ROSELAND, NJ — As one of nearly 300 municipalities facing challenges with the New Jersey Supreme Court’s ruling that it must permit hundreds of affordable housing units to be built, the Roseland Borough Council voted 5-1 on Tuesday to approve 20-year Payment in Lieu of Taxes (PILOT) programs for the properties of 85 Livingston Avenue and 6 Becker Farm Road.

Although all of the council members agreed that the affordable housing requirement is unreasonable, the majority, with the exception of Councilman Richard Leonard, decided that these two properties would help the borough achieve the greatest number of affordable housing units with the least possible impact on the community.

“We’re not trying to say that we want to change our community, even though we have pretty much a gun to our head saying we have to,” said Councilman Thomas Tsilionis. “We’re trying to pick what would have the least amount of negative impact to the residents who invested to live in this community, who own properties in this community and who moved to Roseland based on the fact that they liked the way Roseland was when they moved in. We’re here to represent the residents in the best way that we can, and this location has the least impact negatively that we can possibly find.”

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Leonard, the only opposing vote, wanted to postpone the final decision in order for the planning board to reexamine the Master Plan and assess whether it would be possible to develop mixed-use properties at 65 Livingston Avenue and 280 Corporate Center. He also shared concerns with his colleagues that this plan would turn Roseland into a rental community.

“They may be right in supporting this, I may be wrong—10 years from now, five years from now, we’ll know,” said Leonard. “My hesitation is, I wish Mack & Cali (the developer) would sit down and talk to us about some of the other projects. The designer of 6 Becker Farm Road is the same designer who did [Metropolitan at] 40 Park in Morristown—great building, half condo, half rental apartments. The first floor includes Roots restaurant, a Starbucks and a number of other retail places…That’s part of the vision that I’m looking for at 280 Corporate Center where you have a mixed use.”

Councilman Chris Bardi, the newest member of the council, had also been against the PILOT when the ordinance was introduced in March due to the lack of funding for the school system as a result of it. However, after doing his due diligence to meet with members of the board of education and assess the available options, he said he finally felt comfortable voting in favor of these two ordinances.

“I was very encouraged by the progress that we made,” said Bardi. “We unanimously agreed as a team to put together a plan to properly and adequately fund the school where we can. Obviously, there’s more discussion to be had, there’s more work to be done, but I feel like we’re on the right track. My main concern has been addressed, and I do not feel the PILOT program is perfect, but I do, however, feel that it’s the best option that we have in order to keep Roseland in the driver seat.”

Although Tuesday’s council meeting was packed with community members who raised concerns about the PILOT program, Tsilionis reiterated that voting against these two properties, or even postponing the vote until a later date, would provide other developers with the opportunity to insist on building affordable housing units in residential areas.

“The alternative is, it will be a build-for-all,” he said. “We are facing a fork in the road, and the direction we go is going to dictate what this community is going to look like 10 years from now. We are looking at getting the most amount of units possible out of this location because we believe that if we don’t, then we’re going to have to make it up in another part of our community.”

Prior to opening the hearing to the public, the council invited its financial consultant Daniel Mariniello and legal counsel William Northgrave to give a presentation on their findings regarding these two properties. The two were hired by the council to review, analyze and make a recommendation regarding the PILOT application submitted by the developer, who will pay their invoices.

According to Mariniello, principal of NW Financial Group in Hoboken, the property at 6 Becker Farm is a 300-unit residential building with 240 market-rate units and 60 affordable units, and the property at 85 Livingston Avenue has 140 units with 112 market-rate and 28 affordable units. The Livingston Avenue project will also include a hotel with a first-floor restaurant, which is not included in the PILOT request.

The all-in cost of these three developments would be approximately $154 million, according to Mariniello. In his PILOT application for the term of 20 years, the developer has requested 10 percent of gross revenues for the first 10 years and 11 percent for the next 10 years.

“The long-term tax-exemption law allows for us to set minimums on PILOTs, and those are either a percentage of gross revenues, the minimum being 10 percent, or a percent of the total development cost, which is 2 percent,” said Mariniello. “The developer is requesting the gross-revenue avenue approach…which is typical in New Jersey right now.”

As part of the PILOT law, Mariniello explained that the developer will pay land taxes, which are credited to the PILOT payment, and that 5 percent of the PILOT will go to the county and the remaining will go to the municipality. In other words, the total PILOT payment, which includes land-tax payments, would be approximately $1.7 million, with a little more than $1 million (or 63 percent) going to the municipality, approximately $375,000 (22 percent) going to the school district, and approximately $265,000 (15 percent) going to the county.

With these two residential units, Mariniello estimated that the public (both local and regional) school district would see a total of approximately 89 new students in grades K-12, with an estimated cost of approximately $782,000.

“I believe very strongly, with the way the numbers work themselves out, that I’m overstating what the costs are going to be for the municipality, but you have to have a basis to represent what the cost might be,” said Mariniello, who also calculated that Roseland would see approximately 900 new residents (607 at Becker Farm and 293 at Livingston Avenue) based on the number of units and the types of units, including one-bedroom units, family units, etc.

