Western New York is considering providing a payments in lieu of taxes (PILOT) agreement to a redeveloper to support the construction of new waterfront residential buildings. Meanwhile, the city also recently granted five-year tax holidays to other redevelopment projects in Western New York.
New buildings in Port Imperial
The PILOT ordinance was introduced by Mayor Gabriel Rodriguez and the West New York Board of Commissioners at its July 27 meeting. Previously, the ordinance was introduced at the May meeting this year, but withdrawn on the recommendation of cocompany lawyer.
Now the city is moving forward with the financial agreement with RB III Apts Urban Renewal, LLC to support the construction of two new buildings during the Riverbend redevelopment. The property is located on the east side of Port Imperial Boulevard within the city’s waterfront controlled development zone.
Riverbend Building Company II, LLC, a subsidiary of the previously mentioned entity, obtained West New York Planning Board approval for the project in November 2020. But the redeveloper had to make changes to the site plan due to changes in FEMA policies regarding basement parking in multi-family buildings, requiring it to be heard again at the May meeting after who council passed a resolution approving the project at its april meeting.
Under approvals, the re-developer has adjusted the lot line between two parcels so that the size of one lot with an existing one decreases from 3.15 acres to 2.997 acres and another lot increases from 1.73 acres to 1,881 acres.
On the lot that has been expanded, the redeveloper will demolish the existing Buildings 2 and 3 of the Riverbend development and construct two new residential buildings with rental units at market rates, according to the ordinance. The new Riverbend 2 building will have 164 units, an increase from the existing building which contains 87 units; the new Riverbend 3 building will have 426 units, an increase from the existing building containing 126 units.
Conditions of the PILOT Agreement
According to the ordinance, the project would not be feasible without financial assistance from the municipality, which led the developer to apply for the PILOT agreement. As such, the re-developer has sought to support the project by applying for a PILOT agreement, as permitted under the state’s long-term tax exemption law.
After reviewing the request with the city’s attorney, redevelopment consultant, and city financial consultant, the mayor recommended that the long-term tax exemption and financial agreement be approved, as per the order. The ordinance authorizes the city to accept, in lieu of property taxes, an annual fee to be paid by the redeveloper.
The PILOT will be for 30 years with an annual service fee based on 11.5% of annual gross revenue for years one through five. Annual service fee increases to 12% for years 6-10; 12.5% for years 11 to 15; 13% for years 16 to 20; and 14% for years 21 to 30.
The property currently generates $1,400,000 in property tax revenue. The projected annual service fee over the 30-year term will average about $2,600,000, according to the order. It is also estimated that the project will create temporary jobs during construction, as well as permanent jobs.
The ordinance will be subject to a public hearing and a vote at the next meeting. The Western New York Board of Commissioners will meet on August 10 at 12:30 p.m. For more information, visit westnewyorknj.org.
5-year tax exemption for 18 dwellings
At an earlier meeting in July, the city also passed an ordinance allowing a five-year tax holiday for an apartment building to be constructed at 582-586 66th Street. The 18-unit project is expected to be built by Mars Equities, LLC on the currently vacant land.
western new york Five-year tax abatement order allows the municipality to conclude a tax agreement for the exemption and reduction of local property taxes. Under the agreement, he instead accepts payment of an amount in lieu of full property taxes in an area in need of rehabilitation.
In In 2021, this property generated approximately $11,533.50 in taxes, all of which were land taxes. Under the five-year tax holiday, the developer would be required to pay the city all taxes on the land and existing improvements which will continue to be valued and taxed conventionally.
Also under the five-year tax holiday, the redeveloper would pay the city a payment in lieu of taxes for new improvements to the property. Aaccording to the order, tThe estimated tax due on the completed project improvements will total approximately $67,601.00 in total for the 18 residential units.
During the first full year after Substantial Completion, no payments are due from the re-developer. In the second year, the re-developer will pay 20% of the taxes otherwise due on the new improvements, estimated at $13,520.20 of the aforementioned $67,601.00.
In the third year, the re-developer will pay 40% of the taxes otherwise due on the new improvements, estimated at $27,040.40. In the fourth year, the re-developer will pay 60% of the taxes otherwise due on the new improvements, estimated at $40,560.60. And in the fifth year, the redeveloper will pay 80% of the taxes otherwise due on the new improvements, estimated at $54,080.80.
Other financial agreement granted
The only other financial deal approved by the Board of Commissioners was another five-year tax holiday with 6115-6119 Broadway, LLC. The tax relief supports the 18 residential units already built at 6115-6119 Broadway.
The board adopted this ordinance at its June meeting. In 2020, the property generated approximately $102,917.28 in taxes, all of which were land taxes. As part of the five-year tax holiday, the re-developer will be required to pay the city all taxes on the land and existing improvements, which will continue to be assessed and taxed conventionally.
You alsoUnder the five-year tax holiday, the redeveloper will pay the city a payment in lieu of taxes for new improvements to the property. Payment will be based on an approximate estimate of tax otherwise due on improvements to the completed project of approximately $77,889.57 in total for the 18 residential units.
During the first full year after Substantial Completion, there will be no payment on new improvements. During the second year, the redeveloper will pay an amount equal to 20% of the taxes otherwise payable on the new improvements, estimated at $15,577.91 of the $77,889.57.
In the third year, the re-developer will pay 40% of the taxes otherwise due on the new improvements, estimated at $31,155.83. In the fourth year, the re-developer will pay 60% of the taxes otherwise due on the new improvements, estimated at $46,733.74. And in the fifth year, the re-developer will pay 80% of the taxes otherwise due on the new improvements, estimated at $62,311.66.
West New York continues to help support the city’s redevelopment through the use of financial agreements.
For updates on this story and others, visit www.hudsonreporter.com and follow us on Twitter @hudson_reporter. Daniel Israel can be reached at [email protected].