Council to consider PILOT for Meridia Brownstones

The developer of a proposed four-building complex on the former Wheatena property on Elizabeth Avenue is seeking a Payment In Lieu Of Taxes (PILOT) to the city that would average about $1 million annually for 30 years.

An ordinance (0-21-14) was introduced at the July 14 regular meeting of City Council. A public hearing and final approval is scheduled for the Aug. 11 regular meeting.

Meridia Brownstones
Meridia Brownstones

West New York-based Capodagli Property Company will acquire three parcels along Elizabeth Avenue and has proposed 489 units with parking for 542 cars within the building’s footprint. About 5,000 square feet of supportive commercial retail space will be “geared toward millennial tenants,” in addition to a dog park, communal green space providing outdoor dining, walkways, gazebos, and outdoor lounge areas.

The concept plans included in the PILOT application (black-and-white plans on Pages 12-14) envision ground-floor parking topped by four floors of apartments along Elizabeth Avenue in a sort of U-shape, with another set of apartments abutting the railroad tracks, some with private balconies and terraces. Green space would be featured between the buildings as well as a grand concourse with iron gateway and water fountain.

The PILOT application, filed July 1, estimates a projected construction start date of May 2016 after gaining necessary approvals early that year. Construction will come in four phases and last five years, culminating in April 2021.

dd973-img_0325The properties encompass 1829 and 1905 Elizabeth Avenue, three parcels that currently are assessed at $2.5 million and pay property taxes of approximately $151,175 a year. Capodagli would acquire Block 226, Lot 1; Block 227 Lots 1 and 2, and Block 228, Lot 1 from the current owner, David and Sylvia Weisz Foundation. How much four buildings with 489 unit would be assessed for, and pay property taxes, is unclear but it’s the largest proposed development since the city began redevelopment efforts some 20 years ago.

The $49.75 million project would make annual estimated payments of $1,000 per unit ($489,000) for the first 10 years, according to the application, increasing ever five years after that:

  • Years 11-15: $1,250/unit, $611,250
  • Years 16-20: $1,500/unit, $733,500
  • Years 21-25, $3,000/unit, $1,467,000
  • Years 26-30, $4,530/unit, $2,215,521

Over 30 years, the total PILOT payment would be $30,024,007. The city would received all but 5 percent, with that portion going to Union County.

The pro forma development budget submitted as part of the application estimates total costs of $24.4 million, the largest of which would be for construction, $15.2 million.  Another $25.312 million is estimated for “extraordinary costs,” including:

  • $7.4 million for “elevated slab for air flow;”
  • $5 million, “slab for encapsulation of contaminated soil;”
  • $3.5 million, demolition and disposal.
  • $2 million, environmental remediation and reporting
  • $1.5 million, “vapor intrusion barrier;”
  • $1.5 million, flood plain control and mapping; and,
  • $1.25 million, asbestos abatement.

The Brownstones PILOT would be the second 30-year PILOT approved this year and the fifth awarded within the last two years. City officials have said the environmental issues associated with the Wheatena site make it an ideal candidate for a PILOT to help offset costs of remediation and attract investment.

At last week’s meeting 5th Ward Councilwoman Jennifer Wenson-Maier asked whether the environmental issues fall on the previous owner. Chief Financial Officer Frank Ruggiero said the responsibility for remediation was negotiated as part of the acquisition by the developer.

Wenson-Maier also inquired about whether the developer will seek LEED certification for the project. Henry Szwed of Capodagli Property Company said they will not pursue LEED certification but will incorporate green building techniques, like low-impact windows, higher insulation values, and air sealing and Energy Star products to increase the efficiency of the building. The process for certification entails a lot of paperwork and tracking and Szwed said their market studies indicate certification does not show the value but use of green techniques does.

The Redevelopment Agency approved a redevelopment agreement for The Brownstones last summer after being presented with a concept for 450 units in August 2012. Plans by previous developers for the site have changed over the years, ranging from 130 to 300 units.

A supermarket has been explored for the area but due to regional markets in the area in Linden, including a Walmart, the competition for new space has been reduced, Redevelopment Director Peter Pelissier said, adding that Capodagli had explored sites in the area near Elizabeth Avenue. Although manufacturing would be nice, he said there has been no interest for this site, probably due to the cost of the property and rigorous state environmental regulations.

The Transit Village concept for Rahway encourages residents in and near the downtown area, he added.

5 thoughts on “Council to consider PILOT for Meridia Brownstones”

  1. Thanks for catching that. I meant to link to the PILOT application in that case, which includes some concept plans. It should link to the correct document now. Thanks again!

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