@Tom: I agree completely. I find it troubling that the rest of the Council choosed to bury their heads in the sand on this. The residents and taxpayers deserve better.

oops! meant "chooses to bury" not "choosed to bury"

Mr. Englert: Am I correct in assuming that the financial resources necessary to complete the job will be RESTRICTED solely for this project? The Township will have first lien on the property, ahead of the bank or lending institution?

Concerned:

I think it's safe to assume that any lending institution/private equity real estate receives investor legal assurances as to where their money is invested and, accordingly, by what real property secures it...little different that your arrangement with whomever holds your mortgage.

That said, it's a matter of law that municipalities and property tax obligations trump a mortgage lender's lien on real property.

Once the PILOT agreement takes effect, I believe that there is a "credit" for the land taxes built in. My recollection (maybe flawed) was that the PILOT is reduced by the amount of the land taxes, f'rinstance if the land tax is $100,000 and the PILOT is $850,000, the Township nets $850,000 (rather than $950,000) and it goes 95%/5%/0% Municipal/County/BOE with the Township making a $10,000 per student payment to the BOE. If the redevelopment area sends any special education students into the district, we could wind up in a revenue hole.

Gary Englert:

Apparently, Prism responds to notices of default by bringing their property tax payments up to date. The benefit is that their cash flow problems don't become ours.

As to your point that lack of income from the property somehow makes property tax delinquency acceptable, I don't buy it. From your profile, I see that you're an employee of former Mayor McKeon and, as such, are tasked with the job of defending his folly, but constant repetition of the same nonsensical excuses for Prism's conduct in the matter are tiresome.

It would also be helpful if they cleaned up the property - other property owners (residents) face fines when their properties are not maintained to the Township's satisfaction. Surely a fine could be issued to encourage Prism to maintain the property on Main St. It's a disgrace.

Say, Prism continues this way for the next 5 years, taxes = $200,000 per quarter = $800,000 per year. Over 5 years, taxes paid to West Orange = $4,000,000. Is this income to the Township higher compared to what the Township will get after the Redevelopment is completed, over a 5-year period? Of course the eyesore will still be there, but then we do not have to worry about the $6.3 million general obligation bond in the next 5 years. Just thinking out loud.

@Concerned - there are videos from early 2012 where ex-Councilman Anderton explains the PILOT and the revenues expected by the town. I don't know if the videos are still available from the Township - the online videos at westorange.org seem to go back to May 2012. There are some meeting excerpts posted on youtube where Sal tries to explain the tax abatement (February and March, I think). A search for "west orange town council march 2012" on youtube will get you to the clips. The projections, IIRC, were between $650K and $950K with a credit for the land taxes, 95% to the Township ($617K - 902K) and the remaining 5% to the County with the BOE's share (60%+ of which makes up your property tax bill) will come out of the Township's take.

I'm guessing that the current $800K is divided roughly 60%/25%/15% among the BoE/Township/County as is the case with all of our property taxes, but, please check the video clips for a more thorough (though somewhat convoluted) explanation from the Councilman.

Paul Eggers:

My service to Assemblyman McKeon is as an unpaid, Legislative Aide, providing voluntary counsel and assistance to him and his constituents in my areas of expertise; veteran and military affairs first and foremost among them. I am not his employee in any sense.

That the projected buildout for the battery factory was to be 24-30 months, and things have dragged on for more than 60, it's a given than no reasonable schedule or business plan could have predicted such a delay. It's also unreasonable to presume that Prism Capital Partners, you, me or anyone else has some bottomless well of cash from which to draw...absent any income being generated.

Just how long, pray tell, could you continue to pay your bills before exhausting your savings if you lost your job?

Again, without income being generated on Main Street, Prism has paid its bills and stayed the course...during the most challenging economic conditions that any of us have seen in our lifetimes...and, yes, that is commendable...and saying so isn't defending folly but, stating common sense.

As to the fabric on the construction fence (again, meant to last no more than 30 months), I understand it will be replaced before the St. Patrick's Day Parade but, it will do little to screen the ugly, six story monolith that rises behind it.

Only renovating the structure with change that visage and Prism remains the best situated to see that through to completion.

Concerned:

Assuming nothing happens for five years and Prism's continued willingness to carry a non-performing entity, yes, we'll continue to receive property tax payments from them.

True as well would be the fact that we will not have issued the bond we have committed to and just as true will be the fact that Prism won't be paying the debt service on them.

What would then also be true is if the 100 year old sewer mains bordering the battery factory decide to collapse during this period, the Township will be forced to renovate and upgrade them at its own expense, without Prism as a partner in doing so or picking up the tab.

Scott:
Thank you for your response. How is the revenue to the Township (PILOT) calculated? Is it a fixed amount per year, or a function of (rentals, occupancy, or some other factor?) Since Prism is now considering selling units in addition to rentals, will this affect the formula used for PILOT or no effect at all? If this has an effect, then the anticipated revenue to the Township will have to be revisited.

Concerned:

Frankly, I have no idea how the PILOT is supposed to be calculated. All I know is that Anderton said that there would be a MINIMUM of $650K/yr and that it *is* a function of Prism's reported revenues.

I viewed the videos of 2/15/2012 on the Redevelopment Meeting with Prism and these are my takes:

(1) Upon completion of Phase I, Prism will continue to pay the land property tax as they currently do. Around 24% of this goes to the Township, 60% to BOE and 14% to the county, the 2% to the library, county open space, etc.

(2) PILOT means the tax for the building is a negotiated rate which is a percentage of the gross revenue (rentals) of this project; and instead of 24% of this going to the Township, their share will be 60%. It is projected that during the stabilization period (80% occupancy?, I am not sure when stabilization is achieved), the PILOT revenue will be $950,000. The Township share of this will be $950,000 x 60% = $570,000 per year. If rentals (occupancy) = 0, then the PILOT revenue will be 0.

