementon Road, it would help build that area up. We want to attract businesses to parts of the area the township deems as in need.”

Sweet said other towns do it that way, and can provide a list of them. Mercado asked for a copy of the list and said council would consider putting it for a future agenda, but couldn’t guarantee that it would be on a future agenda.

According to the state comptroller, Gloucester Township is one of three municipalities in Camden County that make "significant use of development abatements." The other two are Collingswood and Camden. In South Jersey, Atlantic City, Bridgeton, Harrison Township, Millville and Vineland also make significant use of the abatement program.

In his 2010 report, Matthew Boxer pointed to an example out of Gloucester Township in which the township granted three short-term abatements to entice three Wawas to expand to become “Super Wawas” over a six-month span from 2007-08 as a problem with the state’s use of tax incentives.

“Each of these establishments was within two to four miles of each other,” Boxer wrote in his report. “In fact, a search of 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. When we asked a township tax official about the impetus for the abatements, 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. The official further noted his personal view that the abatements were not necessary, and that national chains do not need these incentives. Nonetheless, the tax break was granted, in accordance with law.”