An hour-long informational meeting at the end of September allowed residents to ask questions to representatives of Capodagli Property Company (CPC), the developer of Meridia At Roselle Park. The development along West Westfield Avenue – where the old Domani’s/Yesterday’s restaurant used to be – will be the first major property development in Roselle Park in decades. A group of about 30 residents sat, listened, and asked questions regarding the project.
The 213 apartment complex will be separated into two buildings – each six-stories high – with two floors of parking and four (4) floors of apartments. The first floor of one of the buildings will have a little over 5,000 sq ft of retail space with a restaurant, at this time, being focused on as the tenant. About 35% of the apartments will be one-bedroom apartments, 23% will be one-bedroom units with a den, and 42% are two-bedroom units. All apartments will have one bathroom and there will be no studios nor three-bedroom units. It was stated at the September meeting that there would be 340 parking spaces in total although previous official meetings had the number at 355 with 82 of them dedicated to retail/restaurant parking.
The project, classified as Class I, took its first official step in December of last year when a report was commissioned by the Municipal Land Use Board (MLUB) to determine if eight (8) properties could be designated as an “Area In Need Of Redevelopment”. Seven months later, after going through the necessary legal steps of approving reports and redevelopment plans as well as the number of properties decreasing from eight to five, the MLUB approved the Preliminary & Final Site Plan for the development in June. At that meeting, although all required plans for lighting, landscaping, electrical, plumbing, etc. were on-hand, the MLUB never publicly reviewed or mentioned them before giving approval. The Board focused on the variances, parking, and traffic studies.
Meridia At Roselle Park looks to be completed in March of 2018.
Previously, in April of 2104, Dominick Glynn – the owner of the former Domani’s property – had applied for and was approved to develop a 27-unit apartment complex (link). That development never progressed after being approved.
At the information session, Craig Ryno, CPC’s head of Approvals & Acquisitions, started the meeting with a short presentation on the company’s history and offering an overview of the project’s timeline. CPC, owned by George Capodagli, is a family-owned business and started in 1970. Since then, it has constructed residential developments throughout northern and central New Jersey. Most recently, it completed apartment complexes in Linden and Rahway. According to Mr. Ryno, CPC found out about the properties that were for sale along Westfield Avenue, most notably DJ’s Limousine and Domani’s, after having considered the old lumberyard on the Cranford-Roselle Park border. Mr. Ryno stated at the meeting that, as of September 29th, CPC had closed on four of the five properties. The necessary permits to begin demolition had been applied for and CPC had its construction financing in place. Mr. Ryno also mentioned, “We look to move on this project very quickly. I think that because of the cooperation of mayor and council, this is probably one of the fastest moving, most successful projects that we’ve ever had.”
Mr. Ryno said that the restaurant, which will be open to the public, would be a positive for the development as well as the community. He stated, “What we think that equates to is almost like a hotel because it’s a luxury building. With the restaurant, we think the tenants can come downstairs, the can eat, they can intermix with each other, or they can have room service or just call up and have people come up. So we think there’s going to be a lot of positives for this.”
Brian Pfistner, CPC’s vice president of Property Management, spoke next and gave information on the development. He stated that the average rent in the complex would be about $1,730. One-bedroom units will be between 600-800 sq ft with rent between $1,500-$1,700. Two-bedroom units will have rents between $1,650-$1,850 and be up to 1,000 sq ft. Along with a gym, the development will have package rooms, networking events, and mixers for tenants.
Mr. Pfistner added, “We currently work with an international property management company called Grey Star (link) that manage over 400,000 units. It’s just been a great fit for us and to assist in creating a community with our residents.”
The complex will have a staff of six people: a full-time property manager, assistant property manager, superintendent, and three maintenance technicians. A cleaning company will be contracted out.
The presentation was followed by questions from those in attendance. Responding to a question about whether the retail space will be one business or be separated, Mr. Ryno stated, “It probably could be divided but, at this time, we’re in discussions with two or three restaurant people which is really [what] we’d like to focus, so we’ll probably concentrate on that.”
One resident asked, “Besides the gym, what makes this property a luxury apartment?”
Yes, most of our projects will have PILOT.” – Craig Ryno
Security factors were also discussed with Mr. Pfistner saying that access to the apartments and the complex itself will be through a key fob.
