UPDATED: City Council unanimously approved ordinance (O-9-14) by an 8-0 vote (with only Councilman At-large James Baker absent) on Monday night. There was no comment from the public or council members.
The Payment In Lieu Of Taxes (PILOT) for a proposed 196-unit project downtown could mean a tax break of as much as 50 percent in the first year alone and some $17 million versus $34 million over the 30-year life of the program, if certain assumptions are made. City Council introduced the PILOT at its March meeting and is scheduled to to vote on the ordinance (O-9-14) at its meeting tonight at 7 p.m., along with the 2014 city budget and the $130,000 Special Improvement District (SID)/Rahway Arts Distrit (RAD) budget.
PILOTs are often used in urban renewal efforts around the state, and in recent years Jersey City has awarded a slew of tax abatements. This would be at least the fourth PILOT approved for Rahway projects in the last two years.
Based on recent comparable sales, the assessment of the Slokker project could be as much as $12 million, by my estimates. Such a tax assessment would normally generate a property tax bill of some $722,000, based on the 2013 tax rate of $6.047 per $100 of assessed value. In my estimates, I used the recent sales of the 159-unit Park Square for $46.5 million and the 136-unit River Place for $26 million.
Of course, the tax assessment will depend on a variety of factors involved in a project that has yet to be built, including the number of bedrooms per unit. The proforma and details of the PILOT can be found in the PILOT application, which was filed in January.
The PILOT proposes an annual payment of about $360,000 in the first year, increasing 3 percent each year. Based on the estimated annual increase in the PILOT of 3 percent, the project would pay almost $850,000 in the final year of the agreement (~2046), with 95 percent of it going to the city and 5 percent to the county. Over the life of the PILOT, payments would be more than $17 million, or an average of about $570,000 annually over the 30 years.
The lots involved in the Dornoch II/Slokker project (Block 318, Lots 1-10 and 23) have a combined total assessment of $649,400 but currently are tax exempt under an agreement with the Parking Authority, which owns Lot 23. Based on the latest overall tax rate of $6.047, such an assessment would yield a tax bill of less than $40,000.
The $55-million project envisions two buildings built to four stories, with a two-level parking deck (one level underground and another at ground level). The north building, closer to the corner of Poplar Street (map), would have 112 units and the south building, along Main Street near the extension of Monroe Street, will have 84 units. The developer would be responsible for about $1.4 million in environmental remediation, as well as creating a new street — extending Monroe Street past Main Street, to East Cherry Street at a cost of about $250,000, according to the proforma.