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MHD
Citizen
Username: Mayhewdrive
Post Number: 3898
Registered: 5-2001
| | Posted on Tuesday, April 18, 2006 - 9:09 am: | 
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Interesting article on PILOTs in today's Star Ledger:
http://www.nj.com/news/ledger/jersey/index.ssf?/base/news-3/1145335581280300.xml &coll=1
I thought some of the most notable comments were:
As a carrot to urban pioneers willing to brave uncertain school systems or polluted old redevelopment sites, lawmakers created a system of tax abatements known by the acronym PILOTs -- for Payment in Lieu of Taxes.
Towns have great latitude in negotiating these agreements. In the case of Jacob's Ferry, developer K. Hovnanian Homes agreed to fund several public works projects in town, including renovating a firehouse and building soccer fields. In exchange, it was able to offer buyers a 30-year tax break.
Why do developers in other towns agree to help the town in exchange for a PILOT, but in South Orange, our brilliant negotiators give it all away for free?
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Sean Flood
Citizen
Username: Campus_sub_shop
Post Number: 147
Registered: 6-2005
| | Posted on Tuesday, April 18, 2006 - 10:07 am: |
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MHD, I am not sure of this but perhaps most of the local businesses in search of a PILOT are small beans compared to KHov? Until recent, most of the developement was a building here or there. You bring up a good point though, maybe Millenium is willing to give something back -if -in fact, they are the chosen developer. |
JoRo
Citizen
Username: Autojoe51
Post Number: 100
Registered: 10-2005
| | Posted on Tuesday, April 18, 2006 - 10:39 am: |
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Interesting point, MHD. But why are PILOTS needed at all in an affluent village situated 30 minutes from New York City? What about making the case for development (with full tax benefits for South Orange) based on the strengths of the community, rather than "weaknesses"? Incentives, if used it all, should be undertaken with immense care. We need to avoid long-term shortfalls and pennywise-pound foolish decisions. |
susan1014
Supporter
Username: Susan1014
Post Number: 1507
Registered: 3-2002
| | Posted on Tuesday, April 18, 2006 - 10:56 am: |
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No more PILOTS for residential development period. To me that is the only sane answer. PILOTS for limited and specific commerical goals, but not on the condos above those goals.
This is an attractive residential destination, and we don't need incentives to build more housing here. |
SOrising
Citizen
Username: Sorising
Post Number: 302
Registered: 2-2006
| | Posted on Tuesday, April 18, 2006 - 11:01 am: |
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I agree with JoRo and susan1014. People who grant PILOTS right and left have no sense of the town's real worth. And that is why they should not be the ones making these decisions. |
dgm
Citizen
Username: Dgm
Post Number: 295
Registered: 5-2001
| | Posted on Tuesday, April 18, 2006 - 11:19 am: |
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I agree,period. |
SO1969
Citizen
Username: Bklyn1969
Post Number: 281
Registered: 7-2004
| | Posted on Tuesday, April 18, 2006 - 1:32 pm: |
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Unfortunately Calabrese has no notion of what you speak.
He said, and I paraphrase loosely, "We have to use PILOTs to encourage development. THAT IS THE FIRST THING THE DEVELOPERS ASK ABOUT or was it, THAT IS THE FIRST THING MILLENIUM ASKED ABOUT."
This, unfortunately, is the mentality we're dealing with. No notion of what other communities are doing, no notion of any analytics or logic one might/ should use to help determine whether a PILOT should be used and if so, to what level. Just limited personal experience.
Of course developers want a PILOT...you've been giving them away like candy, so of course they expect them.
I don't know enough to know for sure that no PILOTs for residential is the right policy - but it sounds right. The "transit village" development area is SO's one shot at doing something long-term to reduce the SF home owners' tax burden. Let's investigate and see if PILOTs are needed in this area for residential developments. My gut is with the other posts, they're not needed in SO at this point for this type of development. There are several successful MFH communities.
Let's look back at the PILOTs we've awarded and how they've worked out. The community by the train station parking lot has a very small PILOT as I recall - I'm talking about the one with parking on the ground level. It was recently converted to condos. Questions: How much did the Developer make all in - development and conversion? What was their ROI? We already made that give away, the purpose of this exercise is to inform our decisions on PILOTs going forward AND to use data to educate developers, if needed, that the market here requires no subsidy. |
Bob K
Supporter
Username: Bobk
Post Number: 11243
Registered: 5-2001
| | Posted on Tuesday, April 18, 2006 - 1:51 pm: |
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So, I asked previously and was told there were no PILOTs for the two apartment developments on Church Street.
If the VB goes through with PILOTing condos I imagine there will be a major bruhaw when people living in similarly valued houses find the buyers of the condos are getting a substantial tax break. |
mrosner
Citizen
Username: Mrosner
Post Number: 2741
Registered: 4-2002
| | Posted on Tuesday, April 18, 2006 - 2:06 pm: |
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The apartments on church street do not have a PILOT.
