Recent downtown development projects have a mixed bag when it comes to reaching Payments In Lieu Of Taxes (PILOT) levels anticipated in their original financial agreements.
The PILOT applications and financial agreements originally approved by City Council for seven recent or under-construction projects stipulate almost $2 million in total annual payments to the city, when completed:
- The Gramercy (20 years), $78,000
- Lafayette Village (15 years), $156,000
- Water’s Edge (10 years), $216,000
- Metro Rahway (15 years), $265,000
- The Mint (30 years), $360,000
- REVA Rahway (30 years), $383,250
- The Brownstones (30 years), $489,000
The Gramercy on East Cherry Street, The Mint on Main Street and REVA Rahway on Lower Main Street haven’t yet started their PILOTs. The Brownstones is still under construction.
City Council on Monday is scheduled to hold a public hearing and final approval on an ordinance to extend a 15-year PILOT for Metro Rahway for another 15 years. The 116-unit development on Campbell Street was constructed by Metro Rahway Urban Renewal, LLC, a partnership between AST Development, developers of REVA Rahway, and East Hanover-based Heartstone Development.
Metro Rahway has yet to reach the $265,000 annual payment anticipated in the original financial agreement. After a high of $231,015 in its first year (2016), payments were $160,169 in 2017 and $155,535 in 2018. The 2019 municipal budget anticipated a payment of $155,000, about 58 percent of the $265,000 anticipated in the original PILOT.
PILOTs in the 2019 municipal budget were anticipated to generate almost $1.4 million in revenue. City Council is expected to introduce the 2020 municipal budget at its regular meeting on Monday.
Meridia Water’s Edge
Meridia Water’s Edge, a 116-unit complex adjacent to the library and Rahway Plaza Apartments, paid $421,005 in its first year (2016), well above the $265,000 anticipated in the 10-year PILOT application, but has since dropped off considerably, with payments of about $184,000 in the past two years. The 2019 municipal budget anticipated $180,000.
Meridia Lafayette Village
Meridia Lafayette Village, a 108-unit complex at the corner of Main and Monroe streets, has fared better as compared to the 15-year PILOT application. The original agreement anticipated an annual payment of $156,000 and its first year paid $181,935, with $180,000 anticipated in 2019, about 15 percent more than the anticipated PILOT.
Most every recent PILOT but one has been based on 10 percent of annual revenue from a development.
The only PILOT that differed also was the shortest: a five-year PILOT for Park Square, a 159-unit, two-building complex occupying the block bounded by Elizabeth and Elm avenues and Irving and Main Streets. The original developers, Keasbey-based Landmark Companies, started out paying 20 percent of the overall tax assessment, with the payment increasing 20 percent each year until it reached the full assessment (which would take five years).
The 63-unit Irving Street building, which also includes ground-floor retail of 6,000 square feet, was completed in 2009 and the 96-unit Main Street building was completed in 2011.
