KEARNY –
One developer’s bid for a tax abatement remains under review while another’s has been approved by Kearny’s municipal government.
Mayor Alberto Santos and members of the Town Council huddled in private session Tuesday, March 28, before emerging to vote on the proposed tax breaks.
Carlstadt builder Edward Russo had hoped to come away with a financial agreement keyed to a PILOT (payment in lieu of taxes) for developing 280 rental apartments at 113 Passaic Ave.
He didn’t get it.
Santos told The Observer that, “Russo remains under consideration. … We hope to finalize our negotiations with Russo by our next council meeting [April 11].”
He didn’t elaborate.
This represents the second recent setback for the developer – on March 1, the Kearny Planning Board deferred action on Russo’s request for site plan approval for the Passaic Ave. project, pending further review of projected traffic flow patterns along the north-south artery.
The town previously negotiated a financial agreement with Russo granting him a 30-year PILOT for his initial enterprise, 150 rental units spread among six, 3-story buildings built along the south side of Bergen Ave. off Schuyler Ave.
For 2016, the town was to receive a PILOT payment of $375,000.
He’s also seeking a PILOT for the next phase of that project: construction of an additional 80 apartments on the north side of Bergen on the site of two former industrial buildings that have been torn down to clear the way for the new apartments.
Under an agreement designating his LLC as the redeveloper for property on Passaic Ave., Russo was slated to build a total of 458 apartments. Construction was slated to begin Nov. 1, 2017.
The proposed PILOT for the Passaic Ave. project has stirred up anger among some on a Kearny discussion forum on Facebook:
George Rosko commented: “No reason to give tax abatement nor PILOT for this project.”
Lorraine Swick Sanfilippo: “So what good are these overpriced apartments to us in town? The good news is if they have kids they will probably go to private schools.”
Lawrence Handlin: “The area should have been developed commercial. There would be less chance of school-aged children and less impact on services.”
But Scott Marshman saw a silver lining, saying: “The entire project is over 400 units. It will probably be done in pieces. This must be just phase 1, kinda like the ones on Bergen and Schuyler. But I might be in the minority here, bring it on, kinda sick of looking at these empty properties not collecting probably anything in taxes right now.”
Jo Pearn: “More tax abatements? I guess they’ll raise our homeowner taxes again to school all the children that will move in. When do we add ratables?”
John Downey: “My feeling is for every 100 units 10 are kids that use our school system. 400 means 40 minimum and these are rentals so it can be more at any given year. Towns need to stop those PILOTs. It does cost money. They just kick the can down the street and homeowners move out because of raising taxes and salaries. Not keeping up can only squeeze an orange so much till there’s no juice left.”
Meanwhile, the mayor and council have approved a financial agreement, including a PILOT, with Hugo Neu’s LLC KPIP Urban Renewal II for development of a 197,000-square foot mixed-use commercial building on a 14-acre parcel in the Kearny Point Redevelopment Area at 1 Eastern Road.
As justification for the abatement, the town concluded that, “In the current real estate market marketplace, the rents likely to be achieved by this project are not sufficient to pay for the costs of construction and the payment of full taxes while allowing the developer the opportunity to make a return on its investment that is sufficient to warrant the risks.
“Since the town believes that the amounts to be paid under the terms of the financial agreement are greater than the incremental costs to be incurred by the town as a result of this project, the town believes that it is in its interest to provide the necessary incentive [the PILOT] that will cause the project to be constructed.”
Further, the town notes that the formulas in the financial agreement “will provide for growth in the amounts to be paid over time” – amounts that will outweigh the costs of municipal services supporting the project.
Current taxes on the property are $106,880. Under a 30- to 35-year abatement agreement, the town will receive an annual in lieu of tax payment, starting in 2019, of $269,512 and rising to $295,000 ($1.50 per square foot) “when the project achieves economic stabilization” and increasing to $350,000 (10% of the projected gross annual revenue) by “no later than 2030.”
Construction is expected to start this month, according to Santos.
