avalonbay communities & roselle park

AvalonBayAvalonBay Communities & Roselle ParkCommunities & Roselle ParkPILOT & Taxes

PILOT & TaxesFebruary 21, 2009

Casano Community Center


PILOT is an acronym forPayment In Lieu Of Taxes

Major Points of Proposed Settlement With AvalonBay Communitiesand Revised Redevelopment Plan for the Romerovski Site Property

1. Development of a total of 249 total dwelling units.

2. Provision by the developer of 38 affordable dwelling units out of the total of 249 (reflecting a 15% set aside).

3. Contribution by AvalonBay Communities of $400,000 toward the Borough’s senior housing initiative.

4. Reservation of a minimum of 2,000 ft2 of space in front of the building on Block 213, Lot 1, along with 10 public parking spaces for use and occupancy by the Borough's Historical Society Museum/Community Center. In addition to providing the space, AvalonBay Communities will include an allowance at $25.00 per ft2 (at least $50,000) for "tenant improvements" to ready the space for Borough use.

AvalonBayAvalonBay Communities & Roselle ParkCommunities & Roselle ParkAvalonBayAvalonBay Communities & Roselle ParkCommunities & Roselle ParkPILOT & Taxes


Major Points of Proposed Settlement With AvalonBay Communitiesand Revised Redevelopment Plan for the Romerovski Site Property

5. The Borough will rent this space at a nominal rent of $3.75 per ft2(triple net) and will pay for the utilities and maintenance of the space.

6. Avalon Bay will cover the utilities and maintenance for all of the common space.

7. Avalon Bay will contribute $50,000 for unspecified "off-site" improvements not specifically required for the development.

8. AvalonBay Communities will agree to pay a Payment In Lieu Of Taxes (PILOT) at the rate of 10% of the gross rental revenues for a period of 30 years. The benefit of the PILOT is that the Borough gets to keep almost all of this payment. A small portion goes to the County.


Information on the Romerovski Property

• Two parcels of land• Block 213, Lot 1• Block 314, Lot 1

• In 2008, the property was assessed at $1,755,000• Block 213, Lot 1 was assessed at $805,000• Block 314, Lot 1 was assessed at $950,000

• In 2008, taxes collected on the property were $182,414.70• Block 213, Lot 1 paid $98,743.00 in taxes• Block 314, Lot 1 paid $83,671.70 in taxes


Information on AvalonBay Communities• AvalonBay Communities is a publicly traded company (AVB).

• AvalonBay Communities is a Real Estate Investment Trust (REIT) Corporation which is a tax designation for a corporation investing in real estate that reduces or eliminates corporate income taxes which are required to distribute 90% of their income, which may be taxable in the hands of investors.

• AvalonBay Communities exclusively specializes in developing, redeveloping, acquiring, and managing luxury rental communities.

• AvalonBay would fulfill Roselle Park’s Affordable Housing Compliance Plan.

• Affordable Housing is not the same as Section 8 Housing.


with PILOT• 10% of annual gross revenue for the property would be collected

• This amount has been estimated to be around $585,000/year*• 95% (~$555,750) would automatically go to the Borough of Roselle Park• 5% (~$29,250) would automatically go to Union County• 0% would automatically go to the Board of Education

• PILOT would remain for a period of 30 years (around the year 2042)

* The figure of $585,000 is based on an annual gross revenue for AvalonBay Roselle Park of $5,850,000 which has never been publicly confirmed nor verified by AvalonBay Communities.


with Taxes• An estimated amount of about $750,000 would be collected annually

+

• Based on 2008 Tax Levy percentages• 54.9% (~$411,750) would have gone to the BOE• 30.5% (~$228,750) would have gone to the Borough• 14.0% (~$105,000) would have gone to the County.• 0.6% (~$4,500) would have gone to Open Spaces

+ There have been other figures mentioned including $800,000 and $900,000 but $750,000 is the most conservative publicly mentioned amount.


Advantages of PILOT• The Romerovski property is developed within the near future

• Litigation ceases

• Constant revenue stream for the Borough based on the housing/rental market

• The amount collected through PILOT will be more for the Borough than an amount collected through taxes for 30 years based on present calculations of $555,750 for PILOT vs. $228,750 for Taxes

• Tax appeals cannot be filed by the developer

• AvalonBay Roselle Park may lead to other development in the Borough


Concerns with PILOT• The influx of possible school-aged children who will attend the Roselle

Park school system from the development is not addressed since the BOE will receive nothing automatically through PILOT.

• AvalonBay Roselle Park will not be ‘on the books’ with regard to tax collection for 30 years.

• The amount collected will fluctuate with the housing/rental market.

• The maximum for PILOT is mentioned at 15% of annual gross revenue. The current agreement is for 10%.


Advantages of Taxes• The total amount collected through taxes will be more than the total

amount collected from PILOT ($750,000 vs. $555,750).

• AvalonBay Roselle Park will pay its responsible share of taxes.

• The issue regarding the influx of school-aged children who might attend the Roselle Park school system from AvalonBay Roselle Park is addressed.

• The amount collected will be based on budgetary needs from the municipality, school system, and the county; not the housing/rental market.


Concerns with Taxes• Litigation continues, which will impact current municipal budgets due to costs

associated with defending the Borough’s position.

• The Romerovski property will not be developed within the near future.

• If AvalonBay does not build, the Romerovski property, undeveloped, would bring in a fraction (around ⅓) of what could be collected though PILOT.

• Tax appeals.

• $400,000 will not be given toward the Borough’s senior housing initiative.

• A contribution of $50,000 for ‘off-site’ improvements will not be donated.

• The Borough’s redevelopment & Fair Share Housing Plans would need to be re-evaluated.


Possible Options Available• Stay with current proposals resulting from mediation talks up to this date.

• Refuse proposed agreements and continue with litigation based on Roselle Park’s position to limit AvalonBay Communities’ development plans.

• Renegotiate terms to increase percentage of PILOT from 10% to 15%.

• Renegotiate terms to separate the two parcels of land and apply PILOT to one parcel and taxes to the other.


Possible Options Available (Continued)• Evaluate the possibility of a “Five-Year Exemption and Abatement Law” for

multiple dwelling units which would allow for PILOT during a five-year period where the developer would be exempt from payment of taxes.

• Confirm to see if PILOT has a minimum of 30 years or if a lower time period can be negotiated.

• Allow AvalonBay Communities to build based on their original development plan in compliance with local ordinances and building codes and proceed with taxes on the resulting development.

avalonbay communities & roselle park

Documents