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Battle over PILOT agreements continues

Third Ward City Councilman Gary La Pelusa continues calls for a 15-year limit

A rendering of the mixed-use development that will be the recipient of a 20-year PILOT.

The Bayonne City Council adopted an ordinance authorizing a payments-in-lieu-of-taxes (PILOT) agreement with Bayonne Equities BII Urban Renewal at its June meeting.

The tax abatement will last for a term of 20 years for the property at 9-11 West 12th Street and 281-289 Broadway. A 10-story mixed-use development is proposed for the corner of West 12th Street and Broadway, with 100 units and 2,200 square feet of retail space.

Under a PILOT agreement, municipalities grant developers exemptions from traditional property taxes for a set period of time to encourage them to make improvements to property or locate a project in a distressed or “blighted” area. Instead of property taxes, developers make an annual payment to the municipality. The payment is typically much less than traditional taxes, and is structured so that the municipality receives more of a benefit than it would from usual property taxes. These exemptions save a developer in real estate taxes, but they provide an increase in the fair market value of the property as a result of higher net operating income.

Previous squabbles 

The ordinance was supposed to be up for a public hearing at the May council meeting but the matter was not heard. The council squabbled over the length of the PILOT when introducing it in April.

Third Ward City Councilman Gary La Pelusa didn’t even want to introduce the ordinance in April because the PILOT was for 20 years.

Last year, the council adopted an ordinance limiting PILOT agreements to twenty years maximum. At that meeting, the council pledged to lower the maximum to 15 years this year. Since then, La Pelusa has been pushing to enact that 15-year cap every time the council votes on a PILOT.

After a back and forth at the April meeting, City Council President Sharon Ashe-Nadrowski agreed with La Pelusa and they both voted against approving the agreement due to the length. However, the rest of the council voted 3-2 to introduce the ordinance, including First Ward City Councilman Neil Carroll, Second Ward City Councilman Sal Gullace, and City Councilman At-Large Juan Perez.

Still opposed

At the June meeting, the council voted 3-2 to approve the PILOT, this time with First Ward City Councilman Neil Carroll and Third Ward City Councilman Gary La Pelusa in opposition.

“Residential abatements, I generally vote no on them,” La Pelusa said. “We as a council unanimously passed a resolution months ago that pushed for a 20-year limit last year, trying to push for 15 years as a maximum this year. This [agreement] is 20, not 15. Generally, when there are jobs being offered, then I think about these things that I would otherwise be against. I don’t think this warrants a 20-year abatement.”

This time, Carroll, whose ward the project is in, also voted against the agreement.

Carroll said he opposed the PILOT “in the interests of the common man’s voice being heard … There are a number of other reasons why I feel the way I feel … I sympathize with the sentiments from … residents in that area.”

He added that if the PILOT is approved, the developer should consider the use of unionized labor during the construction of the property.

PILOT approved

Ashe-Nadrowski voted yes, along with Gullace and Perez, but said she “understands the idea” for lowering the maximum length of PILOT agreements to 15 years.

“Although we’d like to see [the terms] go down, I believe that I’d rather add five years to a PILOT then have an empty lot like we did at Garden State for almost 30 years,” Ashe-Nadrowski said. “So I’m willing to go the extra five years to prevent another Garden State, which anyone who’s been in Bayonne will understand has been an empty lot for I think 25 years because they didn’t have the financing to build it.”

Perez, who previously said he would vote against the agreement if it was not lowered to 15 years, voted to adopt the ordinance without comment.

The next council meeting is July 14 at 7 p.m. at the Council Chambers in City Hall at 630 Avenue C. For more information, go to bayonnenj.org and click on the event on the calendar webpage.

For updates on this and other stories, check www.hudsonreporter.com and follow us on Twitter @hudson_reporter. Daniel Israel can be reached at disrael@hudsonreporter.com.

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