|
1 Q. What is EnCap?
A. The New Jersey Meadowlands/EnCap Mixed-Use Redevelopment Project ("Project") was initiated by the New Jersey Meadowlands Commission ("NJMC") in 1999 as a way to remediate abandoned municipal landfills in Rutherford and other towns in the Meadowlands District. The Project makes use of New Jersey’s redevelopment laws through a public/private partnership in which the private entity funds the millions of dollars needed for the landfill remediation. Pursuant to a request for qualifications, the NJMC selected EnCap Golf Holdings, LLC ("EnCap") to undertake the Project. The Rutherford phase of the Project involves two areas known as the "Northern Node” and "Rutherford West”. As currently planned, it includes the remediation of the landfill and the construction of not more than 800 residential units and a portion of one of three planned golf courses. It is located on the southeastern side of Route 3 and Route 17. These highways separate Rutherford proper from the EnCap Project in Rutherford.
2 Q. The original proposal included a hotel and office buildings in the Northern Node and 200 age-restricted units in Rutherford West. Why has it changed? How does the change benefit Rutherford?
A. In recent years the hotel and office market in the New York metropolitan area has weathered a dramatic downturn. In sharp contrast, the demand for residential housing continues to be strong. In 2004, recognizing that the hotel and office development would not provide tax relief anytime in the foreseeable future, the Borough moved to provide that relief by allowing for limited residential with appropriate protections and substantial impact fees. Recently, the Borough required EnCap to meet COAH obligations on site and without increasing the overall number of units (see 5Q). These units will be built at the developer’s sole cost and will provide an opportunity for affordable housing in the Borough. Another recent amendment further limits rental units and allows for condominiums to bring an even greater benefit to our residents.
3 Q: Why condos?
A. The reduction in rental units and inclusion of condo units will increase the value of the Project as a whole in terms of tax revenue, but is not anticipated to increase our costs to provide municipal and school services. An additional $3 million dollars in impact fees over the next 3 years has been negotiated. The amendment allows for the construction of 300 market rate condo units and 300 luxury rental units (estimated monthly rental at $2500 or greater) rather than all rental units for the Northern Node in Rutherford. This will reduce the number of rental units, increase the value of the project as a ratable, and provide greater impact fees. This change will not increase the number of residential units already approved and it is anticipated that it will not increase the cost to provide municipal and school services to these new residents. Further, it will lessen the number of school children to be generated by the project as a whole. Finally, it provides for an option to increase the number of condo units to include all 600 units as condominiums, no rental units and a substantial increase in impact fees.
4 Q. What impact will this have on the school system?
A. Based on an independent municipal impact analysis, the Project will not have a significant impact on our school system. The estimate with the recent amendment is 87 children. School costs were calculated in the analysis and covered in negotiations. As a result, EnCap will pay a $5.5 million impact fee for school improvements and pay all transportation costs. In addition, the Borough will receive a credit for each school child, through the Meadowlands. District tax sharing formula, for the estimated tuition costs for such school children. It is estimated that, with the change to condo units, the number of school children will decrease. Nevertheless, the fees that have been, and will be, paid by the developer have increased with each negotiation.
5 Q. I have heard a lot about COAH. What is it?
A. COAH is the Council On Affordable Housing. Every municipality has an obligation to provide a certain number of affordable housing units with every new square-footage retail, commercial, industrial or residential development. COAH units are subsidized housing. By way of example, a family of two making $47,657 or less would qualify for occupation of one of these units. The Borough has required that EnCap provide for all of the Borough’s increased affordable housing requirements from the Project on the EnCap site. Otherwise, these units would have to be built by, and would be the responsibility of, the Borough. It is estimated that 100 units will be required, less than what was generated by the hotel and office plan.
6 Q. What are PILOTs and why has the Borough agreed to provide for PILOTs with respect to this Project?
A. PILOTs are payments in lieu of taxes. The Borough has negotiated a financial agreement with EnCap whereby the property owners will pay the equivalent of full taxes in the form of a PILOT. 5% of this PILOT will be shared with the County, as required by law, and the balance will be split between the Borough and EnCap. EnCap will be allowed to use a portion of its PILOT to offset some of the extraordinary costs associated with this project (i.e. landfill remediation, extraordinary construction costs caused by the need to build on top of the remediated landfills, etc.) as an inducement for undertaking the landfill remediation and relieving the municipalities, including Rutherford, from that liability. The Borough will use its PILOT payments to offset the cost to provide municipal and school services to residents of the Project. Based upon an independent municipal impact analysis, the annual net benefit to the Borough taxpayers that reside in Rutherford proper (north of Route 3) , after the payment of all municipal and school services, will be approximately $2.2 million without tax sharing (or $1.0 million with tax sharing) per year at build out. This will also increase each year for approximately 30 years.
7 Q. I heard a lot about the tax sharing formula. What is it and how does it impact on the Project?
A. The tax sharing formula comes from a State law that provides for a sharing of the taxes and PILOTs received by all of the municipalities required to participate in such program, including Rutherford. The Borough is currently a "receiving municipality” under the tax sharing formula. The formula is revised annually to make appropriate adjustments for new projects in the Meadowlands District. The municipal impact analysis described above provides a conservative estimate of the annual net benefit to Rutherford with tax sharing because it assumes there will not be any other development outside of the Borough (i.e. the Borough portion of the Project will be built but not the Lyndhurst portion). The shared taxes are administered by the NJMC and used, in part, to provide the payments to municipalities for school children residing within the District which Rutherford will also receive for any school children within the Project providing further tax relief.
8 Q. What are Impact Fees?
A. In addition to the above, NJMC purchased the Rutherford landfill for $1 million and EnCap has agreed to pay impact fees that can total $13.4 million over the years 2003 to 2009. These monies have been used, and will continue to be used, for municipal services associated with the Project and to provide tax relief to all of the Borough’s residents. They are not included in the tax sharing formula.
|
