The developer of a 43-unit East Cherry Street project has requested a 30-year Payment In Lieu Of Taxes (PILOT) to be considered by City Council.
An ordinance (O-12-16) was unanimously introduced by the governing body during a special meeting on Monday night. The measure will be come up for a public hearing and final approval at June 13 regular meeting.
The Redevelopment Agency approved a redevelopment agreement in principal with R2-N2 Properties at its March meeting and then adopted a resolution at its May 4 meeting but the agreement had not yet been signed by both parties. R2-N2, an entity of DMR Construction, submitted its PILOT application on May 16.
The Planning Board approved the project in November and here are five things to know about it. The five-story proposal will replace three buildings from 38-52 E.Cherry St., including the Police Assistance Center (PAC) and the building occupied by Rahway’s Finest Barbershop.
The PILOT would comprise an annual service charge based on 10 percent of annual gross revenues of the development, projected to be $78,000, according to the financial agreement. The ordinance refers to several exhibits, including the PILOT application, income projections and financial agreement, but the items weren’t yet available on Monday’s agenda.
The properties (Block 318, Lots 18-21 and part of 23) currently generate taxes of about $26,475, according to the ordinance. That includes city, school and county taxes.
Lots 18-21 currently are assessed for about $491,900, and include Lot 18, 52 E. Cherry St., which does not pay taxes since it’s city owned. All of Lot 23 is assessed at $714,400 and currently owned by the Parking Authority so it also does not generate taxes. Only part of Lot 23 is planned as part of this project and it’s unclear what the assessment would be for part of the lot.
Based on a 2015 overall tax rate of $6.317 per $100 of assessed value, the $491,900 assessment would generate $31,073 in property taxes, if the PAC parcel is included included (and if all lots are included, a $714,400 assessment would have yielded $45,128).
If approved, as expected, The Gramercy would be at least the seventh development in recent years to be awarded a PILOT and the first to get one for 20 years. Two received 30-year PILOTs, two received 15-year PILOTs, and one received a 10-year PILOT. Last year’s budget included $1.3 million in revenue from PILOTs. Three of those PILOTs will begin payments in this year’s budget, which was introduced on Monday (more on that next week).