By Neil Schulman
Long Branch — The City Council voted 4-1 on Tuesday to approve a tax abatement for FEM South Beach Urban Renewal, which plans to construct 47 luxury condos in Beachfront South.
Despite the word “abatement,” Redevelopment Attorney Robert Beckelman said that Long Branch will receive more money this way than it would through traditional taxes.
This is the first major project for the Beachfront South area since the rules for redeveloping the district were changed several years ago, eliminating the use of eminent domain. As an incentive for being the first developer in such an area, abatements are common, Beckelman said. The developer has also agreed to make improvements to Ocean Boulevard, and is willing to give part of its property to the city if Long Branch decides to expend that section of Bath Avenue.
For condos, this PILOT, Payment In Lieu Of Taxes, will be based on the “carrying fees,” for the building, expected mortgage rates and association fees. For the first two years, the PILOT will be 10 percent of that, rising to 15% over the course of a decade.
Beckelman said that the city actually makes money on this, for two reasons. The first is that currently, the land is vacant, and the city is only collecting $25,000 a year in property taxes. The first year PILOT revenue is estimated at $425,000.
The other reason is because Long Branch gets to use 95 percent of this pilot for municipal tax purposes. (As noted in the related article, only 41 cents of every dollar from property taxes goes to the city.)
Beckelman said that the city expects to collect $5.5 million over the course of the pilot program. Their calculations show they would only get to keep $3.4 million if the condo paid property taxes traditionally.
Council President Kathleen Billings said she had asked for the presentation because people often assume a tax abatement means the city will get no taxes.
Council voted 4-1 to accept the program, with Councilman John Pallone voting against it. Billings said that she has reservations about the concept of abatements, but believed she had to support it anyway.
“When I became a council person, I was given a fiscal responsibility,” she said, and giving Long Branch an extra $2.1 million in revenue is part of that responsibility.
With this PILOT agreement now in place, work on FEM is expected to start later this year.