8.30.23   Dear Friends, I am trying to stop our local government from giving billionaire developers huge tax exemptions which we residents will have to pay for. So far, they have promised at least $150 million of our tax revenue to Birchwood, South Ave and 750 Walnut developers, with plans to offer more such exemptions to developers at North Ave/Springfield, and beyond.

        These exemptions cost our schools over $70 million in lost revenue which we residents will have to pay for out of pocket. It’s several thousand dollars in extra property taxes a year per household for 30 years so that the developers can make more profit off of our backs. It’s a scheme being perpetrated across NJ towns, and is only successful because residents are kept in the dark and told false narratives.

        I filed a lawsuit in Superior Court to challenge the latest PILOT (Payment in lieu of Taxes) tax exemption offered to Hartz Mtn. LLC, the developers of 750 Walnut Ave. and interviewed our Committee members and the developers’ attorneys under oath. The interviews confirmed our suspicions that none of these huge 30-year tax exemptions are necessary or legally required in any way. Nor were any of the publicly stated reasons for awarding them accurate. Committee members admitted to having had little to no understanding of the financial implications when they voted for the exemptions, and confessed to relying entirely on the directions of the Town’s attorneys and never thought it necessary to question that advice.

        Most concerning perhaps, it was revealed that the Town attorneys intentionally hid our financial advisers’ report from the Committee members which states unequivocally that the PILOT tax abatements are excessive by over 20% and should be renegotiated.

        In the quest to uncover the truth as to why our Committee members would vote for such an extraordinary tax giveaway to a billionaire developer the following facts were uncovered which run contrary to everything the public was led to believe for the past several years.

1. A PILOT means a huge loss in tax revenue to the Town. A PILOT (Payment in Lieu of Taxes) agreement is when the developer pays @10% of their "self-reported" annual revenue to the Township instead of paying taxes. The problem is that in NJ where PILOT agreements are made, municipalities receive on average only @15-20% of the revenue that they would receive if the developer paid their taxes.                                                          
2. The Township was never legally obligated to offer any PILOT or tax exemptions whatsoever to the developer.          
3. Cranford’s attorneys approached the developer Hartz Mtn. LLC first and asked them to accept a PILOT and 30-year tax exemption, not the other way around.                            
4. Cranford had already met its Affordable Housing quota before negotiations with Hartz even began and so was not in jeopardy of being sued over unmet Affordable Housing, and thus never even had to rezone the property to allow residential in the first place. 
5. The Hartz threat to build 900 apartments without a PILOT was never actually a real threat. The huge project would have never been financially feasible for Hartz or any developer. The threat of 900 apartments was meant to serve as an excuse so the Mayor could say the Town had won some concession when it was announced that Hartz would only build 250 apartments.                                                                                
6. The $13M in Land taxes at 750 Walnut which the public was made to believe we would receive, are actually being refunded every year to Hartz Mtn. LLC as a Land Tax Credit so we actually receive no Land Taxes either.
7. The State can require a Township to create Affordable Housing but the State can never require a Town to offer 30-year tax exemptions or PILOT deals. If a developer owns land zoned commercial and the Town has not met its affordable housing than the developer may sue the town to force the rezoning of their property to residential. However even if a developer is able to successfully sue a town the developer can never force the town to give them a tax exemption or PILOT.                                                                                                               

WHY DO TOWNS GIVE 30-YEAR TAX EXEMPTIONS?

Affordable Housing vs. PILOT (payment in Lieu of Taxes)

In New Jersey both state political parties and big developers are making billions off of all the overdevelopment, especially developments that receive 30 year tax exemptions and PILOT deals.

How it began? Political parties and big developers (PP&D) knew years ago there was enormous profits to be made if they could build developments throughout NJ metro and suburbs. But the problem was they knew residents would never vote to rezone property to allow residential developments in their cities and towns. So the political parties and large developers created a scheme to get around this issue, known as Affordable Housing Quotas. 

Years ago a legal ruling in Mt. Laurel, New Jersey was won by lower income and multi generational residents against wealthy developers who tried to use zoning laws to disenfranchise the lower income property owners so that they could take their land and build their high rent apartments. This was a great and just court win to protect and keep housing affordable in Mt. Laurel and beyond.

But in a perverse twist and irony this same ruling is now being manipulated to once again help billionaire developers make enormous profits that are passed directly to low and middle class residents, making New Jersey ever less affordable!

The PP&D send orders from the top to the local Town attorneys who then tell the Committees how to vote, and who to give tax breaks to. The PP&D knew that local Mayors couldn't tell their residents they were just going to rezone to allow big developments because there would be a revolt,, so the PP&D invented a ready made excuse for the Mayors to give to their residents. The excuse allowed the Mayor to tell the residents how much they hated allowing developments in the town but that their hands were tied and that they had to allow the development to generate Affordable Housing quotas from the State. This way the residents wouldn't hold the local Mayor responsible.

So using Affordable Housing Quotas big developers and their political allies could force their way into the door so to say, by getting wherever they wanted to build rezoned to residential. But the scheme didn't stop there.

Next the PP&D wanted to get 30-year tax exemptions for all their developments, so that the billions in developer tax savings could be funneled back to the political allies from both parties, all off the backs of the local residents.

But again the PP&D knew the Mayors could not just tell the public they were giving away 30-year tax exemptions for no reason or there would be a revolt. So the PP&D invented an acronym that sounded a whole lot better than 30-years tax free. The acronym they invented is called PILOT and stands for Payment in Lieu of Taxes. It means the developers pay no taxes for 30 years but pay @10% of their self reported income every year to the Town, and the payment goes entirely to the Municipal budget with nothing to the schools. 

Mayors could now pitch the PILOT deal with a developer as a positive that brings in revenue based on a percentage of the profitable development. Most residents assumed the PILOT would get us as much or more revenue than regular taxes would.

But the PILOT payments are no where near what regular taxes would be. On average Towns get about 15-20% the revenue they would if the developer paid their regular taxes over 30 years. 

The PILOT payments can start at about 20-30% of regular taxes in the first years when the development is new and high occupancy but fall sharply year after year until the Town gets little to nothing, and residents are stuck with all the costs, schools etc..

This is a general big picture summary, for any specifics please email me below. Thank you very much!! :)))

CranfordNeighbors@gmail.com

CASE FILE FOR PUBLIC VIEW