The 20-unit, 100-percent affordable housing development, The Place at Haddonfield, is slated for completion within the next four to six months.
As redevelopers Community Investment Strategies (CIS) of Lawrenceville work to bring the project to the finish line, Haddonfield commissioners are poised to approve a 20-year PILOT (Payment In Lieu of Taxes) agreement for the site.
According to the terms of that agreement, Haddonfield would collect 5 percent of project revenues from the date of its completion until the 30-year, $5,875,500 mortgage loan from the New Jersey Department of Community Affairs (DCA) Affordable Housing Trust Fund is repaid.
At that point, the developer could return the property to market-rate rents and a full tax levy, or elect to continue it as a fully affordable housing project,” Haddonfield Borough Administrator Sharon McCullough said.
If the latter occurs, “the municipality would then have a discussion as to whether or not to extend the PILOT at that time,” McCullough said.
The borough has a similar agreement in place for the Tarditi Commons senior housing project that is also based on collecting a percentage of its revenues, she said.
As outlined in Section 20 of N.J.S.A. 52:27D-320, known conventionally as “the Exemption Act,” the basis for the PILOT agreement is rooted in the creation of a 100-percent affordable housing project.
Applicable PILOT revenues are calculated as “the total annual gross rental or carrying charge and other income of the sponsor from the project” minus utilities (gas, electricity, heating, water, and sewerage) and vacancies, according to the language of the ordinance. They also excludes any state or federal rental subsidies attached to the project.
Under terms of the agreement, CIS will make quarterly payments to the borough on the same schedule that local taxes would be collected. Payments are to be audited annually, with any underpayment to be owed by CIS or overpayment to be refunded by the borough based on those calculations.
McCullough said that the appraisal amount will be established once the project is completed, and added that enacting a PILOT for the work predates the current governing body.
“That decision was made at the time the original agreement was signed with CIS by the former commissioners,” McCullough said.
“They have a contractual agreement with an entity that has already stated it is one of the stipulations of the contract.”
The terms of the PILOT agreement were not immediately available to the public, however, when Haddonfield commissioners prepared to vote on the resolution at their September 23 meeting.
Residents hammered the governing body about the absence of specifics, which ultimately led commissioners to table the issue until their October 7 meeting.
Dave Siedell, who is campaigning for a seat on the borough government in the November 5 special election, complained about the lack of information on the PILOT agreement.
“This exhibit doesn’t exist to the public before you’re voting for it at all,” Siedell said. “Two weeks ago, you would not release it when it was asked to be released. Tonight you’re voting on it without sunshine of that document to the public.
“Do you understand why the public loses trust?” Siedell said. “You’re voting on documents we haven’t seen.”
John Kawczynski argued that not only had the public not had an opportunity to review the ordinance, which was introduced by title only at the August 26 commissioners meeting, but that detailed answers about the agreement weren’t immediately available a month later, either.
“What other questions should we be asking about this PILOT that we don’t know to ask because we haven’t seen it?” Kawczynski said. “Why don’t you wait until November when you’ll have a full commission to vote on it?”
Haddonfield Mayor Colleen Bianco Bezich motioned to table the vote “based on public comments,” and Commissioner Frank Troy seconded. Both voted in favor, and the ordinance was tabled.
“I want to understand where the disconnect was, and why it’s not in front of everyone in the public tonight,” Bianco Bezich said.
McCullough wasn’t sure in the moment why the document wasn’t available either; Borough Clerk Deanna Bennett made it available to the public by the following afternoon.
Despite the PILOT agreement having been a prior obligation of the governing body, Bianco Bezich said such agreements help communities to offset the costs associated with services related to a new project by collecting direct payments as a portion of the improvements they facilitate.
A PILOT “allows enhanced, improved municipal services,” the mayor said, by allowing the local government to retain a greater share of the revenues than fully assessed properties do, particularly as the borough only typically retains about 17 percent of the assessed taxes it collects.
“Ad valorem [assessed] taxes pay for our budgets,” Bianco Bezich said. “If we’re looking at $1, the school gets 50 to 60 cents, and 20 cents goes to the county.
“Twelve to 20 cents on every dollar is all the borough is left with to do trash, DPW, grounds and maintenance, recycling, public safety — [that’s] all funded from municipal revenue,” she said.
Because it controls more of the local revenues collected under a PILOT than it would under a conventional tax assessment, the borough is also free to allocate those funds to other sources, including projects that benefit the local school district.
In the recent past, the mayor said, the borough has helped fund improvements to the Haddonfield Memorial High School athletics facilities as one such example.
Although there’s “no guarantee of anything specific” until it’s hammered out, “things are on the table with a PILOT,” Bianco Bezich said.