The Gaslight commons on third streed was given a PILOT. I do not remember the actual ROI but it was close to 10% (and the return was less than what was promised the investors).
Although I think I have made it clear that a PILOT should only be used to attract a developer or a development when it is something we want, they are not exclusive to S. Orange. Livingston and Montclair have both used a PILOT agreement (and both have major residential elements to the projects).
Other towns have used other methods (reduced property price, variances for a larger project, or a combination).
As long as the state and the county allow PILOT's, they will be something that has to be discussed on every project. In my mind, Beifus was a perfect example of a property where one was not needed. On the other hand, the supermarket site was a classic example where one was needed.
No question, this will come up on valley street no matter whom the developer might be. Based on the initial presentation from Millennium, I can not see why they would need a PILOT (since the project is enormous and was designed without input from the village).
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MHD
Citizen
Username: Mayhewdrive
Post Number: 3905
Registered: 5-2001
| | Posted on Tuesday, April 18, 2006 - 2:13 pm: |
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Again, the main point is why do developers in other towns agree to help the town in exchange for a PILOT, but in South Orange, our brilliant negotiators give it all away for free?
There is NO REASON that Gaslight Commons should not have been required to improve the park that surrounds the property.
There is NO REASON that Beifus should not be required to improve the pool that his adjacent to his property.
South Orange appears desperate and weak through poor negotiators and gets taken advantage of every time.
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Spitz
Supporter
Username: Doublea
Post Number: 1694
Registered: 3-2003
| | Posted on Tuesday, April 18, 2006 - 2:44 pm: |
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Gaslight Commons should have been required to contibute to the upgrade of Waterlands Park, at the bare minimum. As I recall, the Village (i.e., the taxpayers) spent approximately $250,000 to improve the playing fields the year Gaslight Commons was completed. In addition, the original developer of Gaslight Commons, LCOR, sold the development within two years of completion at a profit. There was no provision in the PILOT agreement for the Village to increase the PILOT revenues to reflect the higher price.
Instead of asking Beifus to contribute something to the Village, he was granted a parking variance with the explanation that any overflow could be accomaodated in the parking deck to be built at the NJTransit lot, without any contribution from Beifus. Additionally, the Village agreed to pay Beifus $100,000 to compensate him for the costs he incurred in making curb cuts and other costs which were entirely attributable to him.
With New Market, instead of at least requiring the developer to pay for reaquiring the easements into the entrance off Vose, the Village is incurring the costs plus the costs involved with any landscaping of the entrance way off of Vose.
So, the bottom line is that, unlike other municipalities that may grant pilots, but at least get something additional in return, SO not only doesn't ask for anything from the developers but actually incurs costs that should have been borne by the developers. |
SOrising
Citizen
Username: Sorising
Post Number: 304
Registered: 2-2006
| | Posted on Tuesday, April 18, 2006 - 3:09 pm: |
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What is the current status of the development committee the town recently advertised to attract members? What exactly is that and how will it compare to a developement corporation that handles downtown developement?
It is really sad the town is being so short changed by the inferiority complex of its representatives. |
SO1969
Citizen
Username: Bklyn1969
Post Number: 282
Registered: 7-2004
| | Posted on Tuesday, April 18, 2006 - 3:24 pm: |
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Looks like I interpreted a number incorrectly and appreciate the correction.
MHD - I think you posted a Village produced sheet showing projected revenues off of various projects. No, not offloading responsibiltiy here. Point of your post was to show revs we weren't getting from Beifus, New Market, etc. I can't find that thread/post.
On that sheet - that had drawings of various projects - I also saw info for the project in question.
I believe the revenue number was on the order of $20K-$40K for that project. I assumed - my bad - that must be a PILOT, because it was so small, even though the numbers, as I recall, were just for the village portion of the tax revs.
MHD - was that you? Does this sheet ring a bell with anyone? Am I misremembering the amount?
In any event, to Bobk's comment, I'm pleased to learn a PILOT was not involved in the Church St. condo project. |
mrosner
Citizen
Username: Mrosner
Post Number: 2742
Registered: 4-2002
| | Posted on Tuesday, April 18, 2006 - 3:25 pm: |
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I have only seen the PILOT agreements from Livingsston and Montclair. They were no givebacks by the developers. In the case of Livingston, the PILOT was done at the minimum (set by Statute) and the property sold to the developer for the residential component was sold by the town at a steep discount. They were given a variance for parking. They destroyed open space and the so-called buffer zone between the existing residential homes and the new development.
Montclair did not get anything for their PILOT in the old Hahne's building. They converted commercial property to residential. They gave a height variance and a parking variance.
