WESTFIELD, NJ — (Updated at 9:56 p.m.) The plot on which Lord & Taylor rests, the Rialto Theatre and municipal parking lots are among the properties that could be considered for potential tax breaks under a measure the Town Council has passed to the Planning Board for consideration.

The Town Council earlier this week referred to the Planning Board a measure that if approved could set up property owners in the town’s special improvement district for certain tax abatements by designating the downtown as an “area in need of rehabilitation.”

“This designation allows for agreements with property owners that [are] meant to encourage them to improve their properties through five-year tax abatements on the value of their improvements,” said Mayor Shelley Brindle. “The property owners were very enthusiastic about this designation when we asked for their input last month. This designation seems more necessary now than ever as a means to ensure our downtown not only survives but eventually thrives after we emerge from the other side of this pandemic.”

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Town Planner Donald Sammet said the town’s entire downtown special improvement district would be designated as an “area in need of rehabilitation” under the plan and that the council would later approve the specific tax breaks.

“If you continue on this path of rehabilitation, we would present to you an ordinance for those tax advantages,” Sammet told the council.

The resolution for designating the area in need of rehabilitation cites a study by Sammet that says the area is at least 50 years old and that most of the water and sewer infrastructure is “in need of repair of substantial maintenance.”

Sammet, who previously worked in Montclair and Asbury Park, said those are among the New Jersey municipalities to successfully use the state's local redevelopment law as Westfield intends. South Orange and Metuchen also have used such designations, he said.

“The redevelopment law is a great tool to for municipalities to use. It gives a lot of flexibility,” Sammet said.

While the designation comes as downtown property owners manage the financial challenges that have come from closures due to coronavirus, officials were considering the designation even before coronavirus.

The Rialto Theatre, which closed abruptly in August, is being considered as a potential location for a performing arts center should the right investor present itself. In addition, the takeover of Lord & Taylor by the fashion brand Le Tote last September raised the possibility that the property owner may be seeking to convert the store into something other than its existing exclusive retail use.

On March 10, Brindle said that a rehabilitation designation “would ensure that all downtown stakeholders have an opportunity to participate in and benefit from the revitalization of our downtown.”

Tax abatements, referred to as payment in lieu of taxes, have been criticized for benefiting municipal government while leaving school districts bereft of the financial gain that they would otherwise receive if taxes were collected from the developers in the typical fashion.

“Municipalities often receive more funds by granting tax abatements because they arrange for payments in lieu of taxes,” state comptroller Matthew Boxer wrote in a state report on the tax abatement programs. “School districts, however, receive no share of those payments and therefore lose out on the municipality’s new wealth.”

It is a concern that Brindle, in her March 10 remarks, addressed.

“We … know it’s in our collective best interest to adequately invest in our schools,” Brindle said. “PILOT programs allow the opportunity for the Town to enter into creative agreements with the school district to support specific initiatives that benefit the community as a whole, a potentially very timely opportunity.”

Email Matt Kadosh at mkadosh@tapinto.net | Twitter: @MattKadosh

Click herepdf to read the full study of the town's special improvement district.

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