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By William T. Wade
The administration of Bret
Schundler has definitely been a breath
of fresh air to Jersey City, formulating
policies that have renewed hopes of
small businesses for tax relief, of a
revitalization of the housing market
and of a revamping of the city's failed
school system.
Often likened to the white
knight who has come to the rescue of
the maiden trapped in the tower, the
Harvard-educated Schundler is also a
realist who knows he has a
formidable battle on his hands.
Just to remind himself of
this fact, he often goes to an office
adjoining his at City Hall, and takes a
look at a small closet-like room.
There are two massive wall safes in
the room, both used by the late FranK Hague,
who ran Jersey City with an iron fist
for four decades.
"Hague did so many shady
things that he needed two safes, I
guess," said Schundler, smiling
broadly. He added, "I don't think he
kept the money there; the important
thing was the pieces of paper with
the names and the deals on them.
Money he could always get by raising
taxes."
This is the battle that
Mayor Schundler knows he faces --
years of city patronage that has
added layer upon layer of unneeded
workers on the payroll along with
work rules that stifle growth and good
governmental practices.
"Jersey city can be great
again, but it is also still living in the
politics of yesterday; you know the
scenario, give my cousin a city job
because he got the vote out for you,
that kind of thing," said Schundler in a
recent interview in his second-floor
office at city hall.
Schundler intends to
change the old patronage system, but
meanwhile, he says, he is saddled
with a city payroll that has many jobs
that should be eliminated.
He has already trimmed
the 840-member police department
by 50 officers since he took office in May, and plans to
eliminate 250 more through
retirement and attrition in the
coming months.
Schundler is not
against more police protection
in the city because he calls
crime the No. 1 problem his
administration faces.
"But numbers do not
make for better protection," he
said. "It is how you utilize your
police officers, and we are not utilizing them properly."
Schundler said that
putting more cops on the beats is
the main answer to reducing crime.
"When the cop gets to know the
neighborhood people, then he or
she can better serve those people,"
he said. "There is no great mystery
in that. Neighborhood policy
patrols on foot work. You cannot
see as much or be as close to the
people, if you are driving by in a patrol
car."
The Republican mayor
admits that he faces a fight with the police department's PBA over
some of the changes that he is
planning.
"The union will be
challenging everything that I attempt,
because they are part of the
entrenched bureaucracy which had
done things its way for decades," he
said. "They don't want change and will
attempt to exert political pressure on
my administration through a variety,
of means
One tactic of the police
union, he said, has been to go to the
state legislators who represent Jersey
City and lobby for laws to enhance
their job situations by making it
impossible to remove or transfer
officers with seniority.
"In effect, the state
legislators are telling me and other
mayors, incidentally, how to best run their cities," he said." It just
doesn't make any sense to try to
take away the power of the local
officials who are mandated with
protecting the citizens by tying
their hands."
"Under the environment
today, everyone has to be mean
and lean, and that especially means
city governments," he said, "but it
won't happen overnight."
But Bret Schundler is an
impatient man, and his
administration is striking out in
many directions, whether some of
the old-timers like it or not.
For instance, Schundler
has turned city tax liens into
securities that have been sold to
pension funds and other
investment pools.
As a result, Jersey City
has collected $25 million in cash
by the end of June and is expected
to pick up another $19 million
through 1998.
"We took assets that
were not doing anything," Schundler
said, "and realized
the value of the
assets in providing
tax relief for our citizens.
Everyone gains."
Tax liens are usually auctioned off,
but Schundler,
using his expertise
as a former investment banker for Salomon Brothers in New York, contacted First Boston Corp.
First Boston bundled about $45 million in the city's
tax liens and turned them into
bonds to be rated and sold to
investors.
Underwriters have traditionally bundled other forms of debt,
such as mortgages, auto loans and
credit card receivables and sold them
in a process that is called
securitization.
"If we could bundle
mortgages and other instruments, I
asked myself, why not tax liens?"
Schundler said. His Wall street
connections helped smooth the deal,
and Jersey City's securitization of tax
liens is the first time a city has used
such a procedure in the state.
Other cities, including New
York and Chicago, have contacted
Schundler to find out about the tax
lien program.
State officials confirmed
that other cities have been contacting
them for information on the
securitization of tax liens.
"Sometimes the best ideas
are the simple ones," Schundler said,
"and the tax lien program proves
that. Here we
were with useless paper that
said we were
owed taxes;
nobody was
benefiting from
the liens." The advantage to Jersey City, he said is that
"we make
money on a
stack of uncollected bills." Schundler said it would have taken
years to liquidate the inventory of
tax liens.
The affect of the sale on
the city's tax rate was immediate.
When Schundler took
office, the acting mayor had
prepared a budget calling for a
$5.27 increase in property taxes,
which would have raised the tax
rate to $44.25 per $1,000 of
assessed valuation. This was
because "no one was enforcing the
collection of taxes, so people just
stopped paying," said the mayor.
In addition, Schundler
said, the tax collection rate in
Jersey City had fallen to 78 per
cent, just three points above the
rate that would trigger a state
takeover of municipal finances.
"The city would have
been taken over for sure, unless we
acted," he said. By plugging $10
million from the securitization
into the budget, Jersey City was
able to cut the property tax rate to
$36.38, the mayor pointed out.
"So everyone gained by
this program, which uses good
common business sense to solve
the problem," he said. The tax lien
bonds which received an A rating,
cover 2,500 properties --
39 per cent residential, 18 per cent apartments, 34 per cent
commercial and 8 percent vacant land.
"Every city should be
looking at the tax liens program as an
efficient way of bringing
20th centur
technology to
solve an old
problem that was
getting worse an,
worse,"
Schundler said.
Another problem that the mayor
addressed in his
interview with the
New Jersey Times
was the need to
upgrade the city's
school system thorough the voucher
system to parents who send their
children to private schools.
"We simply must allow
people the choice to attend private and parochial schools if they
wish to," he said. "This will also
benefit the city's schools because
there will be lessening of
overcrowding and less of a strain
on the system."
Mayor Schundler, a tall
dark-haired man with a ready
smile, was optimistic about the
future of his city.
"We are moving forward, and, while there will be
many detours, I believe Jersey City will be the state's leader in many areas in this decade. We have great housing stock, a terrific atmosphere for businesses
to thrive and a superior transportation system. And just think
of that great view of the
Manhattan skyline."
The figures bear
the mayor out.
Jersey City's
population, after
decades of decline,
began to stabilize
in the early 1980s
and posted a gain --
2.2 per cent -- by
the end of the
decade. In 1990,
the city's
population stood
at 228,437.
Based on current demographic trends, Schundler
sees Jersey City becoming the
state's most populous city in the
late 1990s because Newark
continues to lose residents,
dropping over 54,000 during the
1980s.
No matter how big Jersey
City becomes, Mayor Schundler
will keep his two feet firmly on
the ground. All he, has to do is
think of the two safes that are in
the office next door to remind
himself to be vigilant in keeping
the ghosts of the past from ever
returning to Jersey City.
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