PILOT agreement approved for first ‘high-rise’ at MOTBY

The council adopted the ordinance with a timeline for site plans and construction

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The Bayonne City Council approved the PILOT ordinance after withdrawing it in July.
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A rendering of a planned development in the Harbor Station South District by Mahalaxmi Bayonne Urban Renewal, LLC.
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Another rendering of a development in the Harbor Station South District by Mahalaxmi Bayonne Urban Renewal.
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The Bayonne City Council approved the PILOT ordinance after withdrawing it in July.
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A rendering of a planned development in the Harbor Station South District by Mahalaxmi Bayonne Urban Renewal, LLC.
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Another rendering of a development in the Harbor Station South District by Mahalaxmi Bayonne Urban Renewal.

The Bayonne City Council has adopted an ordinance granting a payments-in-lieu-of-taxes (PILOT) agreement for a “high-rise” at Chosin Few Way at the former Military Ocean Terminal at Bayonne (MOTBY).

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 a 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.

Review by financial advisors

The council voted to approve the PILOT agreement with Ma Durga Chosin Urban Renewal, LLC at its October meeting. The ordinance was previously on the council’s agenda in July, but was withdrawn to be reviewed by the city’s outside financial advisors, NW Financial.

After review, the terms were adjusted and presented back to council.

“We just got this back,” she said. “All PILOTs now get reviewed by our outside financial consultants.”

According to Ashe-Nadrowski, the agreement is for a property “on the base” for a term of 25 years.

“It starts at 11 percent and increases up to 14,” she said. “There’s an increase at year 8 and then another one at year 18.”

Adding an expiration clause

Ashe-Nadrowski said she had no problem with the agreement, but took issue with the fact that the developer already has multiple PILOTs granted to it by the council. And only one project that received a PILOT is under construction.

“All of our PILOTs have language written in there about time frames,” she said. “This particular PILOT is going to a developer who has three other PILOTs with us. One project is already being built. The other two don’t have site plan approval yet.”

Due to the lack of action, Ashe-Nadrowski suggested adding in language with a clear timeline for developers.

“We have a lot of PILOTs out there that aren’t being acted on,” she said. “I would like to make sure that we add language in there that said that you have two years to get site plan approval, then four years to have shovels in the ground or the PILOT should automatically expire. Because what we’re finding now is properties that we gave PILOTs to 7 years ago still haven’t done anything, and the financial situation has changed.”

A rendering of a planned development in the Harbor Station South District by Mahalaxmi Bayonne Urban Renewal, LLC.

Council on board

If the PILOT expires, the developer can reapply to the council for another.

“At that time, let them reapply,” Ashe-Nadrowski said. “Whoever is sitting here should be able to make that decision if in four years nothing has happened… Those terms would be reconsidered with where the state of the city is and what our economy is like at that time.”

The rest of the council had a warm reception to the idea of having PILOTs expire if no construction is done.

“I think it’s a great idea,” First Ward City Councilman Neil Carroll said.
Third Ward City Councilman Gary La Pelusa said he was in favor of a two and half year deadline for final site plan approval, but otherwise was in also in favor of the added measure. The rest of the council was agreeable to that number.

“I understand we have a supply chain problem right now too, with materials, so we’ll do two and half,” Ashe-Nadrowski said.

First high-rise at MOTBY

Attorney Donald Pepe spoke on behalf of the developer Ma Durga Chosin, commending the council for the added language.

“I think that’s a great idea too, because it is absolutely our intention to proceed,” Pepe said. “I think COVID might have prevented some of the other applicants from building.”

Pepe said that the developer, Mahalaxmi Urban Renewal, LLC which is an affiliate of Ma Durga Chosin, is actively working on this particular project.

“We’re proceeding expeditiously,” Pepe said. “We’re out seeking financing and development partners right now. That’s why this was critical to us.”

According to Pepe, the development is going to be a high-rise that is part of a multi-phase residential development on 5.32 acres at MOTBY. That is in line with the Harbor Station South redevelopment plan approved by the council in 2016, which calls for 25 buildings including five residential towers with 25 stories each. However, no final site plans have been approved by the Bayonne Planning Board.

“We think that’s really critical to bringing the peninsula to the next level,” Pepe said. “We need the assistance because high-rise construction costs are 50 to 70 percent greater.”

Another rendering of a development in the Harbor Station South District by Mahalaxmi Bayonne Urban Renewal.

Unanimously approved

Ashe-Nadrowski clarified that she was excited about the project, but wanted to make sure that the language was added regarding the timeline: “I’m happy. I think that’s the location for these high-rises and I’m glad we’re finally going to get our first one down there.”

Pepe confirmed the developer was fine with the conditions. The council voted unanimously to approved the agreement with the added language.

The council also tabled a PILOT agreement ordinance with Woodmont Bayonne Phase Two Urban Renewal, LLC to have it reviewed by the city’s outside financial advisors.

“We have not gotten the report from the finance consultants on the liability of it,” Ashe-Nadrowski said.

Further action may be taken on that ordinance at the council’s next meeting on Nov. 10 meeting at 7 p.m. in the council chambers at 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.