Ordinance 2493: PILOT Agreement For Meridia At Roselle Park

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Published: June 1, 2017 @ 5:00 PM EST

The legal requirement to allow PILOT, or Payment In Lieu Of Taxes, at the “Meridia At Roselle Park” development on West Westfield Avenue for their 213-unit residential development is in the form of Ordinance 2493. This directive will authorize Roselle Park’s governing body to enter into a PILOT agreement – on behalf of the borough’s residents – with Meridia on Westfield Urban Renewal, Roselle Park, LLC. This will be for the five (5) properties along West Westfield Avenue that include the former restaurant Domani’s, DJ’s Limousine, and SESSCO.

In December of 2015, the first step to having the properties developed on Route 28 (Westfield Avenue) was taken when the Municipal Land Use Board (MLUB) designated the lots as an Area In Need Of Redevelopment. Now, 18 months later, after being approved by both the MLUB and council to develop, Capodagli Property Company (CPC) – the parent company of Meridia – has demolished the structures and is applying for PILOT.

PILOT is a program that is utilized as an incentive for developers to build on properties in municipalities that have been abandoned, vacant, or unused. Developers use PILOT to pay a municipality less than would otherwise be paid if taxes were paid on properties. Municipalities may receive less in taxes but the municipal government receives more by way of percentage since 95% of PILOT goes to a town as opposed to having 30% to 33% of taxes going to a municipality. In a PILOT scenario, a school district does not get any of the PILOT payments. Criticism of the program is that for an apartment or residential development, school children might attend local public schools but the developer would not pay for any increase in student population through school taxes. At a presentation for PILOT held in April, Michael Hanley of NW Financial Group stated that school districts do get taxes from the land portion of property taxes. It is only the improvement part – which is covered by PILOT – that does not go to schools.

Joseph Baumann from the law firm of McManimon, Scotland & Baumann, LLC – the special council appointed by the governing body to assist with the logistics of the project and PILOT – confirmed that the land portion of property taxes are still paid and only the improvement portion has PILOT applied to it. It is this portion that will not have any taxes going to schools but, according to the presentation, between 50% and 55% of the land portion taxes will still go to schools. PILOT will apply any taxes paid by the municipality from the land portion as a credit to the PILOT payments.

As for PILOT, it will be based on the annual revenue of the development and will be for 30 years. The complex is scheduled to be completed by July of 2019. The project is designated as mix-use with the first floor of the development being for as yet unnamed commercial use.

Below is a breakdown of the percentage to be paid as PILOT for the span of the agreement:

YEARS
RATE
PHASE-OUT
1 - 5
10.5%
6 - 10
10.5%
or 20% of ordinary taxation
11-15
13%
or 40% of ordinary taxation
16 - 20
13%
or 60% of ordinary taxation
21 - 30
13%
or 80% of ordinary taxation

The phase-out alternative method means that the developer will pay either a percentage of the revenue of a percentage of taxes – whichever is greater.

Ordinance 2493 is set to have its second reading, public hearing, and vote by the governing body at tonight’s Mayor & Council meeting which will start at 7 p.m. in Borough Hall.

A copy of the ordinance along with the 99-page application for PILOT are included below. Additionally, a video of the April 19, 2017 PILOT presentation is available below the documents.


Download RP Ordinance 2493


Download Meridia on Westfield Urban Renewal PILOT Application