To the editor:
Drive southwest on Federal City Road just past the 1-295 North on ramp and you’ll see a vacant property that used to be a landscaping business. It’s been empty for a couple of years now and has since become somewhat of an eyesore. According to stateinfoservices.com, 87 Federal City Road generated $30,302 in property taxes in 2016.
This property, known as Woodmont, was identified as a potential site for state-mandated affordable housing and is also eligible for “redevelopment.” Redevelopment’s purpose is to transform an underutilized or distressed area into an economically viable and productive part of the community.
A redevelopment plan is essentially an ordinance on steroids that dictates what a developer can and cannot do with the property. This is good for the municipality because it keeps the developer from running amok and it’s good for the developer because it allows them go into the project knowing what’s expected and what will and won’t fly, which increases their chances of a successful project.
Since this property has been designated for redevelopment, it is now eligible for a financial arrangement allowed by a New Jersey law that authorizes the township to accept from the developer an annual service charge over a period of 30 years instead of property taxes. This is agreement is referred to as a PILOT, short for Payment In Lieu Of Taxes.
This arrangement makes it feasible for the developer to undertake the costly process of adding infrastructure such as tying into sewers and funding things on the redevelopment plan that the township wants.
To be eligible for a PILOT, a developer has to prove their funding is insufficient to feasibly pay for all of the costs associated with the development and construction of the project. This includes infrastructure costs such as sewer tie ins and any other costs of complying with the agreed upon redevelopment plan.
A PILOT can be extremely advantageous to a municipality because 95 percent of the annual service charge goes directly to the municipality (5 percent goes to the county). As opposed to just 14 percent of property taxes it would receive under normal circumstances. That’s if the project ever got built, which without the PILOT agreement in place, it wouldn’t because it wouldn’t be financially feasible.
For example, under the PILOT agreement struck with Woodmont in late 2017, the township will receive an estimated $829,000 in year one, once apartments are occupied. As opposed to $30,302. That is a +2,636 percent increase in income from that property for the township.
Another reason this is important is Bristol Myers Squibb is slated to move out in 2020. The municipal tax on the BMS property is $888,432.
That’s right, this one PILOT agreement will generate almost as much revenue as the township’s highest ratable commercial property in year one, from a property that is a fraction of its size.
Redevelopment plans and PILOTs are powerful tools that should continue to be used to provide Hopewell Township with all available options and benefits moving forward.
L. Helena Bouchez
Hopewell Township