Government

Berkeley Heights Residents Given Overview Of Municipal Redevelopment Costs, Timetable

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Bond counsel Matt Jessup speaking about financing the redevelopment project.
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Berkeley Heights CFO Michel Mistretta speaking about the tax impact. Credits: Barbara Rybolt
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Architect Anthony Iovina, left, and Township Planned Mike Mistretta speak to the council about the Municipal Redevelopment plan. Credits: Barbara Rybolt
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An earlier version of the Municipal Complex. Credits: Barbara Rybolt
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BERKELEY HEIGHTS, NJ - On Tuesday, Jan 10, residents learned several new facts about the proposed Municipal Complex: 

  1. It is 1,000 square feet larger than previously planned because of the relocation of the Senior Citizens meeting room from the basement to the ground floor.
  2. The bond ordinance to finance the project will be introduced on January 24, the next meeting of the Township Council.
  3. The bond ordinance is scheduled for its public hearing and adoption on Feb. 7.
  4. If it is adopted, the bond ordinance will be effective on March 2, which will allow the borough to officially hire an architect, who will begin drawings for the salt dome, so the township can send out bids for the dome in June 2017.  
  5. The current salt dome must be removed before any other work begins, because a portion of the municipal complex will be on that site.
  6. Construction of a new salt dome should start in November.
  7. Construction of the new Municipal Complex should begin in January 2018 and end in June 2019.

Township CFO Michel Marceau presented information regarding how the project would impact taxes.  Residents learned there are two scenarios as far as taxes are concerned.  

Scenario 1, which the council prefers, includes the purchase of the Hamilton Avenue property for $3 million, the estimated cost of the Municipal Complex of $28 million and the estimated $10 million sale price of the Hamilton Avenue property, the estimated net project cost would be $21 million. This scenario presumes a 100 unit townhouse development will be built on this property. 

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In this scenario, the owner of the average home which has an assessed value of $308,100 (which represents a fair market value of $550,179) will see their taxes go up about $78 a year. 

Seven years of bond anticipation notes (BANS), from 2016 through 2022, with an anticipated interest rate of .95 percent would be paid down - interest and principal would be paid. At the end of that period, the township would have to finance $16,225,000. 

From 2023 through 2042, serial municipal bonds would be financed with an estimated interest rate of 3.75 percent. The annual cost to the municipality would be about $1.3 million, declining to just under $1 million in 2042.

In Scenario 2, the township would foot the bill itself, without acquiring, then selling, the Hamilton Avenue property. the cost of the municipal complex would be $28 million. 

In this scenario, the owner of the average home which has an assessed value of $308,100 (which represents a fair market value of $550,179) will see their taxes go up about $255 a year.

From 2016 through 2017, the township would rely on $28 million BANS to fund the project. At the end, the township would need to finance $23.2 million.

From 2023 through 2042, serial municipal bonds would be financed with an estimated interest rate of 3.75 percent. The annual cost to the municipality would be about $1.8 million the first year, declining to just under $1.43 million in 2042.

All of these numbers are estimates and subject to changes.  According to a chart handed out at the meeting, "Potential Positive Adjustments" to these figures include the "timing of the BANS/bonds; use of a PILOT with the redeveloped; purchase price of units from redeveloped exceeds target; actual project costs are less.

Potential negative adjustments include rising long term interest rates, the purchase price of units on Hamilton Avenue are less than anticipated and exceeding estimated project costs.

Matt Jessup, the township's bond counsel, gave an overview of redevelopment finance for the project. A municipal bond is "a certificate issued by a governmental entity promising to repay borrowed money at a fixed rate of interest over a specified period of time," according to a slide he presented.

Perhaps the most important point he made was that the "amount authorized to be bonded would not be borrowed all at once," it can be borrowed as it is needed, similar to a home equity line of credit.

Architect Anthony Iovina and Township Planner Mike Mistretta started the presentations last week by describing significant events in the two and a half year process that has brought the township to the point where it is ready to introduce a bond ordinance for the municipal complex project.

After a number of proposals, a meeting with seniors last summer convinced everyone that the senior meeting room needed to be on the ground floor. That move increased the square footage by 1,000 square feet, he said.

Mistretta went over the current state of the project.  "The survey is done" as are EPA and geotechnical studies, including ground water testing. "We are ready to go forward," he said.once the new salt dome is done, the old one can be demolished, "then we can start," he said.

Council members asked a number of questions about the project. Marc Faecher was particularly interested in whether there was "room to grow" in the new complex and whether the council would be able to evaluate the proposals for the townhouse development 

Iovina assured him there was room to grow, on the lower level. 

Mistretta said yes, "We get to evaluate" the proposals. With the design standards in place, there is a mixture of "flexibility and control."

The bond ordinance will be introduced at the Jan. 24 meeting of the council. The meeting begins at 7 p.m. in the council chambers of the Town Hall, 29 Park Ave.

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