CRANFORD, NJ — The township committee on May 8 approved a 30-year payment in lieu of taxes, or PILOT, agreement with the developers of the Birchwood apartment complex on the border with Kenilworth.
Birchwood Developers Urban Renewal Associates will pay 11 percent of its yearly gross revenue to the town as an annual payment rather than taxes, the PILOT ordinance states. The developers of the Birchwood Avenue project also will pay an annual 2 percent administrative fee to the township.
Mayor Thomas Hannen said the township also sold the land at 215 and 235 Birchwood Avenue to the developer for $18.5 million. The sale will generate about $588,000 in the first year for the township, the ordinance said.
“This is the final component in a long-term commitment that the township committee — both this township committee and the previous township committee — have tried to implement in order to reduce the density of the Birchwood project,” Hannen said at the meeting, “And I believe we’ve been successful.”
The 225-unit apartment complex includes 34 affordable housing units and is several years in the making. The redevelopment was delayed by changing developers and lawsuits over the township fulfilling its Mount Laurel requirements, LocalSource previously reported.
In the event that a majority of the apartments remain vacant, the mayor said the agreement has a “calculated-in vacancy rate” at around 2 percent.
The committee plans to approve a resolution giving a certain amount of the PILOT revenues to the Cranford Board of Education.
The impact of an influx of residents on the local school system “would have been quite onerous,” the mayor said.
“At our last meeting we had introduced a resolution that we have committed to pay toward the board of education a certain amount of the PILOT revenues, which is pretty unprecedented in the state of New Jersey,” Hannen said.
The township will also have to pay 5 percent of the developer’s obligation to the county, the ordinance stated.
Alison Mennor, a resident who spoke at the May 8 meeting, hailed parts of the financial agreement between the township and the developer as “good news,” but still had reservations.
“I didn’t like the idea of a PILOT agreement for a private developer for profit because when I choose to improve my property, my taxes go up, and when I build, I pay,” Mennor said, adding that she hopes a precedent hadn’t been set for future developers.
She suggested making a developer responsible for paying taxes might prevent them from building such large developments.
The project was originally slated to have 360 units, the mayor said, but the township negotiated that number down with the PILOT agreement.
Hannen called the project a “win-win” since the PILOT provides a guaranteed amount of money to the township, unlike other projects in town that have been financially uncertain. In some cases, he noted, developers will later ask for a reduction in taxes if there is a vacancy problem.
“As one major development reduces their taxes, we all have to make up that somehow,” Hannen said. “This locks in the amount that the developer is going to pay over the next 30 years. It kind of gives a guarantee to the taxpayer: this is what you can expect from this project in terms of municipal reimbursement.”
Commissioner Jean Maisonneuve was absent at the May 8 meeting and Commissioner Patrick Giblin was the one dissenting vote for the PILOT ordinance. Giblin said he has been concerned ever since the township’s original $18 million purchase of the land from another developer in 2017.
“It wasn’t just the PILOT,” Giblin said in a May 14 phone interview. “It’s an $18 million purchase that I felt was a considerable risk to Cranford taxpayers. The PILOT is just less revenue than what has been realized.”