ROBBINSVILLE: Tax break changes eyed for warehouse project

Matrix has buyer for redevelopment parcel near Route 539

By Joanne Degnan, Managing Editor
  ROBBINSVILLE —An affiliate of a private equity firm that has represented the online retailer Amazon in warehouse projects in other states is under contract to purchase 79.75 acres from Matrix in the Southeast Industrial Redevelopment Area.
   The Township Council on Nov. 8 approved a resolution assigning its tax abatement agreement with Matrix 7A Urban Renewal LLC to KTR NJ Urban Renewal LLC, an affiliate of the New York City-based KTR Capital Partners, a private equity firm that specializes in industrial real estate investments.
   The council also introduced a separate ordinance that would amend the 20-year Payment in Lieu of Taxes (PILOT) agreement for the warehouse project to reflect the transfer of the property from Matrix to KTR. The amended PILOT agreement, which the council will vote on Nov. 29, is more advantageous to the town because it provides an estimated $7.59 million in additional revenue.
   KTR intends to build a 1,046,520-square-foot warehouse fit out with sophisticated equipment that will command a higher commercial lease rate than the “shell” warehouse that Matrix had first proposed, Tim McGough, the township’s economic development director, said Monday. The proposed changes to the PILOT were being made to reflect the higher rent the KTR proposal would command.
   Under the original financial agreement with Matrix, the township would have collected $13,755,040 over 20 years in lieu of property taxes. The new PILOT agreement with KTR would provide an estimated $21,350,000, he said.
   The township would retain the lion’s share of PILOT revenue it collects, but the county and school district would also share a portion.
   Mayor Dave Fried has previously acknowledged that there have been “talks” with Amazon about opening a warehouse distribution facility in Robbinsville, but hasn’t said whether a deal has been reached. Mr. McGough last week declined to identify KTR’s tenant and referred questions to KTR partner Don Chase, who did not return phone messages before press time.
   KTR Capital Partners’ affiliates have been involved in other Amazon warehouse development projects, including the new 1-million-square-foot fulfillment center in Jeffersonville, Indiana that opened last month, according to WDRB-TV in Louisville, Kentucky and several Indiana media outlets.
   Amazon executives held a news conference with Gov. Chris Christie earlier this year to announce they would open two 1-million square-foot distribution facilities in New Jersey and start charging Garden State residents sales tax on their online purchases once those facilities open in July 2013. Amazon did not reveal where in New Jersey those warehouses would be built.
   Currently, Amazon isn’t required to collect sales tax from New Jersey customers because the company doesn’t have a physical presence here. New Jersey residents are supposed to pay the sales tax for purchases from online retailers when they file their state income taxes, but few do.
   State officials have estimated they’ll receive $30 million a year in tax revenue once Amazon starts charging New Jersey customers the 7 percent state sales tax. The governor’s office also has said the two new Amazon warehouse distribution facilities will together provide 1,500 new full-time jobs.
   The new Robbinsville facility being built by KTR would be located on 79.9-acre vacant lot within the 176-acre Southeast Industrial Redevelopment Area located near Interstate 195. Employee parking lots (for cars) would be accessed from Gordon Road and New Canton Way. Tractor-trailers would use John Henry Drive and Montgomery Way to access Route 539 to I-195.
   KTR Capital Partners needed to form a separate entity, KTR NJ Urban Renewal LLC, because state law governing redevelopment areas only allows municipalities to enter into PILOT agreements with urban renewal entities.
   The Planning Board gave the go-ahead to KTR NJ Urban Renewal’s application for preliminary/final site plan and subdivision approvals on Nov. 7.
   The mostly vacant land in the Southeast Industrial Redevelopment Area near Robbinsville’s border with Upper Freehold was designated an area in need of redevelopment by the Township Council 14 months ago.
   State law allows municipalities to use economic incentives, including property tax exemption and abatements, to spur economic activity in redevelopment areas.