BY WALTER ELLIOTT
MAPLEWOOD / EAST ORANGE – Those following tax abatement or Payment In Lieu of Taxes agreements between developers and municipal officials recently did double takes and asked themselves “Can they do that?” with at least two recent developments.
PILOTs and comparable arrangements are normally done as a condition of a developer getting approval for new housing construction or a major redevelopment.
The Maplewood Township Committee, its affordable housing board and the East Orange-based Sierra House announced a 30-year PILOT on Aug. 6 for a project at 95 Tiffany Place involving two apartment units at that address.
Sierra’s 93-95 Tiffany Place Urban Renewal Corp., under the agreement, will be paying the township at least $7,000 annually for the first 15 years with regular increases thereafter until full taxation on Year 30.
The arrangement, made after six months’ negotiations, will allow 95 Tiffany LLC to rent out the two apartments to Sierra House’s clients – “young people that have a job like a substitute teacher or a dental hygienist who makes a decent living but not enough to afford a house.”
Sierra House is a homeless shelter who helps transition their clients into the workforce.
93 Tiffany Place is a garage on an otherwise empty lot. 95 Tiffany is a vacant lot.
While Maplewood-Sierra’s PILOT allows for more familiar flexibility, the Belleville Township Council and Mayor Michael Melham approved a more radical PILOT arrangement on Aug. 13.
The council and Melham, who is a voting member, authorized a five-year PILOT for “The Maximilian” at 527-535 Union Ave. The Maximillian is a three-story, 20 apartment unit building with ground level parking – and was built last year.
The conventional thinking with PILOTS and other tax abatements is that the municipality is providing a tax break as an incentive for the developer or redeveloper to build housing. The thinking is that the housing would not be built without the PILOT or abatement.
Newark Mayor Ras Baraka, early in his first term, said he accepted the granting of PILOTs as a standard operating practice.
There are PILOT and abatement objectors who say that such financial instruments shortchange municipal services like public schools, first responders and utilities. Some call for varying the PILOT or abatement terms to between five and 20 years to keep City Hall from “giving away the store.”
Concern over routing PILOTs or abatements is part of a concern by petitioning Orange residents. They contend that 30-year pilots granted to developers, along with 11 years of property tax increases, are pricing out longtime residents.
The PILOT tax abatement controversy comes at a time where the decades-old Council on Affordable Housing’s municipal allocations are being changed. Some, like Orange, have long fulfilled their allocation; others, like Millburn, have not.
Maplewood committeeman and former mayor Victor De Luca is urging homeowner to make small scale affordable housing available.
“For those who scoff at there being only two units, I invite them to be part of the solution,” said De Luca. “Build an accessory dwelling unit to your property to rent to somebody needing affordable housing or take in a boarder who needs a place to live.”