In addressing another question from a resident regarding having enough sewer flow rights for the development, Mr. Ryno remarked, “Our engineers generally handle that, and we don’t see anticipating that as a problem whatsoever. We think there’s plenty of capacity.”
The target market for Meridia At Roselle Park, according to CPC, is Millenials and people between the ages of 25-40 that will be using the train or working in the area. Mr. Ryno also said, “Our secondary market is senior citizens. People who live in the area, are selling their homes, they have children in the area, looking to maintain a presence but maybe buying a second home somewhere in the south or another part of the country. They maintain a residence here so they can maintain contact with their families and because they love the area. That’s typically what happens in all of our buildings.”
When asked if Payment In Lieu Of Taxes, commonly known as PILOT, is considered for the project, Mr. Ryno answered, “Yes, most of our projects will have PILOT.”
PILOT is a tax abatement program that allows for a developer to make a payment to a municipality that is less than would be paid through taxes, which benefits the property owner. This type of program is welcomed by a municipality because even though less is paid for the property, more is paid to the municipal government. By way of a very basic example, if a developer pays $1 million in taxes, around $350,000 would go to the town, about $550,000 would go to schools, and the rest would go to the county and open spaces. Under PILOT, a property owner might pay $700,000 but the municipality would receive 95% of that payment – $665,000 – and the county would receive 5% or $35,000. PILOTs have different percentages – between 10% and 15% of income from annual rentals or 2% of construction costs – and various lengths in duration – up to 30 years.
Nothing goes to the schools and while this would be appropriate for a commercial property since no children attend local schools from stores or offices, there has been controversy when apartment developments use this program since any children that attend local schools from any PILOT development will need to be paid by the remaining taxpaying property owners. For this project, although a required SAC (school aged children) report has not yet been conducted, CPC stated that their ratio of school-aged children from the properties is 1% – in this case about four students. It was not stated if this percentage was an annual one or over time. This is important because this could mean the difference of having four or 40 children in the school over a decade – again using CPC’s stated estimates. A report by a firm hired by the Roselle Park Board Of Education (BOE) for the Roselle Park School District (RPSD) gave a combined estimate over five years of up to 70 students. This figure was provided at an April BOE meeting even though no details were provided as to how that figure was arrived at and it was a combined total of three properties – of which Meridia was one.
The last time PILOT was attempted in Roselle Park was in 2009 when AvalonBay sued the municipality under a Builders’ Remedy lawsuit when the developer wanted to address Roselle Park’s lack of Coalition On Affordable Housing (COAH) requirements in exchange for building a complex in the borough that did not have any retail space. That issue resulted in the municipality agreeing to several conditions, including PILOT based on 10% of annual rent, as a condition of AvalonBay dropping its lawsuit. Even though AvalonBay was allowed to develop, nothing has been constructed since then.
When asked if Meridia At Roselle Park will have any affordable housing, the answer was no. Additionally, as it relates to the percentage of PILOT, the response was, “That’s a negotiation that we’ll probably have with the mayor and council.”
Ankit Duggal, the head of Development & Finance from CPC, talked about the development’s estimated value, saying, “We anticipate the project’s value based on market condition. When this is finally built and stabilized, this should be worth $50 to $60 million between two buildings. If markets will look really well and the multi-family is the soup de jour where everybody is still going, because then Millenials’ tenant-base keeps growing and keeps expanding, it might be worth some more. So it’s going to produce some significant greater revenue growth than what’s currently in place on-site.”
The last key document in this process is something called a Redevelopment Agreement.” – Joseph Baumann
In line with schools, it was confirmed that a pedestrian study for children walking to school was not conducted but the developer stated that it would work with public safety officers and add crossing guards if needed. There will also be an impact study as well as a formal review with the fire department for safety concerns.
Geroge Capadagli, the namesake owner of the company, personally spoke to those in attendance. The father of four daughters and a son was brought up in Red Hook, Brooklyn and offered his company’s input to Roselle Park. He said, “You need to understand that we are really hands-on people. We’re very concerned about what you’re concerned about. We went into towns like, for example, Linden where no building had been done for years and they gave us the opportunity to develop a piece of property there that someone had for ten years and did nothing with. And today, the building’s occupied. We’re working on our second and potentially our third project.”