Additional people coming into the borough would also affect other portions of the municipal budget, including the police and fire departments, according to Mariniello. Taking this into account, the projected cost would be approximately $395,000 to the municipality based on an estimated cost of $439 per new resident.

“We try to make sure that when we look at projects like this, we balance two things out: a regular return for the developer and does it make sense with regard to them requesting the tax abatement, and then also is it costing the municipality anything,” said Mariniello. “You want to make sure that not only are you, as a municipality, breaking even, but you would actually like to do better than that so that the entirety of the municipality benefits.”

If affordable units were not a factor, Mariniello said it would be a different discussion—but even with the affordable housing requirements, he said the total PILOT and tax payments to the borough, including the total tax payments to the school, is approximately $1.4 million in revenues to the taxpayers. After costs, the total comes to about $200,000 per year in revenue.

Following his presentation, Mariniello stated that he firmly recommended that the borough move forward with adopting the PILOT for both locations. Northgrave, of McManimon, Scotland and Baumann LLC, said that because his office is in Roseland, he is also a Roseland taxpayer and understands the residents’ concerns, but that he also agreed this option was better than the alternative.

Many residents still spoke against the ordinances, including former Roseland Mayor Louis DeBell, who was faced with a similar but much less intrusive task of fulfilling affordable housing requirements within the borough during his tenure. DeBell was concerned about putting so many units in one location, fearing that this would cause future developers to want to build affordable units on Harrison Avenue, Noecker and other areas with vacant land.

“You don’t have an easy chore resolving the situation with a mandate on affordable housing,” said DeBell. “I compliment you on the diligence and the time and effort you put into this. My question here is that if you put them in that one location, you’re leaving other locations to be developed, and in the event that those locations are vacant, is that going to affect a future affordable housing that we’re going to be obligated to?”

Other residents also voiced that opinion that it would not be fair to the current taxpayers for the borough to allow a tax exemption for any developer.

Scott Gorman, an attorney and a member of the Roseland Board of Education, spoke on this issue strictly as a private resident of Roseland. He said that, like Bardi, he initially opposed the PILOT program due to the negative impact on the schools with respect to the revenue that the school district will receive based on the assessment of these two properties. However, he said he has been incredibly encouraged by recent meetings between the district and the council.

“From what I have heard, it’s been very encouraging because it appears as though there has been a willingness on the part of the governing body to ensure that at least our local school district is not shut out from the revenue related to the improvement on the properties,” said Gorman. “My concern, though, is that I think we all agree that this is a decision that impacts the future of our community—it’s perhaps the largest, most significant decision that’s going to be made in quite some time—and this is the first that I’m learning of the details of the financial arrangement. As a private resident, I believe it unfair that we have a public hearing to weigh in on this very significant issue, and yet the only information that I have about the details of the arrangement is what I was able to scribble down [tonight].”

He added that the council should have given the public at least a week to consider the information provided in Mariniello and Northgrave’s presentation in order for residents to evaluate the benefits and to give more educated commentary on their positions.

Although he had hoped that the vote could be postponed until the two governing bodies could iron out the details of a financial arrangement to ensure that the school district does not get shut out of revenue, Gorman said he was looking at the PILOT program with a much more optimistic view.

“I think it’s of paramount importance that we know the details with respect to how the local school district will share in the revenue that is going to come in through the PILOT,” said Gorman. “[It] impacts the quality of the education that our children will receive and it has a substantial impact on what our property values will be. This is so important that it seems as though we’re doing things out of sequence if we’re taking a vote on this issue today and then ironing out those details later.”

All council members were in favor of finding a solution to ensure that the school district is able to handle any impact that additional students will create, such as a need to add classes or hire more teachers.

“Obviously, one of the things that’s missing from the PILOT is funding for our schools,” said Tsilionis. “What makes the PILOT attractive is because the alternative is so far worse. It’s not necessarily that we’re trying to give tax breaks to developers or incentives for them to build as much as we’re trying to prevent the alternative.

“If the school is being omitted from the PILOT revenue, I would love to find an opportunity for the school to receive a proportionate amount of the revenues that we receive as payments in lieu of those taxes and allow the school to be a partner in this project moving forward.”

In addition to adopting the two ordinances accepting the PILOT applications at both properties, the council also voted 5-1 (with Leonard opposing) to adopt two resolutions authorizing the execution of redevelopment agreements with the same properties.

“We are faced with a very difficult challenge here—we do have a court mandate that states that Roseland has come up short on its affordable housing obligations, and we have to take swift action,” said Mayor John Duthie, who added that the borough is also being sued by the Fair Share Housing Center. “We know that we’re going to have to build a good number of affordable housing units and it’s not a matter of if we’re going to build them, it’s a matter of where they’re going to go.

“We feel that in dealing with these vacant office buildings...this is the best plan that we can come up with. None of us are pleased to report to the public that this is the plan, but as elected officials, sometimes it’s not a good plan, but it’s the best you got.”