SPRINGFIELD, NJ — The Township Committee unanimously approved a 30-year tax abatement for a redevelopment project on Morris Avenue at its Nov. 27 meeting, agreeing to the first payment in lieu of taxes for the downtown area.
The property is to house 24 residential apartments above retail space at 226 Morris Ave., at the corner of Church Mall next to the First Presbyterian Church, by developer SPDSAIL Urban Renewal LLC.
Matthew Jessup, an attorney with the McManimon, Scotland and Baumann law firm, which specializes in public finance and redevelopment issues, read the ordinance for a second time at the meeting.
“This project has been evaluated by your own independent consultant, who has determined that if the project were built and taxed conventionally like other commercial projects in town, the project could not be built,” Jessup told the committee.
He emphasized that the PILOT would help the developers obtain a better return for their investors and be beneficial for the municipality.
“In this case, the PILOT payment would be less than the otherwise applicable tax, but will generate more income to the municipalities than otherwise applicable taxes would and certainly more than the current taxes being paid,” Jessup added.
A PILOT establishes a fee schedule that a property owner will pay over the lifetime of the agreement, exempting it from regular taxation. The town is currently collecting about $3,700 in taxes on the property; once the project is complete, the projected first year revenue for Springfield, at a standard state mandated rate of 10 percent, is projected to be a little more than $49,000. The PILOT applies only to improvements to the property; the land will be taxed conventionally, with payments going into the township’s regular fund. There is no part of the financial agreement that dictates how the payment must be used.
The payment will be a percentage of the development’s annual gross revenue from commercial and retail rents, pet fees and storage fees. Five percent of the PILOT will go to Union County and the other 95 percent to the municipality. After the 30-year period, the project will go back on the tax rolls conventionally.
“This is going to be one of many PILOT programs and many of the things that we’re going to come across with the redevelopment,” Committeeman Chris Capodice said after the reading. “It’s very important to inform the public as much as we possibly can about what’s coming.”
The first reading of the PILOT ordinance took place at the Nov. 5 Springfield Township Committee meeting, and had been tabled from the October meeting due to concerns from committee members.
Capodice and Committeewoman Diane Stampoulos, of the Finance Committee, said they were apprehensive regarding the township’s return on investment.
“We just wanted to make sure, since this will be one of hopefully six or seven (projects) we might be seeing, that we’re making sure to do our due diligence because the last thing I want to see is a downtown full of brand-new buildings and not seeing a return on our investment,” Capodice said before the Township Committee saw the ordinance Nov. 5.
After the discussion, he said his concerns had been put at ease by Jessup’s explanations. “I’m very confident now that we’re on the right path and we’re taking the right steps,” Capodice said.
“It’s a beautiful project and a beautiful building,” Mayor Richard Huber said after the second reading.
Plans for the redevelopment project were approved at the the Springfield Planning Board’s Nov. 1 meeting after a lengthy hearing that had carried over from the October meeting.