Developer Appeals to Town for Tax Abatement

Elite Properties may get a break on taxes but, in the short- and long-term, the town will benefit, say elected officials.

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.

EvC April 27, 2012 at 12:00 PM
These tax abatements to developers is one of the biggest scams. It's statutory fraud that incentivizes over development. I just love how local politicians frame controversial issues. This shifts much of the inceased tax burden, due to development, on to the average Maplewood tax payers. Maybe the residents of he new building should not be allowed to use town services and send their kids to our school. Instead, the developers should be forced to provide schooling and hire their own police and fire forces.
Ken Houghton April 27, 2012 at 05:24 PM
So we're getting money for the town, but not the schools and this is a good thing, eh? Nice to know no one moves to Maplewood for the schools.
Lauren Bright Pacheco April 30, 2012 at 02:45 PM
According to the above article, the final hearing and vote for approval by the Township Committee is TOMORROW May 1. Below are the email addresses of the Township Committee members listed so you can cut and paste them easily into an email that expresses your opinion on the issue: v.deluca@twp.maplewood.nj.us, k.leventhal@twp.maplewood.nj.us, ILarrier@twp.maplewood.nj.us, JRyan@twp.maplewood.nj.us, mbrownlee@twp.maplewood.nj.us
Lauren Bright Pacheco April 30, 2012 at 03:07 PM
Here's what I sent: Dear Township Committee, I'm emailing to express my concern over the potential Tax Abatement being solicited by Elite Properties. Our school district will see none of the PILOT (the town gets 95% of the PILOT and the county gets 5%), and yet it opens the doors for a flood of potential students into our already burdened system that the rest of Maplewood's tax already strapped tax-paying citizens will be forced to cover. According to the Patch article on the issue, 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. Sure, the initial influx of cash to the town - as well as the 'pay you tomorrow for a burger today' may sound appealing, but in reality it is short-sighted and little more than a shell game in which the taxpayer ultimately loses. Period. I am asking you to vote with your conscience and with the best interest of the voters who placed you in positions of power in mind - not those of the developers who are appealing for this Abatement purely out of self-serving financial interest. They're in this, after all, to make money- not build a better community or protect our schools. That is something we look to all of you for- and I sincerely hope you will protect the faith we have placed in each and every one of you.


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