The Beifus and the New Market call for the developers to pay substantially more than the required minimum called for by state statute.
It is fine to be against PILOT's or to say that the village could do better at negotiating, but no reason to make it sound like others have been getting significantly better deals for their towns. The fact is, as far as PILOT's in Essex county go, it would seem to be they are all very similar. With those towns they do not even get the benefit of having overall less taxes for residents since they do not share a school system. |
Bill C. Shitzola
Citizen
Username: Parkingsux
Post Number: 389
Registered: 6-2005
| | Posted on Tuesday, April 18, 2006 - 3:34 pm: |
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Unfortuntely, our expressed requirement was for a grocery store. Does it appear we'll be getting one...... some say for way too long, coming soon! I think I know what he sees....
BTW: If not mistaken, Gaslight flipped for a profit of 12 million dollars upon completion of construction... and afterwards, we today still see forecasted 10% increases in the municipal tax levy.... unbelievable!! That whole deal needs an autopsy. |
Spitz
Supporter
Username: Doublea
Post Number: 1695
Registered: 3-2003
| | Posted on Tuesday, April 18, 2006 - 3:35 pm: |
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The PILOT payments for New Market and Beifus have been agreed upon in the signed agreements. I think they have been based on assumed sales prices for the residential units. If this is correct, is there any provision that the payments from the pilots will be increased in the event the units are sold at higher prices than was originally planned?
Edited to add: I'm referring to the original sales by the developers. |
MHD
Citizen
Username: Mayhewdrive
Post Number: 3908
Registered: 5-2001
| | Posted on Tuesday, April 18, 2006 - 3:40 pm: |
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SO1969,
I think you are referring to this insert from the Gaslight in 2003 which shows how much money we are LOSING each year due to the stalled developments:
http://www.southorange.org/redevelopment/Redev.pdf |
Spitz
Supporter
Username: Doublea
Post Number: 1696
Registered: 3-2003
| | Posted on Tuesday, April 18, 2006 - 3:43 pm: |
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Just coincidence that insert came out a couple of weeks before the election. |
MHD
Citizen
Username: Mayhewdrive
Post Number: 3909
Registered: 5-2001
| | Posted on Tuesday, April 18, 2006 - 3:49 pm: |
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Ya think? 
Also ironic that there is no "Tax Impact" for SOPAC. |
SOrising
Citizen
Username: Sorising
Post Number: 305
Registered: 2-2006
| | Posted on Tuesday, April 18, 2006 - 4:34 pm: |
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Trustee Rosner, what about Westfield, Summit, Madison? Their downtowns seem a lot better off than South Orange's. Granted they are larger towns, but SO is closer to Manhattan for commuters. |
SO1969
Citizen
Username: Bklyn1969
Post Number: 283
Registered: 7-2004
| | Posted on Tuesday, April 18, 2006 - 4:41 pm: |
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Thank you, MHD.
I think/hope I found a silver lining.
Since there is no PILOT for Church Street Commons, I'm assuming the real tax revs to the Village are substantially higher than the $45,000 shown.
Or, that at least they will be after the Revaluation, since there are 40 luxury units that are selling in $300-$500K range, putting total value in the $12 to $20mm range.
I leave it to the more informed to guesstimate the real future tax revs of this development. |
mrosner
Citizen
Username: Mrosner
Post Number: 2743
Registered: 4-2002
| | Posted on Tuesday, April 18, 2006 - 4:45 pm: |
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SORising: I was looking at other towns in Essex county because of the property tax situation.
Westfield has been losing a lot of smaller stores so I will be curious to see what happens in the long run. I think a lot of their success can be attributed to their DMC.
Summit is a nice town. They have much better traffic flow due to more streets and many ways to enter the downtown (from Broad Street, River Road, 78, etc).
Madison is interesting because they have one major road with a lot of traffic on it. Their big advantage is they have large lots on both sides which is why they were able to develop it so succesfully.
We have small sized lots on both S. Orange Ave and on Valley street - which has always been a big negative to developers. |
JoRo
Citizen
Username: Autojoe51
Post Number: 101
Registered: 10-2005
| | Posted on Wednesday, April 19, 2006 - 8:06 am: |
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I'd be interested in knowing more about the negatives that developers claim with respect to South Orange. I've seen lots of communities and commercial districts that have thrived with smaller lots, older buildings. Perhaps we're looking for the wrong type of developers -- ones interested in big box stores or creating a mall experience rather than a unique center that capitalizes on a diverse, affluent and creative community. (albeit one without a lot of parking.) Have we sent nationwide RFPs and recruitment letters, or do we cast the net to small? |
Elaine Harris
Citizen
Username: Elaineharris
Post Number: 148
Registered: 12-2004
| | Posted on Wednesday, April 19, 2006 - 9:14 am: |
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According to Mr. Rosner (above), he has "only" seen the PILOT agreements for Livingston and Montclair. That is a troubling statement.
