What happens if a sinking economy sinks completion of the proposed M Station office/retail redevelopment?
The matter came up before the Morristown planning board for the first time on Thursday night, sparking a testy exchange between the project’s lawyer and a resident that ended with the board chairman muting the resident from the virtual meeting.
Digital sparks flew after an engineer described a three-phase construction plan, and project attorney Frank Vitolo explained that “if the bottom falls out of the economy” and the second of two office buildings cannot be built, the developers would return to the town and seek an amendment to the plans.
Those plans, approved conceptually by the town council last October, call for Scotto Properties and SJP Properties to transform Scotto’s now-closed Midtown Shopping Center strip mall at Morris and Spring streets into nearly 400,000 square feet of offices and retail, with a parking deck, promenade, plaza and traffic roundabout.
Two office buildings, standing seven and six stories, are at the heart of the proposal.
Resident Stephen Zaklukiewicz, participating by phone, raised the specter of a half-finished lot full of construction equipment, and suggested residents should be told now exactly what alternate uses are contemplated if the second office never gets off the ground.
Things heated up when Zaklukiewicz repeated the word “negligence,” which town Planner Phil Abramson had uttered earlier, in a hypothetical context, and retracted after an objection by Vitolo.
“I think you’ve proved my point for why I brought up the objection, for people like you who will take it and run with it and try to imply that there’s some negligence here. Thanks for proving my point, Mr. Eye-Chart,” Vitolo said to the resident.
Previously, board Chairman Joe Stanley had good-naturedly recalled a conversation in which he struggled to pronounce Zaklukiewicz’s name, and the resident had made a reference to an eye-chart.
Zaklukiewicz started responding to Vitolo’s “ad hominem attack,” when Stanley muted him and asked everyone “to be civil.” Mayor Tim Dougherty then asked board Attorney John Inglesino to explain how the town can protect against the scenario painted by the resident.
‘THE WORLD HAS CHANGED A BIT’
“We understand the world has changed a little bit,” Inglesino said, acknowledging our “COVID environment.”
If economic factors prevent construction of a second building within a reasonable time frame, “or if ever,” the developers could propose some other use for the property, Inglesino said. But the town could impose constraints now, in a redeveloper agreement, he said.
That agreement with the town council would be required–after planning board approval of the site plan–for construction to start, Inglesino said.
Another big question in the redeveloper agreement: Will the town grant M Station a controversial tax break called a PILOT?
Payments in Lieu of Taxes have spurred local political opposition because they cut out taxes for the Morris School District. An M Station spokeswoman says a PILOT may be needed for the developers to finance off-site traffic fixes–the roundabout and a realignment of Spring Place–desired by the town.
That’s in negotiations, and has not come up before the planning board, which is weighing M Station’s site plan.
Thursday marked M Station’s fourth appearance before the board. The last three sessions have been conducted online because of the pandemic. M Station returns to the planning board, via Zoom, on June 18, 2020, at 7 pm.
Civil engineer Sony David laid out a three-stage construction plan on Thursday.
After demolition of the vacant storefronts on the four-acre property, the six-story M East office/retail and half of the six-floor parking deck would go up as phase one. The promenade along Morris and Spring streets also would be created.
The second stage calls for the realignment of Spring Place and installation of traffic signals there — a process David estimated could take three- to five months — and construction of the roundabout at the intersection of Morris and Spring streets.
While the roundabout might take six months to a year, David said traffic could keep flowing through the intersection during much of the work.
Lastly, the seven-story M Station West building and remainder of the parking deck would go up.
If tenants are found quickly for that structure, both buildings could be erected almost simultaneously, Vitolo said.
Alternately, he described the staggered approach as a “‘look’ period… where we’re waiting to lock up tenants in the second building.” The duration of this interim stage is being discussed with the mayor and town officials, as part of the redeveloper agreement, the lawyer said.
IF YOU BUILD IT, WILL THEY COME?
Thursday’s planning board meeting unfolded during a week of grim economic news, including the highest national unemployment rate since the Great Depression and warnings of years of pain ahead.
But the mayor said he felt “positive” about M Station.
“In this environment, I think Morristown a very attractive place for a lot of companies that want to move out from bigger cities,” Dougherty said, while emphasizing the need for a solid agreement.
Is Deloitte still interested in moving from Parsippany to Morristown?
The Big Four accounting firm is slated to occupy M Station East in the project’s first phase. That announcement preceded the pandemic, and 5,000 layoffs nationwide by Deloitte.
“By all indications, they are fully committed to the project,” M Station spokesperson Jordan Rankin told Morristown Green this week.
Morristown Green reached out to Deloitte and will update this story with any response from the company.
UPDATE: On Friday, Deloitte spokesman Paul Dunker told Morristown Green: “Thanks for reaching out. Yes, Deloitte continues to be committed to the M Station development.”
Although many employers have adopted work-from-home strategies during the pandemic, Rankin said M Station’s developers remain confident of demand for high-end offices, and they are not contemplating scaling down the project.
“We’re still in the early stages of understanding how the pandemic may impact companies’ commercial real estate strategies and their space requirements. From the conversations we and many of our peers are having, it’s clear that companies in many industries see having an office as critical to their culture and facilitating efficient operations,” Rankin told Morristown Green.
“We anticipate that these companies will want to have their offices in high-performance buildings situated in dynamic downtown locations. For these reasons, we believe M Station is strongly positioned and have no plans to scale down the project,” she said.
The town, meanwhile, has disclosed that M Station seeks a PILOT.
Payments-in-lieu-of-taxes are an inducement to redevelopers who otherwise might back away from blighted properties, resulting in no taxes at all, town officials have said in defense of prior deals.
Specifics of M Station’s request have not been released. It’s not a public document because it has not been presented to the council yet, said town Administrator Jillian Barrick.
M Station may need a PILOT to finance the roundabout and realignment of Spring Place, according to Rankin, the project spokesperson.
Negotiations for a PILOT in the redeveloper agreement stem from a study of off-site traffic improvements requested by the town, she said.
“The M Station project is going to pay for these infrastructure improvements; under New Jersey law, a PILOT is the legally authorized mechanism that New Jersey has set up in order to provide capital financing for these types of significant infrastructure projects,” Rankin said.
On Tuesday, the town council hired Nassau Capital Advisors LLC for advice on M Station’s request. The developers will pay for the service.
At least six Morristown projects have received PILOT deals. They include the triangular Fox Rothschild office and a neighboring apartment building under construction on Market Street; the Modera 44 and Modera 55 apartments buildings and the CVS pharmacy, all in the vicinity of Speedwell Avenue; and the Metropolitan Lofts apartments on DeHart Street.
BITS AND PIECES
Stefan Armington, the council liaison to the planning board, suggested M Station could create a park if the second office/retail building doesn’t happen.
M Station will add a round of air quality monitoring, after the stage one of construction, Vitolo said in response to environmental questions by Armington.
The developers initially only had committed to testing behind the parking deck once the project was completed. The deck will abut the Spring Hills assisted living center.
M Station traffic consultant Matt Seckler also attempted to reassure Tom Lade, owner of County Rentals on Lackawanna Place, that he won’t be losing precious parking spaces in front of his business after all.
Morris County, which has jurisdiction over Morris Street, wants to expand Lackawanna Place, a town road, to create two-lane access. Seckler said it now appears this may be accomplished without eliminating parking spaces.
Vitolo said M Station also has started talks with the Morristown Parking Authority and the Morristown Partnership, a business organization Vitolo formerly chaired, about sparing other parking spaces along Morris Street that were in the cross-hairs because of the project.