5 Thoughts on why Dixon Advisory was biggest winner from Fulop delaying Jersey City tax reval
Before I begin, I would like to offer my thoughts and prayers to the Bayonne Box, Kushner Companies and Snoop Dogg haters. Though Mayor Steven Fulop and others may have killed your dreams, Real Jersey City offers hope for a brighter future.
As for Dixon Advisory USA (Dixon), I’d like to give them an award – Biggest winner of the Fulop Administration’s Tax Policies (2013-2018).
To be clear, I’m not hating on Dixon. Though people might not recognize it, my work, including all the stuff about the corrupt cops and prosecutors on this website, is inherently motivated by my politics – which doesn’t include an anti-business agenda.
To be crystal clear, I’m more concerned with stopping the malicious prosecution of a female whistleblower than crony capitalism in Jersey City (especially in the Downtown housing market).
Furthermore, I’m not pretending to be an expert on economics or taxation in Jersey City. What I am confident enough to do is express my thoughts on the matter, based off a certain set of facts, and receive whatever feedback that comes with it.
Which brings me to this point – crony capitalism in Jersey City is the result of Hudson County politics, liberal zoning regulations and the rights of property owners being diminished (including by overzealous neighborhood associations).
Given the three previously mentioned factors, I can’t blame Dixon for playing the game. At the very same time, crony capitalism is bad and I’m trying to expand as an investigative journalist beyond law enforcement corruption. This piece is merely a start in that direction, below are my five thoughts:
1) Who is Dixon Advisory USA?
According to their website, Dixon Advisory USA is the U.S. division of Dixon Advisory & Superannuation Services Limited – one of Australia’s preeminent family and employee-owned financial advisory firms. They manage the US Masters Residential Property Fund (US Masters), a residential Real Estate Investment Trust (REIT), and their subsidiaries include Dixon Leasing (property management) and Dixon Projects (construction).
The US Masters was established in 2011 and is listed on the Australian Securities Exchange. The REIT is promoted as “the largest Australian-listed property trust” with a primary strategy of investing in freestanding and multi-tenant US residential property in the New York metropolitan area. Its focus is on achieving long-term returns through a combination of income from rental yields along with potential long-term capital growth.
Dixon claims to have invested over $200 million in Hudson County alone, with a high concentration of acquisitions in Downtown Jersey City. The REIT has total assets of approximately $900 million and is actively committed to expanding their portfolio, below is a break down of the fund’s property allocation:
Of interest, Dixon promotes US Masters as the only fund primarily focused on acquiring single–family residential properties.
2) Establishing a relationship between Dixon and Fulop.
It’s no secret to insiders that Dixon and Fulop enjoy a close relationship, or that Dixon is a generous political donor. According to NJ ELEC reports, Dixon, a U.S. subsidiary of a foreign financial firm, has donated at least $50,000 to over a dozen state-based Hudson County campaign accounts since 2013.
That’s peanuts compared to the $300,000 Dixon donated to a federal Super PAC, the so-called Coalition for Progress, associated with Fulop’s unrealized gubernatorial hopes. The PAC, which was accused of “laundering money” by a Washington D.C. watchdog group, was back in the news recently when Politico New Jersey reported that it was raising money for 2018 Democratic congressional candidates.
Furthermore, though he never endorsed a city council candidate for Jersey City’s Ward E, many political observers noted that Fulop seemed to prefer Rebecca Symes – who served as General Counsel to Dixon prior to her campaign – in the December 2017 runoff over eventual winner James Solomon.
3) Read his lips – No New Taxes!
The unfulfilled promise of “no new taxes” ultimately destroyed the reelection hopes of President George H.W. Bush, a lesson Fulop obviously studied.
As reported by The Jersey Journal’s Terrence McDonald on December 19, 2015, Dixon owned at least two dozen of 485 properties that Fulop attempted to cancel new assessments for that would’ve resulted in higher tax bills. The Hudson County Board of Taxation ultimately denied the appeal, of which five of the top six properties facing the largest tax hikes were owned by Dixon.
Adding perspective to the story, one tax expert told McDonald that “in all my years I’ve never experienced this.” The city would’ve lost $1.4 million in revenue had Fulop been successful, per the report.
Now I’m not saying McDonald’s article is a smoking gun, but with Dixon not providing him comment… My imagination suspects Hudson County politics may be at play.
If Dixon could get Fulop to pull a stunt like that for two dozen new tax bills, imagine what the value in holding off the Jersey City property tax revaluation for nearly 5 years was?
4) Low Taxes and Luxury Rents.
As previously mentioned, Dixon is focused on acquiring single–family residential properties… Then listing their Downtown rentals at exorbitant prices, even for the wealthiest of Jersey City residents.
Before I move forward, I must admit the rentals Dixon has marketed on the website Jersey Digs look like something out of a Hollywood movie.
On the higher end, a Palatial Single-Family Brownstone near Van Vorst Park goes for $10,820 (gross rent)/$8,995 (net effective rent with 2 months free on 16 month lease). On the lower end, a 19th Century Carriage House was marketed for $4,720 (gross rent)/$4,195 (net effective rent on 18 month lease with two months free).
Those are the prices needed to hit the rental yields Dixon is looking for. Additionally, the reval delay likely helped Dixon establish their luxury, if not boutique, Downtown rental market while property taxes remained artificially low (even billion dollar funds are concerned about saving money on taxes).
That said, it’s kind of crazy to think aspiring homeowners and entrepreneurs are competing with a nearly billion dollar REIT for 1-4 family homes in Jersey City. I suppose the cherry on top for Dixon’s strategy is that liberal zoning regulations, which focus on keeping housing density low, especially Downtown, should help their long-term capital growth goals as Jersey City continues to become more exclusive.
5) Jersey City – Where the Working Class subsidizes Foreign Investment.
I heard it loud and clear when Rev. Alonzo Perry Sr. engaged in a heated debate with Fulop over the tax reval delay. “In Jersey City, poor blacks subsidize rich whites,” wrote Star-Ledger columnist Tom Moran. The story then, as it had been until the state intervened, was that the poor, especially property owners in Greenville, suffered from high taxes as the rich failed to pay their fair share.
Although passions were stoked citywide, Fulop never flinched in his opposition to the tax reval. The mayor’s tax policies accelerated the boom in Downtown housing prices, which probably helped Dixon’s capital growth goals, yet long-time residents who didn’t sell are now dealing with shocking tax bills they probably can’t afford.
While most of the city has seen their tax bills decrease, it’s unknown how the reval worked out for Dixon – which owns property throughout Jersey City.
An educated guess? Around 45% of Dixon properties by value are in New Jersey, split between 26% which are “premium” and 19% which are “workforce.” Based off of that, I’m assuming their Jersey City investments are more premium (mostly Downtown) than workforce (not Downtown). If that assumption is true, it’s easy to imagine how Dixon’s new Downtown assessments could have resulted in significant tax increases that haven’t been fully offset by decreases on other properties.
Admittedly, that last paragraph is very speculative of me. Yet, when you think of all the money Dixon potentially saved on taxes since the day Fulop was inaugurated until the first post-reval bill was sent out, dubbing them the Biggest winner of the Fulop Administration’s Tax Policies (2013-2018) isn’t a big reach. If anyone can think of a big winner from the reval delay, or found error in my analysis, please comment below or contact me.
Either way, Fulop’s attempt to cancel new assessments in December 2015, mixed with the reval delay, certainly leaves room for imagination and speculation. Let’s just hope there wasn’t any shady dealings (Hudson County politics) between Fulop and Dixon that may have protected regressive taxation in Jersey City…