The Morristown council is scheduled to vote on an amended redevelopment agreement for Speedwell Avenue at 7 o’clock tonight, Jan. 12.
This 236-page agreement improves upon a 2007 agreement because it ensures that something actually will get built, and it gives the town leverage to solicit a builder for the second- and third phases of the project if the present developer, Trammell Crow spinoff Morristown Development LLC, bails out, said John Inglesino, the town planning board attorney and a key figure in the negotiations.
“This is superior to the old agreement because we think this project will be built,” he said. “We feel that from an economic perspective… and from the perspective of ensuring the whole thing is completed, this is a much better deal for the town of Morristown.”
THE PROJECT’S THREE PHASES
The old and new agreements each call for 650 units of housing, with up to 40,000 square feet of retail/commercial space.
Now, however, Phase One only calls for 268 units and no commercial space. The prior plan called for 375 units in Phase One and 15,000 square feet of commercial space.
Phase Two calls for 214 units; the old agreement designated 188.
Phase Three will have 180 units and 40,000 square feet of retail/commercial space; the 2007 accord called for 88 units and 20,000 square feet.
The attorney said the old plan would have allowed the redeveloper to sit on his rights to build Phases Two and Three “for decades” without constructing anything. Now, there are timelines that give the town options to pursue other builders if necessary.
“When you do a project, the municipality has an interest in getting the project done. We wanted to make sure if they (Morristown Development LLC) don’t do it, someone else will,” John said.
If the council approves the agreement, the redeveloper will have 18 months to secure planning board approvals for Phase One, and 30 months to finish construction of that phase. The attorney said he anticipates the redeveloper will come before the planning board this spring with its site plan. Construction could start by the end of this year, he predicted.
For Phase One, the redeveloper must purchase several homes along Early Street, and also obtain half of the town’s public works property between Early Street and Atno Avenue. Once the builder takes title to these properties, he has 60 days to inform the town whether he intends to proceed with Phase Two.
If the answer is yes, it sets in motion another set of deadlines, culminating in a 36-month deadline to complete construction of Phase Two.
“When Phase One is finishing, they would be building Phase Two,” John said.
Indications are that the redeveloper intends to build Phase Two, he said. But if that changes, the town could start soliciting other builders. Morristown Development LLC would have the right to match the winning bidder.
The redeveloper is not sure if he wants to do Phase Three, the attorney said.
THE DPW PROPERTY
The amended plan calls for the redeveloper to buy half of the DPW property for $3.5 million in Phase One, and negotiate the remaining purchase in Phase Two.
At first blush, this looks like a step down from the original plan, which set a $7 million price for the whole parcel. But John said that deal did not require any payment until Phase Two. Essentially, he said, a builder could have erected Phase One and stopped there, without paying anything for the DPW site.
“This way, the town gets $3.5 million up front,” John said. “We think we’ve enhanced the deal for the town considerably.”
AFFORDABLE HOUSING
This has been the most controversial element of the amended plan. It calls for 10 percent of the Phase One apartments–26 units–to be designated as affordable housing. Half of those units will be for low-income tenants, and half will be for moderate-income people.
The previous agreement called for a separate building that would have set aside 20 percent of Phase One for affordable housing. But that approach has tax-credit issues, among other challenges, John said.
“Bottom line, that was never going to be built,” the attorney said.
THE REALIGNMENT OF SPRING STREET/ SPEEDWELL AVENUE/EARLY STREET
The amended agreement does not require the realignment of the congested Spring Street/Speedwell Avenue/Early Street intersection. It mandates a traffic study by the redeveloper as part of the Phase One site plan approval process; this study will forecast the traffic impact of the fully completed project, and evaluate alternative solutions.
COSTS TO THE TOWN
Under the amended agreement, the town is obligated to pay $1.7 million to extend Prospect Street through the site. It also has agreed to pay up to $500,000 for environmental cleanup of the site. John said the actual cost is likely to be lower. However, if any nasty surprises are found, the town’s exposure is capped at $500,000 and the redeveloper would should any added cleanup costs. In the old agreement, the town was responsible for all cleanup costs, the lawyer said.
The town intends to relocate the DPW garage to its sewage treatment plant in Hanover. If the town ends up borrowing money to move the facility, the redeveloper will pay up to $200,000 in interest over two years, John said.
ENHANCED EQUITY REQUIREMENT
The amended plan also includes measures aimed at preventing the project from sinking under its own debt.
The redeveloper will be required to put 30 percent equity into the project, and create an escrow account in which he pays in 10 percent of every $1 he borrows.
This should result in a project that has 40 percent equity. That would make the project attractive–and provide cash–to a subsequent builder, if the present one does not forge ahead, John said.
THE BOTTOM LINE
The town now receives $26,367 in taxes from Phase One properties–primarily, homes. Phase One will generate a payment of $619,856 annually in-lieu-of-taxes for 30 years from the project landlord, John said.
READ MORE ABOUT THE SPEEDWELL PROJECT
