The former Universal Chain property at 92 Burnett Avenue in the Hilton neighborhood should finally start yielding big financial rewards to the town in a year or two.
Owners of Elite Properties, which purchased the property and plans to develop it as a two-story, 126-unit multi-family housing development, appealed to town leaders for a tax abatement at the April 17 Township Committee meeting.
But while "tax abatement" sounds more like a loss of revenue, town leaders were quick to point out that the development will take a barely contributing property and change it into one of the top tax contributors in town.
With the PILOT — or Payment in Lieu of Taxes — that Elite will be paying, the town will see approximately $403,000 in the first year of improvement. (The county will see about $21,000; the school district will see no money.)
And the PILOT amount accelerates every year over thirty years at a rate of 2%.
After 30 years, the PILOT is over and the property owner pays taxes to the town, county and school district on the same scale and rate as other commercial ratables in town.
With the abatement, the developer saves more than $70,000 in the first year of improvement compared to what it would pay in taxes to the town, county and school district if the property were not tax abated.
It's a margin that the developer says helps it to make the project work financially.
Township Committeeman Jerry Ryan, head of the finance committee, said that, without the PILOT, the town would only see $129,500 in the first year of the property's improvement. "That's an extra $300,000 in the first year."
The only party left out of the new bounty is the school district which sees none of the PILOT (the town gets 95% of the PILOT and the county gets 5%). If the property owner were to pay property taxes on the improvement, in the first year it is estimated that the town would see $129,475, the county would see $79,677, and the school district would see $288,830.
Of course, if the property remains unimproved, no one sees any benefit from the improvement.
Finally, the school district does still receive 58% of the land tax on the property, while the county receives 16% and the town receives 26%.
The abatement is allowed under the Long Term Tax Exemption Law (N.J.S.A. 40A:20-1 et seq.) which provides exemption from taxation for improvements constructed within "blighted areas." The Elite Properties development qualifies because it is in a redevelopment zone.
Should the abatement be approved by the Township Committee (final hearing and vote is May 1), Elite Properties will finalize its plans for presentation before the Maplewood Planning Board. No date for review has been set as yet.