WESTFIELD, NJ — Under a proposed local law intended to incentive development, property owners in the downtown who substantially improve their infrastructure would not immediately see the resulting property tax increases that typically come with higher property values.
The town council on Tuesday introduced the law that would allow for tax abatements of up to five years on the value of improvements made to properties in the town’s special improvement district. Council members voted 8-1 for the measure’s initial approval.
“This is a great incentive for your downtown businesses to share in your growth and revitalization of the town and not be left out,” the town’s redevelopment counsel, Steve Mlenak, told council members at their virtual meeting Tuesday.
If approved, the law would allow for tax exemptions on up to $25,000 worth of improvements made to certain properties within the town’s special improvement district, Mlenak said. The town would then phase in the requirement for full payment of property taxes based on the new value over a time of five years, he said.
Introduction of the tax abatement law follows the council’s designating the town’s special improvement district an area in need of rehabilitation, a measure that allows for the council to set up such abatements as a means to entice property owners to improve their properties, Mayor Shelley Brindle said.
“We continue to prioritize resourceful measures to enable our business owners long-term viability — an issue that is more important now than ever before,” Brindle said.
Councilman Mark LoGrippo cast the lone dissenting vote.
“Some of the residents feel this is a sweetheart deal for developers, but if they improve their own property, they’re taxed at a higher [amount],” LoGrippo said. “What’s the best way to explain it to residents?”
Mlenak replied that encouraging a gradual increase of commercial property values can reduce the share of the tax burden on residential properties.
He also indicated a potential benefit to the business community: “When you have an improved façade in the downtown, you’re attracting more people to shop down there, to walk down there,” Mlenak said.
The proposed law has safeguards to protect against property owners using the abatement law to get tax reductions for anything other than improvements that would benefit the business district over the long term.
According to the ordinance, to receive the tax abatement, property owners must submit an application that provides among other details a general description of a project, a description of the number, classes and types of employees to work at the project site within two years of its completion and a statement of the benefits to be realized if the tax abatement is granted.
Mlenak said that under the tax abatement program being implemented for the downtown, the school district and county would receive their share of property taxes. This is unlike what happens in the case of agreements for payment in lieu of taxes, commonly referred to as PILOT agreements, he said.
“Under a PILOT scenario, the benefit to the municipality is that you get to keep 95%,” Mlenak told the council.
While the measure on Tuesday’s agenda would not enable PILOT agreements, the town is considering declaring a series of properties in the downtown as a “non-condemnation area in need of redevelopment,” a measure that would pave the way for PILOT agreements.
A May 14 report posted to the town’s website recommends seven of the town’s parking lots be declared redevelopment areas. This would first require the approval of the town council and the planning board, the report says.
The council also has initiated a process that may lead to the now vacant Rialto Theatre along with three properties associated with Lord & Taylor being declared redevelopment areas following resolutions the council passed March 10 directing the planning board to investigate such.
A public hearing on the tax abatement ordinance is scheduled for the council’s meeting on June 9. The council is anticipated to approve the measure at that time.
Email Matt Kadosh at email@example.com | Twitter: @MattKadosh
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