Payments In Lieu Of Taxes (PILOT) are anticipated to account for $1.385 million in the 2020 municipal budget.

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That’s slightly less than the $1.5 million in PILOT revenue in the last two budgets.

The $56.7-million budget for 2020 was adopted by City Council in April and this is an occasional series examining certain areas of the municipal spending plan. The budget carries a municipal tax levy of almost $38 million, up 1.56 percent, and projected an average tax increase of $49, or 1.37 percent. That would raise the municipal portion of property taxes from $3,562 to about $3,611 on the average assessed home ($133,000).

A copy of the municipal budget can be accessed here in its entirety., with anticipated PILOT revenue found on Page 11 of the .pdf.

The $1.385 million anticipated in this year’s budget is derived from eight different projects, some recently completed and others still on the books from years ago:

• Lower Essex Street / Denholtz Management (Rahway Plaza Apartments), $490,000
• Senior Citizen Housing, $280,000
• Meridia Water’s Edge (10-year PILOT), $180,000
• Meridia Lafayette Village, (15 years) $180,000
• Metro Rahway (15 years), $155,000
• Housing Authority, $60,000
• Rosegate, $25,000
• Meyers Senior Residence, $15,000

In the case of Metro Rahway, City Council in February granted approval to extend a 15-year PILOT for the 116-unit complex on Campbell Street for another 15 years, essentially amending it a 30-year PILOT.

There are four recent developments that have been completed but have not started annual PILOT payments in the 2020 municipal budget. The four would be expected to double PILOT revenue in the budget eventually, if they live up to their PILOT agreements, at $1.3 million:

• The Brownstones (30 years) – $489,000
• Reva Rahway (30 years) – $383,250
• The Mint (30 years) – $360,000
• The Gramercy (20 years) – $78,000

It remains to be seen whether those four will reach the annual payment levels in the future. Metro Rahway had anticipated to pay annual fees of $265,000 but after almost reaching that figure in its first year of 2016, it has been off by almost $100,000 each year.

Meridia Water’s Edge, a 108-unit complex adjacent to Rahway Public Library, appears to be about halfway through its 10-year PILOT in 2020, having started payments in 2016.

Exclusive to patrons of RahwayRising.com, visit the Patreon page to access a link that breaks down each of the PILOTs from 2012 to 2020, with what each project is anticipated to pay, according to the PILOT agreement.

Revenue from the city’s vacant/foreclosure registry is anticipated to be $350,000, down from what had been anticipated for the last several years. Revenue from the foreclosure registry had been trending up for years and in fact was anticipated at $630,000 last year but fell considerably short of that (anticipated revenue in that budget in italics, within parentheses):

• 2020 – $350,000
• 2019 – $384,700 ($630,000)
• 2018 – $630,915 ($410,000)
• 2017 – $606,815 ($350,000)
• 2016 – $403,500
• 2015 – $322,500

A vacant/foreclosure house registry was established by City Council in 2014 to encourage owners (usually banks) to take action on properties. Owners were required to register properties within 14 days of becoming vacant, with an initial registration fee of $500. The fee would increase to $1,500 after the first year, $3,000 for the second renewal, and $5,000 for the third and any subsequent renewals.

Revenue may have dipped because foreclosures that were on the registry since its inception would have been in the third year or later — paying a $5,000 renewal fee versus between $500 and $3,000 — by 2017 and 2018.

UPDATED: City Administrator Robert Landolfi said the reason behind the dip in foreclosure registry revenue is that more of the properties are getting turned over and occupied. Another part is that the payments are not amendable. The charge can’t be liened against the property. “We’re going to address that and start seeking judgments, which can be liened,” he said. The city also is looking at the process of determining if a property is vacant, as opposed to abandoned. If it’s abandoned, “there are more tools in the toolbox” for the city to address it, Landolfi said.

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