From the Record:
City documents say a surge in foreclosures has cost Paterson’s municipal government about $12 million in tax payments over the past three years, part of an erosion of the tax base that officials warn could take decades to overcome.
The number of foreclosures in Paterson jumped from 75 in 2011, to 207 in 2012 and to 413 in 2013, the documents say. In addition to the $12 million in taxes lost to those foreclosures, Paterson last year also had to refund $9 million for tax refunds, the documents say.
That bleak scenario was outlined in the city’s 2015 application seeking Transition Aid from the State of New Jersey. The application says the foreclosures have resulted in an increase in the number of vacant properties in Paterson.
“Hence many neighborhoods throughout the city are experiencing vacant properties that bring more crime and deepen the urban blight syndrome,” reads Paterson’s Transition Aid application.
“What this means in the long-term is that the city will find it harder, even impossible, to recover its tax asset base,” says the application. “Once this happens, the recovery is slow at best and can take decades. We need to arrest this problem before it strangles the city.”
If Paterson received the full $27 million being requested, that would allow the city to avoid a municipal property tax increase for the current fiscal year. At present, the city’s preliminary 2015 budget would produce a 5.2 percent tax increase. But officials insist that number will be reduced no matter what.
Torres said he expected the ongoing property revaluation will help mitigate the foreclosure problem. Moreover, he said his neighborhood stabilization program – a plan under which the city would take control of abandoned properties and bundle them in deals with developers – would revive some struggling parts of the city.
Morris said the foreclosures were a symptom of bigger economic problems confronting Paterson. “I don’t think we’ll see an end to the foreclosure problem until we see an end to the unemployment problem,” Morris said.
Paterson has endured a steady succession of municipal tax increases, including a whopping 29-percent hike in 2011. Morris said the increase contributed to the rise in foreclosures, but he said “the banking industry played a bigger role.”