“This is where we want to be, in the cities, the inner cities. It’s where we’re most comfortable,” he continued, “I don’t mean that this is an inner city per se but we’re the middle of the roaders. That’s our motto, to stay in the middle because most of the people are in the middle. And that’s our market, the middle. I can tell you this is not a dream or a wish . . . We’re ready to close on a construction loan. We have a commitment from a major bank. So we’re ready. This dream will become a reality for both of us very soon. We’re really proud to be here.”
Mr. Capodagli also said he was speaking to local restauranteurs and talked about that aspect of the project, “I’m very selective. I own the liquor licenses. I will own part of the restaurant. I don’t run restaurants and bars, I don’t do that. But I will make sure that who ever runs my restaurant and bar, runs it correctly. Because no matter what happens, the name on that building says Meridia/Capadagli. I don’t care, whatever name the restaurant has on it, it will always be a Meridia, it’s important to us . . . We’re really honored to be part of this town, the rejuvenation of this town. It’s hard to believe where you’re going to be in the next ten years. You will see, this will be a game changer for the whole town. Not just me.”
Finally, Joseph Baumann, the attorney that Roselle Park hired to advise the municipality on the project, spoke, “We’re not quite done. The last key document in this process is something called a Redevelopment Agreement. Unlike normal development proposals [where] you get your site plan approval and you go build, here we are negotiating a Redevelopment Agreement . . . and that’ll have to come before the council for a vote when we’re finished.”
Mr. Baumann offered a few examples of what will go into the terms between the developer and the municipality. He said, “Things that will be in that redevelopment agreement will be things like we’re going to insist that, to the extent that they have the ability, to hire local residents. We are going to require them to make a good faith effort to hire local people for the six jobs that they can. Not required to – can’t require it but make efforts to do that. There will be provisions in that contract about that they have to begin by a certain date and end by a certain date and if they don’t, they’re going to have to explain to us why. It’s a fairly robust agreement, it’s about 35 or 40 pages. One we’re done with it, there’ll be a meeting. I’ll have the opportunity to explain it to the mayor and council and then there will be a vote on that.”
With regard to PILOT, Mr. Baumann stated, “As of today, they haven’t applied for one. They’ve expressed a desire to have one. Whether they’re qualified to have one, what it will be, how much it will be, what it will look like, has yet to be decided. So that’s sort of still a decision to be addressed. At this point, they haven’t actually submitted the application yet to us, I believe, so we have some time to go [into] that and then there’ll be a dialogue, it’s not ‘you want a PILOT, you’ll get a PILOT’- it doesn’t work like that. In order to get a PILOT under New Jersey law, you have to demonstrate that your project requires it and the PILOT isn’t a specific number necessarily. There’s minimums and maximums and there’s lengths. It could be anything from two years to 30 years. It could be anywhere from 10% of your annual rents or 2% of your project cost. So there’s a negotiation that has to be had and, as a part of that, they’re going to give us a full book on their financials. They’re going to show us what the project’s going to rent out and how their pro forma is going to look and they’re going to lay that out over a number of years and then we’re going to vet it from our side to see if it’s right or not.”
Mr. Baumann subsequently did state that CPC has asked for a PILOT. He added that, by law, PILOT cannot be less than the prior year’s taxes. There is currently an assessment appeal on one of the properties that will be formally approved by the governing body in an upcoming meeting.
When asked more about the terms of the Redevelopment Agreement and negotiations, Mr. Baumann repeated the good faith effort, remarking, “It’s a give and take. Obviously, there’s a point and time where there are those things which are beyond reasonable – it’s a negotiation. But, by way of example, we may want to encourage them to try and hire local Roselle Park residents for those six jobs. I’ve worked with them before, I know that they are willing to make good faith efforts to do that. They can’t be required to do it but to the extent that they can, they’ll consider it. Those are the kinds of things that will be in there.”
The final question from the audience asked if the ground had been tested. The answer from CPC was that yes, all the testing had been done.
During the meeting, there was confusion as to whether the developer had its Final Site Plan approved or only the Preliminary Site Plan by the MLUB in June. An OPRA request shows that it was the Preliminary & Final Site Plan that had been approved. A copy of the approval is available below: