LINDEN, NJ — A mixed-use development in Linden’s fifth ward is projected to get under way this year.
The development, which will be located on John Street off Georges Avenue will include 113 residential units and retail spaces on the ground level. The project will be financed under a 30-year PILOT program, or payment in lieu of taxes, according to council members.
A PILOT program helps compensate local governments for some or all of the tax revenue lost due to tax-exempt ownership or use of a particular piece of property.
The property is owned by the city through the Union County Improvement Authority.
The project, which will be constructed in two phases, is being developed by VVR Developers LLC of Clifton and will include 81 one-bedroom and 32 two-bedroom market-rate units and approximately 16,000 square feet of retail space, according to Ordinance No. 61-37.
Linden Mayor Derek Armstead has expressed excitement about the project, which was approved on June 8, by the Linden City Council in a vote of 7-4, with Gretchen Hickey, Monty Brooks, council President Jorge Alvarez and Rhashonna Cosby-Hurling opposed.
Armstead is calling out the council members who voted against the project, stating that they have voted against something that will bring much-needed revenue into the city.
“That area has been blighted for so long,” Armstead told LocalSource in a recent phone interview. “When you drive through that area, you close your windows and lock your doors.” Referring to the four council members who voted against the development, he said, “These people are just determined to see me fail. They don’t have real numbers. They could not justify their vote. They don’t have any real plan or development ideas.”
According to Third Ward Councilman Peter Brown Jr., who voted in favor of the project, certain members of the council voted against the project for political reasons.
“Councilwoman Hickey and Councilwoman Cosby voted ‘no’ on redevelopment on (the) St. George Avenue project due to politics and this dislike for the mayor,” he said, referring to the representatives of the Fifth and 10th wards, respectively, in a June email. “Neither one sat in any meetings in regards to this project nor did either one offer any solutions. However, both have voted in favor of numerous PILOT programs in Linden over the years.”
According to Brown, city taxpayers have paid approximately $4,499,014 in debt service on about $4.5 million in bonds issued for the property since June 2007. Without development, he said, taxpayers will have had to pay $8,532,358 by Oct. 1, 2026.
“This property has been vacant for a long time,” Brown said. “The mayor has brought a developer to the table that wants to do a PILOT program. Mayor Armstead wanted to see redevelopment in the form of housing and retail space. As a result, we will be able to receive payments that will not only pay for the bond that the city took out in order to acquire the land, we will be able to make money on it as well and we will we pay our debt service.”
“With this redevelopment, by the end of the pilot program, our financial professionals are projecting the city will receive about $11,290,411,” Brown said. “In addition, housing and retail units will inject economic development in an area that the city has tried to encourage for at least 15 years. I personally researched and asked this questions in order to see now we can reduce this liability that the taxpayers are paying.”
Brown also noted that if cleanup of the site exceeds $400,000, the city can opt out of the deal.
But Hickey told LocalSource in a recent phone interview that the deal the city made with the developers of the project is not a good one, stating that the city will be making considerably less on each unit than market rate.
“It’s not that I’m against redevelopment,” Hickey said. “I’m against giving away our city. I believe we need to look around for new developers. With this 30-year PILOT program, we’re giving it away. I just don’t feel we’re getting the best for our money. I don’t know why the mayor is worrying about it. He has the votes; it’s going through no matter what I say.”
According to Hickey, the sale of the vacant property was not properly posted.
“I brought this up at the May meeting of the council, and I was basically berated,” she said. “The next night it was pulled because it was not properly posted. If we were making money on this, I’d be all for it. But we’re not making money on this. Who’s going to pay for these Board of Education taxes? There will definitely be kids in these apartments.”
Cosby-Hurling told LocalSource that the deal between the city and the developers will not bring in nearly enough revenue.
“I did not vote for it because in my heart and in my brain, I said, ‘this LLC has not developed anything of this size before,’ ” Cosby-Hurling said. “A limited liability company is just that. We could have gotten a much better deal at the end of the day.”
According to Brown, former Linden Mayor Richard Gerbounka wanted a justice complex to be in the spot where the mixed-use development will be built.
“That would have cost taxpayers at least $20 million to build, with the city receiving no property taxes or payments,” Brown said. “As a result, we would have spent over $28 million in acquiring the land and building the complex.”
At the June 8 special meeting of the council, at which the development was approved, Dennis Valvano, owner of DenVal Realty, who was called in by Hickey to speak about the project, noted that the property was advertised just once, in 2016. According to Valvano, that was not enough.
“How you found somebody is beyond me,” Valvano said at the meeting. “It was not put out to people that would want to do business with the city. I’m baffled. Residential units have never been more valuable than right now. You need to make a better deal; you need to make a better deal for the city of Linden.”
Valvano stated that, based on his calculations and the tax abatement agreement, the city would net approximately $280,000 in the first two years.
According to Valvano, other multi-dwelling units have brought in much more revenue, often without tax breaks.
But Brown pointed out the risk factor of development in the much-beleaguered area.
“We have the market risk of where it’s located,” Brown said. “And it’s not near the train station.”
First Ward Councilwoman Lisa Ormon said at the June 8 meeting that she grew up in the neighborhood in question and, while the neighborhood was once a thriving area decades ago, that is no longer the case.
“I drive through and it’s heartbreaking,” Ormon said. “We need to take the opportunity right now and get moving on it. I want better for that community where I grew up. We need to do something.”
Brown called out council members who criticized the PILOT program, stating that they have voted for programs like this in the past.
“These guys voted for PILOT programs on Elizabeth and Wood avenues, so are they talking out of both sides of their mouths?” Brown said. “We got a better deal on this PILOT program than the other PILOT programs they voted on in the past. This is political.”
Alvarez told LocalSource that he voted against the initiative because not enough research had been done on the project.
“I agree with Peter Brown,” Alvarez said in a recent phone interview. “A little bit is better than nothing. But I feel like it was just given away…My question is, why?”
Alvarez also took issue with the way the bid for the property went out.
“The bid was posted in a small paper for a short amount of time,” he said. “The only company that came forward was this company.”
According to Alvarez, he reached out to Linden’s tax assessor, Michael Frangella, regarding the deal.
“I asked him, ‘Was this a good deal?’” Alvarez said. “He said ‘no.’ I asked him why he didn’t tell us and he said he wasn’t kept in the loop. He said it’s not a good deal because we gave the land away.”
LocalSource reached out to Frangella, who did not respond to a request for comment at press time.
Alvarez said that the city will be getting the bare minimum as far as revenue.
“Our debt ratio is a lot higher than what we’re getting back,” he said. “We’re getting the minimum allowed by the state. We could have made a better deal on it and we could have made more money.”
But Brown, who stated that the tax assessor was not involved in the negotiations, is pushing back on the naysayers, stating that no one has come to the table with any ideas.
“To simply say ‘no, we’re against it,’ then what?” Brown said. “What are our options? They have not looked at any of the facts and have not provided any solutions. I’ve gone to financial and redevelopment workshops; these guys have not. Under Mayor Armstead’s plan, we entered into a partnership with a developer to pay off our debt service and encourage economic development.”