A redevelopment project that is expected to help revitalize 19th to 21st streets on Broadway received a 30-year PILOT (payment in lieu of taxes) last week, allowing the project, proposed by Ingerman Development Company LLC of Collingswood, to move forward.
An abatement, often called a PILOT, is an agreement with the city to exempt a developer from paying regular, fluctuating property taxes. Developers often negotiate a deal to pay a stable, separate fee to the city in lieu of taxes, a payment which may sometimes be equal or nearly equal to current taxes. Those payments benefit the city because they go straight to city coffers, and do not include paying school and county taxes.
The ordinance passed by a 4-1 vote at the Dec. 16 City Council meeting. Council members Thomas Cotter, Sal Gullace, Sharon Nadrowski, and Juan Perez voted in favor of the measure. Councilman Gary La Pelusa voted against it. La Pelusa has said repeatedly that he does not like voting for PILOTs unless the city sees some other benefit, such as job creation.
Business Administrator Joseph DeMarco said, “The PILOT was necessary for Ingerman to go through with the project. The company indicated that financing was contingent upon that approval.”
The M&M site is part of the city’s plan to rejuvenate a section of the city’s main shopping district.
The City Council voted 4-1 at its Nov. 10 meeting to purchase the vacant lot at 426-428 Broadway for $900,000, using Urban Enterprise Zone money. La Pelusa voted against the measure.
The two votes pave the way for new life for the lot and the neighborhood, DeMarco, Tax Assessor Joseph Nichols, and Chief Financial Officer and UEZ Coordinator Terrence Malloy said.
Benefits to Broadway and to city
Officials say the purchase will result in a new, mostly one-bedroom, residential development and greatly increase ratables for the city.
DeMarco said the plan is to turn the lot, which has not been used since 1990, from a $25,000 annual source of tax income into one which makes the city $400,000 in taxes.
This will happen because Ingerman is purchasing a parking lot behind the site, which runs between 19th and 21st streets. Ingerman will also purchase for $700,000 an old Bayonne Housing Authority building and its land on 21st Street that has been unused for 10 years. The company will then buy, for $400,000, half the lot the city is purchasing, and will build a 140-unit residential building.
“The PILOT was necessary for Ingerman to go through with the project. The company indicated that financing was contingent upon that approval.” – Joseph DeMarco
The project will include a parking deck with a separate section dedicated to Bayonne Renal Center patients and the public.
Ingerman will also build a passive park, to be used for public events.
DeMarco said, “They’ll be enough parking for residents; it takes the Housing Authority building, puts green space on Broadway, and provides residents for the shopping district on Broadway, which is what we’re looking to do.”
Opposition to PILOT and to project
Some Bayonne residents are concerned that PILOTs shift the tax burden for the schools portion of the tax levy onto them.
“You can’t give them a 30-year PILOT; you’re bankrupting this town,” one resident said.
“I saw people who are selling their homes because they can’t live here anymore,” said Jill Pustorino of 46th Street. “I may have to also.”
La Pelusa said he was unhappy with the taxes paid by companies like Ingerman.
“You start looking at what developers are paying and what people are paying,” he said. “I’m offended.”
Without a PILOT, the tax breakdown is 42 percent for the city, 17 percent for the county, and 41 percent for the schools, DeMarco said. With long-term PILOTs, such as the one approved for Ingerman, those figures change to 95, 5 and 0 percent, respectively.
Nichols said that while the school tax percentage does decrease from about 40 percent to zero, the city reaps a much higher tax percentage, more than twice as much.
Corporation Counsel Jay Coffey said the school district does not lose funding, that its tax burden is just distributed across a larger pool of taxpayers.
Ingerman spokeswoman Lara Schwager could not be reached for comment on the PILOT approval. Her company is expected to go before the Planning Board early next year and begin construction later in 2016.
Joseph Passantino may be reached at JoePass@hudsonreporter.com.