Pier Village II in line for tax abatement Taxes will be phased in over five-year period BY CHRISTINE VARNO Staff Writer The developer of Pier Village in Long Branch got a tax break from the City Council last week, which introduced a measure to grant a tax abatement for the second phase of the luxury oceanfront redevelopment project. During a presentation at the Oct. 9 workshop meeting, Jeffery A. Nadell, assistant to Mayor Adam Schneider, said the city is obligated to enter a five-year tax abatement with developers Pier Village Applied LWAG for the upscale residential and retail project. "We are contractually obligated to do this," said Nadell, explaining that the city entered a redeveloper's contract in 2000 with the developers for the Pier Village project. "Previously abated was Pier Village I," Nadell said. "It was an incentive," he said, adding that at the time, developers were not looking to construct along the rundown oceanfront in the city. "They were pioneers," he said. "They were the first ones in." Ocean Boulevard resident Michelle Bobrow objected to the measure during the public portion of the council meeting held after the workshop. "We just heard that this is part of the agreement you had for Pier Village I," Bobrow said, adding, "that they needed incentive. "They have incentive. They are making money hand over fist," she said. The council voted 4-0 at the meeting to introduce ordinance 40-07, which calls for real estate on the Pier Village II project to be phased in over a five-year period. The public hearing and final adoption of the ordinance is scheduled to be held at the Oct. 23 council meeting at 8 p.m. In the first full tax year after completion of the project, the developer will pay full taxes on the land and will not be required to pay taxes on the buildings and developments at the site, according to the ordinance. Starting in the second tax year, 20 percent of the taxes will be paid by the developer. Taxes will then continue to be phased in at 20 percent increments until the developer pays 100 percent of the taxes on the project in the sixth tax year, according to the resolution. "I think it is a pretty standard tool," Councilman Michael DeStefano said at the workshop meeting. "We all agreed on it." The ordinance states, "The city has agreed contractually to certain shortterm tax abatements as an incentive to effectuate continuation and completion of the Pier Village redevelopment project in furtherance of the goals and objectives of the redevelopment plan. "The Pier Village redevelopment project will result in significant benefits to the city by attracting additional residents to live and work in the oceanfront area and provide housing in the area." It continues, "In addition, the project will realize additional public parking and an attractive and desirable commercial area and such benefits are greater to the city than any short-term effects associated with the proposed tax abatement." City Attorney James Aaron explained that there are two kinds of tax abatements, a long-term abatement and a short-term abatement, which is the type the city entered with the Pier Village developers. "We negotiated down to five years," he said. "You could have done a longterm abatement. "For the benefit to the developer, they would much rather a long term. We couldn't get any better deal," he said. Tax Assessor William Fitzpatrick, who assisted Nadell with the presentation, agreed with Aaron. "This is the best, other than no abatement," Fitzpatrick said. Fitzpatrick and Nadell distributed charts to council explaining the progress of the tax abatement from the first phase of the project. In 2005, the total land at the Pier Village I site was assessed at $6.7 million prior to construction of the project, according to Aaron, who said that after the project was developed, the land and the buildings at the site were assessed at $84 million. "What is the impact of this?" Nadell asked at the meeting. "$84 million in ratables. "This reflects the positive impacts the city will have even with this five-year, shortterm tax abatement," he said. Currently, the first phase of the project is in its second year of the tax abatement. In 2007, Pier Village paid $485,000 in taxes, according to Fitzpatrick, who explained that this marks the second year of the tax abatement. He added that the city is anticipating that the developer will pay just over $6 million in taxes for the project. By 2011, the developer will be paying 100 percent of taxes on the property, he said. The ordinance has to be in place before construction on the second phase can begin, Fitzpatrick said. He explained that that once a building is constructed at the Pier Village II site, the abatement will go into effect the next tax year at zero, then taxes will be paid at 20 percent increases for the next five years until the sixth year when the full amount will be paid. Plans for phase two call for the construction of approximately 242 residential units and 3,800 square feet of commercial space on 6 acres of oceanfront land between Morris Avenue and Laird Street. The developers have already completed an estimated $100 million mixed-use project in the first phase on a 10-acre tract stretching from Laird Street to Melrose Terrace.