HILLSDALE, N.J.—The borough administrator told the council Aug. 11 to expect $735,000 in revenue this year from a payment in lieu of taxes (PILOT) agreement with The Piermont, a new 256-unit luxury apartment complex on Patterson Street, part of Hillsdale’s redevelopment zone.
Administrator Michael Ghassali said $699,000 will go to Hillsdale and $36,000 to Bergen County. Ghassali said the estimated PILOT payment was calculated 4–5 years ago when rents were “much lower.” He said The Piermont had leased 115 units, with more pending.
He said that, due to changed economic conditions, an audit of Piermont revenues would be conducted in March 2027 by the borough and Piermont management.
Ghassali called the $735,000 PILOT payment “very conservative” and noted a prior estimate of $1.2 million in revenue at some point in the PILOT agreement. He told the council he was not sure how many of the 115 leased units were affordable units.
Mayor Michael Sheinfield pointed out that March is a busy time, with budgets being developed. He wondered whether any “new number” for PILOT revenues could be included in the 2027 budget. Ghassali said it could be included.
Ghassali said the borough “was due some (PILOT) money now” and he would find out when likely new revenues might be incoming after the March 2027 fiscal audit.
Ghassali said Piermont officials were “very comfortable” with the leasing rate of 115 units. He told the council he would find out how many of the 115 leased units were the affordables required as part of the project. Ghassali said he assumed that affordable units are leased first, but he would follow up.
In mid-2022, Acacia Financial Group told councilors that the PILOT agreement was “properly sized” for the project. The PILOT agreement provides 95% of revenues to Hillsdale and 5% to Bergen County, the financial consultant said.
Jennifer Edwards, managing director of Acacia Financial Group, said at the 2022 meeting that the redeveloper asked “for a land and improvement exemption” for a 30-year period. She said the borough will receive 10% of the development’s annual gross revenue in years 1–10; 11% in years 11–20; 12% in years 21–23; 13% in years 24–25; 14% in years 26–27; and 15% in years 28–30.
She said then the borough’s first-year revenues are estimated at $736,000, based on current unit rents. She said the borough will increase its annual tax income by nearly $700,000 annually.
She said by year 16, the agreement provides incentives to move the property owner slowly back to paying conventional taxes, while providing maximum tax revenue to Hillsdale.
She said should rental income drop, the minimum annual tax payment to Hillsdale will be $500,000. “It will not drop any further than that,” she said. Edwards said the borough will receive an annual 2% “administrative fee” calculated on top of the annual tax payment.
She noted then the borough will receive $735,000 in revenues from the redevelopment versus previously only $35,000 in tax revenues generated there. That accumulates to “just under $40 million for the borough” over the 30-year financial agreement, Edwards estimated then.
See “Possible $40M to borough in redevelopment pact; vote Aug. 9,” by Michael Olohan, July 17, 2022, at thepressgroup.net.
Ambulance building repairs
Ghassali said insurance would cover repair costs to the ambulance building caused by a falling tree branch in a recent storm. He said repair costs were estimated at $150,000.
He said discussions with the borough architect and engineer raised possible ideas about adding height, a second vehicle bay, or a possible second story at the ambulance building. He said those ideas, and cost estimates, would be discussed with the finance committee and council at a later date.