A downtown high-rise building would have its 50-year tax abatement agreement extended another five years under a resolution to come before City Council tonight.

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The governing body is scheduled to meet tonight at 7 p.m. in City Hall, with the meeting also livestreamed on TV-34.

The resolution (AR-206-22) would extend the tax abatement agreement from 2020 through 2024 for Lower Main Street Associates, otherwise known as Rahway Plaza Apartments at 1171-1181 Main St. The 12-story, 288-unit high-rise is owned by Red Bank-based Denholtz Properties;, which owns a number of commercial and office properties in New Jersey, Pennsylvania, Florida and Illinois.

Lower Main Street Associates paid almost $523,000 in lieu of taxes in 2021 and the 2022 municipal budget anticipates $520,000.

The original 50-year tax abatement agreement was approved by City Council on June 8, 1970 (via AR-92-70) and signed on Nov. 20, 1970.

The “existing development provides a substantial amount of low and moderate income housing, much of which would be lost without the continuance of the Tax Abatement Agreement,” according to the resolution to be voted on Wednesday. “The continued availability of housing affordable to moderate income households has become an increasingly important issue.”

The existing agreement was set to expire at the end of 2019 but continues to qualify for an extension pursuant to state law (N.J.S.A. 40A:20-13.2), according to the resolution. The resolution also states that the continuation of the tax abatement will meet or meets an existing housing need and conforms to all requirements of applicable ordinances and fulfilled “all of its reporting and operational obligations under the previous agreement.”

Under the original agreement from 1970, the development would pay an annual service charge not exceeding the property tax for the full year or 14.4695 percent of annual gross shelter rents ($101,854 at the time), whichever is greater, but not less than $5,079 per year.

The June 1, 1970 document indicates minimum monthly rents of:

• $217.08 for a one-bedroom (148)
• $271.35 for a two-bedroom, 5 rooms (69)
• $298.50 for a two-bedroom, 5.5 rooms (48)
• $352.75 for a three-bedroom (22)

The document also provides other details of the project at the time:

• Total development cost: $8,147,102
• Mortgage amount: $7,332,391
• Term: 48 years
• Estimated interest rate: 7 percent
• Gross shelter rents by tenants: $703,918
• Annual service charge of 14.4695 percent: $101,854

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