By Marion Filler
After months of deliberation, it took just 34 minutes on Thursday for the Morris Township Committee to approve an ordinance approving a tax abatement for the redevelopers of the historic Abbey.
The agreement, known as a PILOT–short for Payments in Lieu of Taxes– is between the Township and Madison Avenue Urban Renewal LLC, which will own and renovate the 1904 mansion and property, then lease it to Restoration Hardware upon completion.
The project, already approved by the committee, is intended to transform the long vacant Abbey into a glamorous furniture showroom and restaurant, which is Restoration Hardware’s signature look.
It also will include realignment of the intersection at Canfield Road, Madison Avenue, and Punch Bowl Road.
With the exception of Committeeman John Arvanites, who did not comment, the PILOT vote was unanimous, with Mayor Cathy Wilson, Deputy Mayor Jeff Grayzel, Peter Mancuso, and Mark Gyorfy agreeing to accept PILOT financing.
Conducted via Zoom, with garbled audio, the discussion drew no real-time audience comments even though prior meetings — in person and online– have stirred passionate participation by residents for and against the project.
Restoration Hardware has presented itself as the redeveloper at previous meetings. Township officials on Thursday did not define the relationship between RH and Madison Avenue Urban Renewal LLC.
Nor did they spell out precisely how much revenue the Township will reap over 30 years from the payments-in-lieu of taxes, how much in taxes the Morris School District won’t be getting, or how much money Madison Avenue Urban Renewal LLC / Restoration Hardware is saving by not paying school taxes.
PILOTs enable municipalities to pocket a greater share of revenue from developers than they would receive under regular taxation, because the money does not have to be shared with schools and (for the most part) counties.
“It’s complex” said Wilson, suggesting another presentation to help residents understand how this would affect their taxes.
“There’s probably six to 10 different factors that connect PILOTS to taxes that are interdependent with each other and shift, so the ability to understand the effect of PILOTS on an individual’s tax is a multi-step process,” the mayor said.
Grayzel insisted the school district and taxpayers are not being shortchanged, explaining the added money to Township coffers may help provide relief on the municipal portion of residents’ tax bills.
Deputy Mayor Jeff Grayzel says taxpayers will benefit from PILOT deal. Video capture by Marion Filler for MorristownGreen.com, Nov. 12, 2020:
PILOTs have been controversial in neighboring Morristown, which has approved at least seven of them over the last decade or so. The latest of those projects, M Station, broke ground on Friday.
Morris Township has authorized at least three other PILOTs, all related to redevelopment of the former Colgate site on Hanover Avenue.
Anticipated perks from the Abbey redevelopment include job creation during construction and beyond, as well as saving the landmark — on state and national historic registers–from being demolished and replaced with housing.
Committee members also think the transformation may attract more upscale development to the area.
According to the PILOT agreement, redevelopment of the Abbey is expected not only to increase revenue for the town, but also to contribute 2 percent of construction costs to the municipality’s affordable housing trust when the project is complete.
In place of the Abbey’s current yearly property tax of $62,851, the Township now will receive an “Annual Service Charge” to replace property taxes for the next 30 years.
It is estimated to generate revenue for the Township in excess of what it would have received via normal property taxes, and officials have concluded the benefits substantially outweigh the costs of the PILOT.
The agreement calls for Madison Avenue Urban Renewal, upon completion of the project, to lease the property to Restoration Hardware, with terms that must create Annual Gross Revenue (AGR) of at least $1,550,070 each year for the first five years.
After that, the AGR will increase by 8.5 percent for the next five year period, and continue to increase by that amount every five years, over a period of 20 years.
After 20 years, there will be two five-year options for renewal.
New Jersey laws allows municipalities to retain 95 percent of the Annual Service Charge — the payment-in-lieu-of-taxes. (The other 5 percent goes to the county in which the property is located.)
Under regular taxation, a municipality typically retains far less of each tax dollar it collects, because it must share those dollars with the local school district and the county.
In this case, the Township also gets a renovated Abbey and a new restaurant, with promises of a more efficient intersection and the possibility of increasing its ratables if more upscale growth follows.