Revisting recent PILOTs

The tax assessment for Meridia Water’s Edge is more than $8 million, 20 percent higher than what I estimated a few years ago before construction began.  That means the disparity in would-be property taxes versus the Payment In Lieu Of Taxes (PILOT) is even wider than I originally projected.

Meridia Water's Edge
Meridia Water’s Edge

The 108-unit apartment complex was completed in December 2013 adjacent to the library and included a 10-year PILOT approved by City Council in 2011.

The new assessment for Water’s Edge is $8,068,800 for 2015 — 22 percent higher than the $6.58 million I originally estimated. That estimate of $6,580,636 was based on recent sales of the 136-unit River Place and the 88-unit Meridia Grand.

The $8-million assessment would have yielded more than $500,000 in property taxes, based on the overall 2014 tax rate of $6.2014 per $100 of assessed value. The assessment is higher than the $8.369 million for which River Place is assessed, which also has a PILOT.

As part of a PILOT under the city’s redevelopment plan to attract development, Water’s Edge will pay about $216,000 annually, with 95 percent going to the city (Union County gets the remaining 5 percent). Over 10 years, that would mean almost $2.84 million less in property taxes paid until the PILOT expires after 2024.

Previously, the City Hall Plaza property was assessed at $445,000 strictly for the vacant land (roughly 0.75 acres), and since it was was owned by the Redevelopment Agency it did not pay any taxes. In 2012, Capodagli Property Co. acquired Block 305, Lot 5.041 for almost $1 million from the Redevelopment Agency.

At the time the PILOT was approved, I estimated the tax break could be as much as $160,000 per year, but that tax break appears to be more like $284,000 — or more than half of the current tax bill. And, that tax bill is likely to increase faster over the next 10 years than the PILOT payments or “annual service charge,” which also increase annually.

PILOTs in the 2015 budget are estimated to total $1.346 million.