The Bayonne City Council continues to innovate in the use of property tax abatements as the city develops.
At the April 15 council meeting streamed online via TetherView, the council approved an ordinance granting a “first of its kind” tax abatement, or payment in lieu of taxes (PILOT) for a new development, according to Council President Sharon Ashe-Nadrowski.
The property is the former site of the very popular Chris’ Corner restaurant, at 117 West 2nd Street. Under the terms of the agreement, the PILOT will run for 15 years.
PILOT arrangements allow the developer a predictable payment annually to the city instead of paying the usual tax rate, which can vary over time. What makes this PILOT unique is that the developer will be constructing for-sale units as opposed to the typical rental units.
Normally, the city doesn’t offer PILOTs on for-sale units because the market is not favorable, Ashe-Nadrowski explained, pointing to The Alexan as an example. In that instance, the market couldn’t bare it, and the units were shifted to rentals.
Details of the development
According to Ashe-Nadrowski, the PILOT kicks in when the sale happens and will transfer to the new owners. The new owner must pay based on the price of the original sale or higher.
The PILOT will never collect less than the sum it started at and will never go down if ownership is transferred, Ashe-Nadrowski said. The original owner of the property cannot occupy it; it must sell the units.
At the meeting, Ashe-Nadrowski gave further details about the development after a resident asked for specifics.
The development will house 12 units, mostly one bedroom with a few two-bedroom units. The ratio of parking spots to residential units is 1:1.
Before voting, Councilman Neil Carroll spoke in favor of the ordinance.
“It’s an interesting situation, but I’m happy to vote yes as this represents actual ownership in the city, not just rentals,” he said.
The only member who voted against the proposed PILOT was Councilman Gary La Pelusa.
Ashe-Nadrowski echoed Carroll, highlighting the importance of people taking ownership and putting down roots in the city.
Unlike other PILOTS
A public hearing was held for another ordinance granting the Plattykill Manor Apartments on Avenue E a 15-year extension on the preexisting tax abatement or payment in lieu of taxes (PILOT) on the property.
Under the PILOT agreement, the Plattykill Manor Apartments will pay $230,000 in annual taxes from 2020 to 2023; $240,000 from 2023 to 2025; $275,000 from 2025 to 2030; and $315,000 from 2030 to 2035.
The 147-unit residential complex is 100 percent composed of Section 8 housing, minus the building superintendent, according to Ashe-Nadrowski.
According to Ashe-Nadrowski, the PILOT extension is being granted on the condition that the Plattykill Manor Apartments provide renovations to all the units in the building.
Per the agreement, all apartments must be renovated within 24 months of the passing of the ordinance. Twenty-five percent of the renovations must be completed after 18 months.
Plattykill Manor Apartments has agreed not to evict residents for the next three years if they can’t meet rent or lost their jobs due to COVID-19.
Platykill has also agreed to pay for its own garbage removal service and will no longer put trash cans on the curb, according to Ashe-Nadrowski. Trash will now be kept on its property and carted off privately.
Usually, the trash from the building makes a huge mess and scatters everywhere when placed on the curb, Ashe-Nadrowski said.
Before casting her vote, Ashe-Nadrowski said that normally the city council incentivizes only new development, but a new law passed in recent months encourages this type of PILOT for existing structures to raise the quality of life in lower income neighborhoods.
Ashe-Nadrowski noted that the PILOT is one of the main factors that keeps the units in the complex affordable housing units.
Only one member on the city council was opposed to the proposed abatement.
According to Councilman Gary La Pelusa, the City of Bayonne should receive anywhere from $400,000 to $500,000 if the building was taxed at the same rate as other properties in Bayonne. Because of the poor terms, La Pelusa voted no.
“I don’t think any building should have a 56-year tax incentive regardless of who lives there,” La Pelusa said. “The amount of money we are getting out of this PILOT is tremendously low.”
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