Montclair Council: Red Cross To Sell Park Street Office, Siena PILOT Ordinance

The Montclair Township Council got off to a slow, quiet start for 2017 in its January 10 conference meeting.  Five resolutions, which included the passage for the temporary 2017 budget, a purchase of anti-virus software for the township, and an application for a certified local grant from the New Jersey Historic Preservation funds, passed unanimously.

The one ordinance voted on, a first-reading measure amending the 2008 financial agreement for the Siena condominium apartment building, prompted resident Sandy Sorkin to ask for an explanation of it in public comment.  Mayor Robert Jackson deferred to Township Attorney Ira Karasick, who explained it once the ordinance came up for a vote.

Karasick reminded the council and the few residents in attendance that the Siena was part of a redevelopment plan in which the revenue is generated through via a Payment in Lieu of Taxes (PILOT) program.  He explained that the agreement had a several formulas for calculating the amount of money each apartment unit paid, and the formulas had various inconsistencies and contradictions, none of which accounted for changes in the real estate market or values.  It became very difficult, Karasick said, to calculate how much each unit was supposed to pay.  Also, the units’ values had grown so disparate that the payments were being unfairly distributed among the units.

“What this amendment does,” Karasick said, “is, it rationalizes that system.  It creates one formula, which is intended to fulfill the intent of the original agreement. The original agreement laid out its intent that the units in the Siena, for a certain period . . . were to pay a discounted tax rate.  And, it so happened that some paid a lot less, some paid more, some paid in the middle.  What we’ve done now is, we made all units subject to the same formula, and . . . we took the units and we revalued them so we created a base value for each unit based on their current market value.”    Karasick said that the financial consequences are minor.  After having collected $1.3 million for the Siena with some of the PILOT payments going to the county, the new revision will yield $100,000 less than that but the township will get 95 percent of the payments.

The loss would be a loss of tax revenue, not PILOT revenue; the PILOT money, Karasick said, goes to a different place in the budget.  He said that unit owners at the Siena were “very supportive” of the amendment.

The ordinance passed 7-0, with a second reading pending. For the record, Second Ward Councilor Robin Schlager is the only council member who was on the council when the original agreement took effect in March 2008.

The council also welcomed Jocelyn Gilman, the executive director of the Red Cross of Northern New Jersey, who said she had “bittersweet news” for Mayor Jackson and the council.  Gilman said that the American Red Cross’s extensive network had become unwieldy, and that the 136-year-old organization was looking to centralize its services nationwide.  Explaining that the Red Cross was looking to reduce its “real estate footprint,” she announced with great regret that its Park Street location is to be sold.  Gilman, however, stressed that the Red Cross was not abandoning its commitment to Montclair.  She said she was looking to establish partnerships with local groups to hold blood drives and offer lifesaving courses in town.

Northern New Jersey Red Cross Executive Director Jocelyn Gilman
Northern New Jersey Red Cross Executive Director Jocelyn Gilman

Gilman said that such partnerships were integral to the involvement of service organizations in the community, citing how groups came together to alleviate Montclair residents of the effects of Hurricane Sandy in 2012.  “We don’t exist alone,” she said.  “We exist as partners working together.”  In that spirit, the councilors expressed interest in going over potential partnerships between the Red Cross and other local groups with Gilman, and Acting Township Manager Tim Stafford is expected to come in and look at the possibilities for such partnerships.

Also, Karasick said that his office has been working on the Seymour Street redevelopment plan, and he said that there are agreements that will become before the council soon.   Some of the details are to be vetted before the Finance Committee, and the council may be seeing some of this at the January 24 meeting.  “That project is moving along,” he said.

He added that he has been working on a few ordinances, among them a pricing ordinance requiring certain business to display prices for services, for consideration later on.  The township attorney said he has been working on them and promised to contact council members individually in regard to the ordinances they’re interested in, but he also encouraged them to reach out to him if they had any questions.

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  1. The new Siena agreement is very illuminating…if I understand it correctly. My take aways are:

    – the original PILOT agreement for the residential units was based on an Assessed Value of less than 80% of Market Value. While I always believed this was the case, the actual number was a real eye-opener

    – the residential units will now be pegged to actual tax rate increases, but are discounted 10% for the term of the PILOT.

    – residential units, in total, will get a one-time decrease in their PILOT payments…except for the Affordable Housing owners.

    – a $100,000 reduction in revenues from a $1.3MM total is not nothing to sneeze at.

  2. Yes, it does. The first C of O was issued way back in 2007 and I am not sure either the Retail Phase or the Residential Phase is technically complete. By technically complete, I mean whether the taxpayers are receiving the full extent of what the 27th recital of the agreement now offers.

    Got to love redevelopment in this town. We just nail it…on the 28th attempt.

  3. Actually Frank, I’ve been told directly that your analysis is not correct. That the township actually benefits from this.

    However, math calculations are not my forte. I would suggest a private conversation with the Mayor, or town attorney if you really want to get into the short hairs.

  4. Of course it should be in private, but I don’t see how the three of us getting into the short hairs benefits the public.

  5. If only the Sienna could have been planned as a 12 story glass spire….pushed back on the site to allow for an open plaza space off South Park, flanked by that gorgeous Louis Comfort Tiffany stained glass window of the adjacent Christ Church. What a great downtown Montclair atmosphere that would have created. The planning for the new arts center is way too Anywhere USA for Montclair’s image and the proposed design and planning is substandard. No more excuses for substandard planning and buildings in valuable Montclair.

  6. Martin,

    I accept you don’t have a comfort level with financial detail, but, big picture, the Siena units assessed value have gone down 25% from 2011 to 2017. Furthermore, this adjustment was to normalize the assessments to fairly spread out across all units….but, the assessed value dropped 5% instead of a zero sum. As I constantly point out, the improvements to South Park Street were supposed to raise assessed values 5-10% to pay for the costs.

    What were the red flags to me that maybe this wasn’t a benefit (past, present and future?) to the town?

    – He said that unit owners at the Siena were “very supportive” of the amendment (to pay more?)
    – A $100K reduction in tax revenue doesn’t fit my concept of a benefit (which is another $56K less in revenue to the Montclair schools)
    – And Section 11 of the Ordinance

  7. I wish that the plans for the new hotel would be changed into something that would benefit everyone…. the community, downtown tourists as well as the owners and investors. A four story max “Charlie Browns” with salad bars galore… outdoor dining roof terraces… all self contained parking….and drive in ports for take away meals… THAT would have been a success and would have made everyone happy. I can’t imagine who would stay in a new construction out of character big hotel, except for Newark Airport flight staff and displaced homeowners covered by insurance policies. I would imagine that people who come for Montclair style, atmosphere and the arts would prefer the vintage boutique hotel, repurposed from a genuine Montclair landmark mansion.

  8. Frankgg, you hit the nail on the head. I often say that Montclair could be turned into a bona fide destination by utilizing its stock of historic mansions. The amount of absolutely gorgeous yet decrepit mansions is saddening. Open up some of these properties for conversion to commercial space and we will have quite the town.

  9. “which is another $56K less in revenue to the Montclair schools”

    Oops! My mistake.

    My analysis was flawed. Go ahead with the new agreement…even though I don’t understand the PILOT credit application if the exemption is invalidated by a court { Section 11(b)}

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