Our current Board of Trustees has demanded full control of the redevelopment process, and refuses to yield power to a Redevelopment Agency. If that is their position, then it is totally incumbent upon them to become as authoritative as possible on the subject. That means reading and analyzing EVERY PILOT agreement, not just two. Maybe retaining a law firm with expertise on the subject, as per the suggestion of Trustee Eric DeVaries, would also help? What happened with Gaslight Commons is a disgrace. The instant flip speaks for itself.
Regarding the article which started this thread about the unfair results of PILOTS, think about the analogy to a SID in South Orange. If enacted, the merchants in the new Beifus stores or in the stores on Irvington Avenue will not have to pay a SID tax, or such a high tax burden as the poor slobs who have already invested in their businesses in this community. Do we want to cultivate that form of resentment here? Are we fools? Is this fair minded? |
MHD
Citizen
Username: Mayhewdrive
Post Number: 3914
Registered: 5-2001
| | Posted on Wednesday, April 19, 2006 - 10:44 am: |
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Interesting point, Elaine. We can and should learn alot from other towns.
Mark - can you obtain a copy of the K Hovnanian PILOT agreement from West New York and see how it mentions the developer givebacks? MAYBE it's not even in the PILOT agreement and is contained elsewhere. |
Dan Shelffo
Citizen
Username: Openspacer
Post Number: 181
Registered: 6-2001
| | Posted on Wednesday, April 19, 2006 - 11:08 am: |
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We should also look to towns that have had re-development (or what ever you would call it if it didn't involve a PILOT) happen without the granting of PILOTs. It is my understanding that some of the new buildings in East Orange(the ones you can see from the train), with first floor residential and multi storied residential above it, were done without tax abatements.
I think that having both sides of the negotiation assume a PILOT gives the developer to much of an advantage. |
Spitz
Supporter
Username: Doublea
Post Number: 1697
Registered: 3-2003
| | Posted on Wednesday, April 19, 2006 - 11:46 am: |
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At last week's Planning Board meeting, the planning consultants for the Village talked briefly about the report it had prepared for the redevlopment or rehabilitation of Valley St. This report has been given to members of the Planning Board. The next step is for public hearings on the report, and June was mentioned as a likely date for these hearings. The report will be availabe in Village Hall and might be put on the Village website.
At the meeting last week, the consultants explained the difference between declaring an area in need of redevelopment vs. an area in need of rehabilitation. With a redevlopment area, there are two important things that are possible under the relevant law. Properties can be aquired by eminent domain, if necessary, and 30 year tax abatements can be given, if needed. With a rehabilitation area, the Village cannot exercise eminent domain and tax abatements can only be given for 5 years.
The Village President, who is a member of the Planning Board, immediately said no developer would be willing to get only a 5 year abatement. He's already made his determination, it seems, without any input from others. |
Dave
Supporter
Username: Dave
Post Number: 9244
Registered: 4-1997
| | Posted on Wednesday, April 19, 2006 - 11:54 am: |
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West New York likely got what it got out of Hovnanian because its mayor was the Speaker of the NJ Assembly at the time. |
joel dranove
Citizen
Username: Jdranove
Post Number: 380
Registered: 1-2006
| | Posted on Wednesday, April 19, 2006 - 11:57 am: |
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Or maybe the developer saw profit in the deal, and dealt.
jd |
Dave
Supporter
Username: Dave
Post Number: 9245
Registered: 4-1997
| | Posted on Wednesday, April 19, 2006 - 12:02 pm: |
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I'm sure there was enough profit to go around |
Duck Duck Goose
Citizen
Username: Parkingsux
Post Number: 390
Registered: 6-2005
| | Posted on Wednesday, April 19, 2006 - 12:07 pm: |
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I'm still looking to profit with Sayid Enterprises. Hey, start diggin that dirt out of the hole.  |
SO1969
Citizen
Username: Bklyn1969
Post Number: 286
Registered: 7-2004
| | Posted on Wednesday, April 19, 2006 - 12:08 pm: |
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BOT readers - Consultant's Plan should definitely be made available on village website. No reason with today's technology that the report can't be provided in e-format to village for the village to post.
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SOrising
Citizen
Username: Sorising
Post Number: 310
Registered: 2-2006
| | Posted on Wednesday, April 19, 2006 - 12:09 pm: |
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Spitz, is the report available now at village hall? The VP will continue to damage the town as long as he remains in office. |
Spitz
Supporter
Username: Doublea
Post Number: 1698
Registered: 3-2003
| | Posted on Wednesday, April 19, 2006 - 12:14 pm: |
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I'm not sure. The Village Clerk would have that information. |
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