Judge lets Jersey City's $400M suit against Port Authority over property payments proceed

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NEWARK, New Jersey — A $400 million lawsuit against the Port Authority of New York and New Jersey over property taxes in Jersey City can proceed, a federal judge ruled Wednesday.

U.S. District Judge Susan Wigenton denied the Port Authority's motion to dismiss the lawsuit, though she dismissed two counts in the nine-count complaint and ruled that they can be re-filed.

Jersey City Mayor Steven Fulop sued the Port Authority last May for what he claimed were unpaid taxes, penalties and fees for dozens of Port Authority-owned properties in the city. At the time, Fulop estimated taxes, payments in lieu of taxes and other payments would historically yield about $315 million in additional tax revenue and about $18 million per year.

In addition to operating the region's major airports, bridges and tunnels and the World Trade Center site, the Port Authority owns four PATH rail stations in Jersey City, a PATH command center, parts of the port complex and other properties.

One of those properties, the Journal Square rail complex, would generate about $9 million annually if it was on the tax rolls, but under an existing Port Authority contract yields about $87,000, according to Richard Rudin, an attorney representing the city. Rudin argued the changing nature of the property over the years should warrant a larger payment, citing legislation that requires the payments to be "fair and reasonable."

Craig Domalewski, an attorney representing the Port Authority, countered that the same legislation exempts the Port Authority from taxes since the property is deemed to be for a public use, and holds that the Port Authority can — but is not required to — enter into an agreement to make payments in lieu of taxes, or PILOTs.

Wigenton dismissed one count that sought to prevent the Port Authority from capping PILOT payments in Jersey City because it treats other municipalities differently on the same issue. She also dismissed a count that sought to force the Port Authority to sell properties it had acquired, "many of which are vacant and unused and have been so for years" and aren't subject to taxation, according to the lawsuit.

For example, Rudin claimed Wednesday that the Port Authority owns 12 million square feet of space in the port complex in Jersey City that it doesn't use and doesn't pay taxes on.

"Acquiring property for future use and taking it off the tax rolls is not sufficient and doesn't comply with their statutory authority," Rudin said.

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