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Owning a property located in an area in need of redevelopment is often very beneficial to a property owner. One of the great benefits of being in such an area is the zoning flexibility afforded to the municipality. If a property owner has a conceptual idea for the redevelopment of its property, and the municipality likes that concept, then the parties can enter into a redevelopment agreement permitting the redevelopment. If the proposal requires changes to the redevelopment plan, the municipality can agree to amend the redevelopment plan to effectuate the redevelopment. A second benefit to the property owner is the ability to apply for a long-term tax exemption.
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Redevelopment is a term used to describe the revitalization of an area or areas within a municipality that have been designated as an "area in need of redevelopment." It differs from traditional development in that the municipality plays a direct role in the redevelopment of the area by contracting with the redeveloper on all aspects of the redevelopment project - including:
The Town Council can delineate any area within a municipality as an "area in need of redevelopment" if the area qualifies under one or more of the criteria set forth in the Local Redevelopment and Housing Law, NJ.S.A. 40A:12A-5.
When properties qualify as and then are designated as an area in need of redevelopment by a governing body, a redevelopment plan may be drafted and adopted which would include specific and detailed development standards that are reflective of community desires for the development of the area. Designation of an area in need of redevelopment may also qualify projects within certain financial incentives only available to properties within an area in need of redevelopment.
At the March 10 Town Council meeting, the Council took the first official step required under the Local Redevelopment and Housing Law towards designating areas in need of redevelopment by passing resolutions directing the Planning Board to study all eight municipal parking lots, the property that the Rialto building occupies, and - as a result of the Town’s continued conversations with Hudson’s Bay Company - the Lord & Taylor sites, in order to determine if they meet the statutory criteria as an area in need of redevelopment.
No. Sometimes, misperceptions of redevelopment stem from the previous use of the word "blight" to describe "areas in need of redevelopment." More recently, however, redevelopment has been used in hundreds of municipalities throughout the state as a tool to drive economic benefits, in communities like:
All of which resulted in transformative projects for their residents and businesses. In addition, as described, the owners of properties located in areas in need of redevelopment benefit as well with property values actually increasing due to their inclusion in a redevelopment area.
After an area is delineated as an area in need of redevelopment, the Town Council must adopt, by ordinance, a redevelopment plan for the area. The redevelopment plan can either supersede the existing zoning regulations for that area or serve as an "overlay" to such underlying zoning (meaning that both are still applicable). The redevelopment plan will, at a minimum, set forth the approved uses for the area, the bulk standards (i.e. heights, setbacks, etc.), and any other design or zoning characteristics that will be required for redevelopment in that area. In addition, a redevelopment plan provides the Town with significant control over a project, including the power to dictate:
The Town Council may either have the redevelopment plan drafted or may direct the Planning Board to do so. Either way, the Planning Board must hold a public hearing on the redevelopment plan during which the public is able to comment on the proposed plan. After the public hearing, the Town Council can adopt the redevelopment plan by ordinance.
A long-term tax exemption is an exemption from paying taxes on the value of the improvements made to property as part of a redevelopment agreement. The term of the exemption can last anywhere from 10 to 30 years. In lieu of paying taxes on the exempted value of the improvements during that term, the redeveloper pays annual service charges, or payments in lieu of taxes (PILOT) at an amount agreed to by the parties based upon a formula set forth in the Long-Term Tax Exemption Law, N.J.S.A. 40A:20A-1, et seq.
The redeveloper benefits from a PILOT because the annual service charges paid each year are almost always less than what the redeveloper would pay in traditional taxes. After all, the idea behind the PILOT is to provide an incentive to the redeveloper to complete a redevelopment project that likely cannot be completed without the financial incentive. Further, the redeveloper benefits by having predictable, stable payments over a long-term period. This stability is often necessary for the redeveloper to be able to obtain bank financing for the project.
The municipality benefits from a PILOT because it is able to keep 95% of the revenue from the PILOT. In traditional taxation, Westfield only keeps 16% of the tax revenue, with the larger piece going to the school district (58%), the county (24%), the library, and open space funds. For example, if a property is taxed $10,000, only $1,600 of that is kept by the municipality. If under a PILOT agreement, that property only has to pay $8,000, Westfield would keep $7,600. This arrangement provides the Town with up to 30 years of consistent, recurring revenue.
Financially, the school district already receives 100% of its budget through traditional taxation. In terms of crowding concerns, redevelopment does not simply mean more residential properties; it can also be used for the purposes of developing:
The anticipated number of school children that come from a new residential unit is dependent on numerous factors, including the:
Studies conducted by the Center for Urban Policy Research at Rutgers University, the Joint Center for Housing Studies at Harvard University, and information from other New Jersey municipalities have shown that the number of school-age children in multi-family housing is dramatically lower than that which comes from a detached single-family dwelling and in many cases is nonexistent. During a recent Downtown New Jersey Annual Conference, the South Orange Village President stated that they were seeing one school-aged child coming from 33 units of multi-family housing.
Analyzing the impact of a project on the schools is an important part of the redevelopment process and one that the Town will prioritize as it proceeds through the planning process.
Redevelopment represents more than just residential units. A thoughtful and well-planned redevelopment strategy allows us to control and drive the outcome of future development to bring our Master Plan Reexamination goals to fruition, prioritizing the downtown recommendations as a means to support its revitalization.
It’s important to note that these potential designations of the eight municipal lots, the Rialto property, and the Lord & Taylor sites do not necessarily mean that the Town will be proposing developments on any or all of these sites. Rather, by designating them all, it allows the Town to take a strategic approach to identify the best opportunities and locations for new parking solutions and revenue-generating residential, retail and commercial development; as well as planning for the possibility of a new firehouse, community center, and public plazas. As with the Master Plan, the Town will be seeking and encouraging public input into any proposed downtown plan.
Part of an effective redevelopment planning process is to assess a project’s impacts and ensure that efforts are taken to mitigate traffic and congestion concerns. In this case, analyzing the traffic impacts of development will be paramount and considered in conjunction with the upcoming traffic and circulation study stemming from the Master Plan Reexamination. The Joint Center for Housing Studies at Harvard University found that when comparing apartments to detached single-family dwellings, apartment dwellers own fewer cars and generate fewer automobile trips per household.