West Orange May Give Developer 30-Year PILOT For Apartments – West Orange, NJ Patch

WEST ORANGE, NJ — A day of reckoning may soon be in the cards for a years-long redevelopment plan in West Orange.

The West Orange Town Council is scheduled to make some big decisions about the redevelopment of 30 acres of land on Executive Drive at their public meeting on Wednesday, Dec. 18.

According to a statement from town officials, the proposed plan would allow the developer to demolish two office buildings at 100 and 200 Executive Drive and put up a 425-unit apartment complex with 64 units of affordable housing in their place.

The council approved a 30-year tax exemption for the proposed apartment building on first reading at their Nov. 26 meeting (see video below). It’s due for a second vote on Dec. 18.

As part of the plan, a three-floor building and parking lot at 10 Rooney Circle worth an estimated $6 million to $8 million would be deeded to the township. The town would then use the property as a new home for the municipal library and animal shelter.

The existing library site would be repurposed into 61 affordable housing units for senior citizens and 7,500 square feet of “community space” that could be used for a library annex or a community center.

In addition, the developer has agreed to build a “first-class dog park” with parking spaces in the area. That land would also be deeded to the township, officials said.

An existing building at 300 Executive Drive would remain office space but see upgrades. The West Orange Township Council has already approved renovation plans for the building, which was recently sold. The new owners have already begun renovations in accordance with the approved plan, town officials said.

Executive Drive is located adjacent to the Essex Green shopping center, which got a go-ahead from the West Orange Zoning Board for a big facelift earlier this year. That project – which met with heavy criticism from some local residents – is expected to begin in early 2020.

Here are three ways the proposed development plan for Executive Drive could affect West Orange.

LOCAL TAXES

One of the major criticisms the plan has seen involves a long-term payment in lieu of tax (PILOT) agreement for the proposed apartment building.

PILOT agreements – also known as municipal tax abatements – are deals that enable a developer to switch their standard tax payments for a property with a fixed, yearly payment to the municipality.

Some municipal officials have called PILOT agreements useful tools to attract development to distressed or blighted areas of town. But their use has drawn criticism from opponents, some who caution that the deals can enable a big developer to skip out on paying their fair portion of property taxes.

According to nonprofit Our Green West Orange, the proposed PILOT for the new apartment building on Executive Drive could mean a $100 million tax break for the developer over its 30-year lifetime.

In addition, the residential units will be a burden to the township because every such unit costs $1.20 in services for every $1 paid in taxes, the group stated.

“This is corporate welfare,” Our Green West Orange charged. “In return for the $100 million giveaway, we get approximately $10 million worth of benefits.”

“With tax rates rising 8.5 percent this year and the federal government limiting the ability of taxpayers to take a deduction on their income tax to $10,000, homeowners are already hurting,” Our Green West Orange stated. “This tax abatement giveaway does more harm than good.”

But town officials have argued that without a PILOT agreement, the project doesn’t stand a chance of getting off the ground.

“PILOTs often raise concerns but are a critical means of financing big projects that are impossible without them, and providing benefits to the community.”

West Orange isn’t the only Essex County town that has offered developers PILOT agreements, officials pointed out. Other such agreements are being offered in:

• Roseland – 2 Redevelopment Projects / 2 Separate PILOTS
• Bloomfield – 4 Redevelopment Projects / 4 Separate PILOTS
• Orange – 2 Redevelopment Projects / 2 Separate PILOTS
• South Orange – 5 Redevelopment Projects / 5 Separate PILOTS
• Verona – 2 Redevelopment Projects / 2 Separate PILOTS
• Montclair – 3 Redevelopment Projects / 3 Separate PILOTS

“PILOT funding is not required in all redevelopment projects and the Essex Green Shopping Center portion of this redevelopment does not include a PILOT,” West Orange town officials wrote.

“The administration has been clear since discussions began on redeveloping these properties two years ago that no PILOT would be provided without a significant public use and benefit,” officials continued. “The proposed Executive Drive portion of this project provides significant public use and benefits and the administration is requesting council approve the PILOT and the project. Without the PILOT, this project will not be completed and the township will not receive the substantial public benefits.”

Those benefits include about $600,000 in annual rental income from the Transportation Security Administration (TSA), which is under lease at the third floor of 10 Rooney Circle until 2024.

In total, the proposed development agreement would produce about $1.25 million in new annual revenue for West Orange, officials said.

Read the township’s full financial statement about the proposed PILOT agreement.

INCREASED SCHOOL ENROLLMENT

Town officials said the new apartment building may cause some additional strain on the local public school system, but added that it’s not necessarily a bad thing.

Officials wrote:

“The development of residential housing always, and legitimately so, raises questions about the impact on school enrollment. The demographic study conducted by the Board of Education last year indicated that local schools are not over capacity and, in fact, have capacity for additional students and concluded that given current birthrates capacity challenges are not anticipated to be an issue for several years. That is not to say that these numbers cannot change and local history over the last 40 years is evidence alone that enrollment numbers ebb and flow in time.”

Officials continued:

“Apartments, especially one-bedroom units, do not routinely generate a significant number of children. This product is designed and marketed for young professionals and older empty nesters. The Edison Lofts of the Main Street redevelopment project, for example, currently has 198 units occupied with only four children in the local school system. But it will produce children; although that should never be viewed as a bad thing. Attracting people and young families to West Orange should always be considered a priority. A township that is not attracting young families will never prosper and it is the hope that the young professionals that may move into these apartments will eventually move into a West Orange home when they look to raise a family.”

However, members of Our Green West Orange questioned that stance.

“425 apartments means 215 more students for our schools that are already filled to capacity,” the group wrote. “215 students will cost taxpayers $4.3 million. But we will receive only $2 million. Remember trailers?”

AFFORDBALE HOUSING

According to town officials, the new apartment building on Executive Drive would have 361 “high-end, market rate” apartments and 64 “affordable housing” units, including:

• 15 one-bedroom units with 650 square feet of total space
• 34 two-bedroom units with 800 square feet of total space
• 15 three-bedroom units with 950 square feet of total space

Those units would count towards the township’s COAH obligation, which still needs to be met if the project isn’t approved, municipal officials said.

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