By Kenny Walter
Staff Writer
LONG BRANCH- The City Council has greenlit a tax abatement payment plan for the developers of a 47-unit beachfront condominium project.
After a presentation by redevelopment attorney Robert Beckelman, the council adopted an ordinance for a payment-in-lieu-of-taxes (PILOT) plan for FEM South Beach Urban Renewal LLC during the May 10 meeting.
Councilman John Pallone delivered the only vote against the measure.
“The city has determined that the project will result in significant benefits to the city, including the redevelopment of underutilized properties into unique and desirable residential development, the creation of jobs during construction, new residents to patronize existing businesses, and to support the creation of new business that will contribute to the economic growth of this city,” Beckelmen said.
Under the agreement, the developer will pay 10 percent of the gross annual revenue in the first year instead of traditional property taxes, and the developer will pay the greater of 15 percent of gross annual revenues or 80 percent of full taxation by year 10.
However, under the agreement, the city will receive 95 percent of the payment, while the county will receive the remaining 5 percent and the local school district will not receive any of the funding.
According to Beckelman, the average pilot is usually 30 years, so it spans the life of a mortgage, but the city opted for a 10-year agreement. He also said because of the agreement, the developers are subject to certain requirements.
“Because they are receiving the pilot, the redeveloper is subject to profit limitations and annual reporting requirements to the city as well as local government services in the state of New Jersey,” Beckelman said.
Mimi Feliciano, CEO of FEM Real Estate, which is located in Morris County’s Montville Township, first presented plans for the project in the Beachfront South redevelopment zone in 2013 and gained approval from the Long Branch Planning Board in 2014.
Because of a previous redevelopment agreement, Feliciano already secured approvals to construct 11 townhouse units on the property, but was able to acquire more properties to expand the project located on the corner of Ocean Boulevard and North Bath Avenue.
According to Beckelman, there are several benefits to the city regarding the project.
“What this project does, it maximizes the scope of redevelopment in this sector,” he said. “The developer purchased an 11-unit townhouse project and spent two years assembling property to increase the base of this development and the scope of this development.”
Other benefits include the assemblage of properties without using eminent domain and the developer will make environmental and infrastructure improvements.
Beckelamn called the project a catalyst for redevelopment in the Beachfront South zone. He also said under a traditional taxing plan, the developer would pay about $25,000 in municipal taxes, and under the pilot that number grows to $422,000 in year one and will result in about $2 million more in payments to the city under the duration of the pilot.
Resident Vincent LePore requested that the city hold off on the vote and put the presentation online for public review.
While Councilwoman Kathleen Billings said she is primarily against pilot agreements, the benefits outweigh the negatives for the city on the FEM project.
“I’m not a huge fan of abatements for project developers, and as a result of this abatement, we will be getting $2 million in revenues,” she said.