(3) It is now clear in my mind that if Prism considers selling some of the units in addition to rentals, this could change the calculation of the PILOT revenue and definitely should be revisited.

Further to my post re-videos of Redevelopment Meeting with Prism on 2/15/2012, the following are my comments on the $6.3 million general obligation bond.
• Prism will pay back one half of this ($3.15 million) via special assessment to Prism over 30 years with interest. Assuming an interest rate of 1.0% over 30 years, the capital recovery factor (crf) = 0.03875. The annual cashflow to the Township = crf x 3,150,000 = $122,000.

Mayor Parisi mentioned that the other half ($3.15 million) is a fair share of the Township for the infrastructure improvements, similar to how such improvements were financed by the Township in Llewellyn Park, etc. Just for argument sake, suppose we would like the Township to also recover this amount so that the Township does not pay for any of the infrastructure improvements, how much is the minimum PILOT revenue just to breakeven over 30 years?
• Using the same assumptions above, the minimum PILOT revenue = $122,000/60% = $203,000 (since the Township only gets 60% of the PILOT revenue, the rest goes to BOE, the county, etc.) The projection is PILOT revenue of $950,000 during the stabilization period (assume at 80% occupancy, say 270 units.) $203,000/$950,000 = 21%. 270 x 21% = 58. Therefore, with these assumptions, the Township will at least recover the other $3.15 million when the occupancy is at least 20%.

@Concerned:

I posted earlier but to the wrong thread (it ended up in the one just above this one).

The Township actually splits the PILOT 95%/5% with the County getting the 5% and the BOE getting nothing. According to former Councilman Anderton, any school-age children residing in the project will trigger a payment of $10K per student to the BOE out of the Township's 95% share. The average cost of one student is close to $20K/year (I don't know what the marginal cost is) and the cost of educating a single spec-ed kid can be many times that $10K/year.

To add 2¢, the bonding for Llewelyn Park (and Ridge Road, for that matter) is not quite the same. The property owners in those areas will repay the entire bond from special assessments on the individual properties (whoever owns them now or into the future). The rest of the town's property tax payers will have zero tax liability going forward.

RB: I am quoting Mr. Diaz from the 2/15/2012 meeting video. He said that the Township will get 60% of the PILOT revenue. I defer to your information re-95% share if it is later than my 2/15/2012 source. He did not state how the remaining 40% will be split.

HMV: I might have missed Mayor Parisi mentioning that Llewellyn Park will repay the bond via special assessment. This makes sense to me.

Concerned:

The Redevelopment Meeting on Feb 15, 2012 was more of a sales talk by Prism than a meeting in the usual sense.

I went back to westorangegrassroots.org and found the TC meeting of 3/6/2012 where Sal explained the PILOT. About 45 minutes into Part 3 of 4 (or on youtube:
http://youtu.be/e2UsmoQvu-Y?t=3m42s) you can see Sal's explanation of the PILOT split.

If it's not a big deal, why don't you chip in with the council and pay for it wiseguy?

Steve Serebrenik:

Those of us who actually volunteer our time and energies to the community (which I've been doing for decades), generally pick a niche and stick with it; addling goose eggs isn't mine but, you just might be the man for the job.

If you think spending $3,000 is such a big deal, you can devote your time and energies by doing the job yourself and making the expenditure a moot point.

It isn't a big deal but, rendering athletic fields and parks unusable because they are covered in the feces deposited by some fairly good sized animals most certainly would be.
.

$3,000 comes to something like 18 cents per household. Get over it.

^ Nonsense.

Paul P:

Thanks for that link. While there, I clicked over to the WO Redevel project and found

http://www.prismpartners.net/proj_edisonvillage.html#

"This complicated redevelopment includes more than $40 million in non-recourse Redevelopment Area Bonds. These bonds are tied to a payment in lieu of taxes (PILOT) agreement. This arrangement provides substantial benefits to both the Township as well as individual homeowners whose property taxes will be substantially reduced for a 25 year period."

The $6.3MM bonds are General Obligation bonds, no? What are these $40MM RABs then? I thought the 30-year tax abatement was for the rental units; why are we giving individual homeowners (if we ever actually see any) substantially reduced taxes for the next 25 years? From the look of the master siteplan, there will be quite a large number of children flooding into the local schools - who's paying for that? The existing beleaguered homeowners? If this is the plan, I can see property taxes doubling again in the next decade just as they did in the 1990s.

Taxes in West Orange are already at an unimaginable high as a result of McKeon, Codey, Parisy and the failed WOBOE.

WO already has a failed educational system, high crime, high taxes, failed redevelopment...the future is clear WO will be the next Irviingtoon/Orange/East Orange.

^ Nonsense.

Yes, Mr. Englert it is nonsense when you feel a compulsion to respond to every post even those where you have nothing to counter the verifiable facts with.

wohopeful:

There is nothing factual about your repetitive, incessantly negative posts, concerning everyone and everything, lobbed from behind the cowardly anonymity of a screen name.

Simply labelling them as the nonsense they are spares my having the wrestle with a pig.

Gary,

I knew you would miss the point.

Steveb Serebrenik:

Surely, you don't know me well enough to know what I miss and what I don't...but, I can assure you I don't miss much.

If your point wasn't that you're far from enamored with paying for/supporting services/facilities you don't use, then what is it?

Volunteers DO assist with the egg addling process but, someone must take the point...stay abreast of the technology...and organize the effort...and the current cost of doing that is $3,000 a year.