TC approves 30-year PILOT for Executive Drive

WEST ORANGE, NJ — The West Orange Township Council approved a long-term tax exemption, also known as a Payment in Lieu of Taxes, for the developers of the Executive Drive property near the geographic center of town at its Dec. 18 meeting. The move begins a plan to relocate the West Orange Public Library and Animal Shelter to 10 Rooney Circle and build a dog park on the property. The ordinance passed with a vote of 4-1; Councilman Joe Krakoviak cast the only opposing vote.

The deal would turn 100 and 200 Executive Drive into a large apartment building, while redeveloping 10 Rooney Circle into a new library and animal shelter, and building a dog park on 2 acres of land on the property. The PILOT is for 30 years at $1.2 million a year, which financial adviser Michael Hanley said at a Nov. 26 council meeting represents 10.5 percent of the annual gross revenue. In the second decade of the three-decade deal, the payment will go up to 11.5 percent, and in the final 10 years will go up another percentage point to 12.5 percent.

Mayor Robert Parisi attended the Dec. 18 meeting to present the plan to council members and the public. He explained that BNE Real Estate Group will knock down 100 and 200 Executive Drive and build 300 apartments, 64 of which will be affordable housing units. In his presentation, Parisi addressed concerns about school-age children and the possibility of overcrowding the public schools.

“Our schools are not over capacity. We have been in the past, so we know that numbers of children are always going to ebb and flow. Despite what most people ultimately think, our schools are not overcrowded,” he said. “When you look at birth rates, the demographics will decrease. That’s not to say we should fill all those vacancies, but these vacancies will not be an issue. We don’t expect it to be the number many people expect.”

Parisi acknowledged that the number of school-age children is something the town should and did consider, though he doesn’t believe it is a reason to stop the project from happening.

“It’s obviously something important to consider in the community, but not a reason to deny,” he said. “I don’t think we should be looking to create anything that doesn’t attract young families because those young families are going to keep the circle going. They’re going to buy the houses we sell when we don’t have kids in the house anymore. Our goal should be that we want to attract young families to this community.”

In the presentation, Parisi also described the administration’s plan for 10 Rooney Circle, which, under the plan, the township will be given at no cost. The three-floor office building will be renovated to house the new library and possibly the animal shelter. The town will also gain $600,000 in rent revenue from the TSA, which leases the third floor and is scheduled to be there until 2024. The organization has the option to break the lease with six months’ notice, but if they remain in the building until 2021, they are no longer allowed to do so.

“To get a building is a huge value to the community as part of this project,” Parisi said, describing how the library and animal shelter would be able to share a building. “The building is on an angle, as most of the town is, and the building enters on the second floor. Technically it’s the second floor, but it’s the first floor you enter. The lower floor is completely behind the building on a lower level.”

The animal shelter, for which Parisi said the administration is still considering other locations, would be on the lower level of 10 Rooney Circle, with a separate entrance.

Using redevelopment projects from other towns in Essex County as an example, Parisi said the Executive Drive project would not happen without a PILOT. According to Parisi, Roseland, Verona and Orange each have two ongoing redevelopment projects, Montclair has three, Bloomfield has four, and South Orange has five — all 18 projects have PILOTS.

“Pilots are not a West Orange phenomenon,” Parisi said. “What’s important to talk about with these 18 projects is only one has gotten any community benefit. Only one of them provided funding to the village of South Orange for a first aid building. All those other PILOTS are not providing public use other than the benefit of getting them done. This project is not possible without a PILOT.”

The mayor said the library board and staff have been supportive of the project concept, which would allow for the expansion of the library without the limitations of the current site on Mt. Pleasant Avenue. On Executive Drive, Parisi said, there is more square footage, more outdoor space and more room to make building upgrades. He also spoke about access to the library after the move.

“Of course there are people who like to walk to the library,” Parisi said, adding that a jitney making rounds around town would run to Executive Drive, so residents living near the current library could ride it to the new site. “Picking up and moving does create a problem. Even though there would be an annex, it’s not the same as a full library. We think moving up to Executive Drive actually improves access.”

Library Director Dave Cubie and members of the library board were present at the meeting; they did not speak.

Several residents spoke out against the PILOT and redevelopment plan at the meeting. Sally Malanga said a more reasonable deal should be made with the developer.

“It doesn’t matter what other towns do; their plans may not be economic,” she said at the meeting, referring to Parisi’s comparison to the surrounding towns’ PILOTS. “We don’t know their financial situations. When completed, this project will have a property tax value of $125 million, it should have property taxes of $5 million. These numbers are not being discussed.”

Malanga said the revenue the town will make is not as much as it would be without the tax abatement.

“How can the administration make a deal that is so skewed? I’m happy to hear mention of a jitney, but how much will that cost? Will there be enough money to settle the police contract after these abatements? This is the largest transfer of public revenue into the hands of private company since the Edison project. I encourage our administration to please reconsider this proposal.”

Clare Silvestri brought up the 8.5-percent tax increase that the council majority passed in this year’s budget.

“This is a major project with immense implications to the township’s residents over the next 30 years,” she said at the meeting. “The money will be made up by the other taxpayers in this town. This is not great for the people who are still reeling from the 8.5-percent tax increase. I ask that you vote this down.”

Krakoviak asked why, if the housing rental market is so good, the developer needs a PILOT for the project.

“The PILOT is less dollars than if the project was built with conventional taxes. But the reason it’s done like this is because it’s not feasible to do that. The reason you do this is you can make that money, but it does produce less than it would with traditional taxes,” Hanley said in response. “One of the things you have to take into account is the marketplace. In Morris Plains you don’t have a PILOT, but it’s because the effective tax rate is so much lower. Different places have different economics and different sites have different economics. This site requires a PILOT.”

Krakoviak said he voted against the ordinance because he believes Executive Drive could attract office tenants without having to turn to redevelopment.

“All of the risk is on us if we go through with this deal,” he said. “Our community has many attractions, maybe the town would be better off letting the market do its thing without redevelopment. Certainly there are benefits here, I don’t want to deny that. But when I balance this out, I come to a different conclusion. We’re giving up future value and we’re giving up property taxes. There’s a lot of positive aspects of the proposal, particularly as a library supporter. But I don’t believe the deal is friendly to taxpayers. I think we should vote it down and ask the administration to go back and try to get a better deal.”

According to Councilwoman Cindy Matute-Brown, when the town first began to discuss the Executive Drive project, she was looking for a reason to vote against it, as she does with each vote she makes. In this case, she thinks the benefits outweigh the issues.

“It’s hard for me to say no to supporting this, because there is an immediate benefit, there is a long-term benefit,” Matute-Brown said at the meeting, saying she believes moving the library and animal shelter and building a dog park could draw more people to the Essex Green shopping center as well. “I think this is a step in the right direction for our town.”

Councilwoman Michelle Casalino agreed, saying the project is creative.

“The developer is giving us an $8 million asset, plus a dog park, plus the improvements,” she said at the meeting. “We’re getting a benefit. The mayor said from day one we’re not giving a PILOT unless we get a benefit. I think this has been really creative. I see this as a great benefit for the township.”