The Mayor & Council is holding a Special Meeting on Tuesday, December 6th at 7:00pm on ZOOM.
On the WCL M&C Agenda there is a Resolution to Enter into a Memorandum of Understanding with 188 Broadway.
The following are some points from the 188 Broadway Agreement:
- Re-zone pursuant to a redevelopment plan to allow 46 total residential units on the 188 Broadway property consisting of 37 rental units in the existing building and 9 townhouse units behind that.
- The developer will not be required to construct any affordable units at the 188 Broadway site. Instead, the Borough will include the eight units that 188 Broadway was required to provide on the North Broadway Affordable Housing site.
- The Developer and the Borough will negotiate a redevelopment agreement which will have a Long-Term PILOT Tax Exemption for the 37 rental units and a Five Year Tax Abatement on the 9 townhouse units.
What is a PILOT PROGRAM
- PILOT Program stands for "Payment in Lieu of Taxes"
- PILOT payment is generally lower than the property tax amounts, helping to improve the net operating income of the developer, encouraging them to enhance the property.
- The payments go directly to the municipality and do not have to be shared with the Schools.
- Homeowners typically see an increase in their taxes to cover the cost of students coming from PILOT PROGRAM properties.
- The Pilot Program Agreements generally last anywhere up to 30 years.
- Typically, municipalities enter in to an agreement of either a set percentage of revenue or a set percentage of total construction costs.
- One of the benefits to the developer in the calculation is that the allowable net profit calculation is cumulative, so if a developer generates losses early on in the project as they work to increase occupancy, these losses in earlier periods can offset income in future years.
According to the New Jersey School Boards Association, the structure of the PILOT payments is the result of a negotiation between the developer and the municipality. School Districts are not legally "entitled" to share in the PILOT payments.
Municipalities should evaluate the full economic impact of the development; i.e, increase in school enrollments and/or required local services.
Read the full article School Finance: An Overview of PILOT PROGRAMS
Click Here to Read the New Jersey Long Term Tax Exemption Law
