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A 3rd Party Look at

PILOT Payments & Challenges



PUBLISHED BY TEANECK VOICES

8/28/2023

Contents:


A 3rd Party Look at PILOT Payments & Challenges


The “Secret” of Where Teaneck’s Development and Redevelopment Ideas Come From


The Week that Was - 8/22-27, 2023


This Week in Teaneck 8/28 to 9/2, 2023


Still Waiting - For Board of Adjustment Minutes


Announcements


Meet & Greet Superintendent Spencer - September 28



Contacting Teaneck Voices

A 3rd Party Looks at

PILOT Payments & Challenges

Voices asked Google “How are NJ PILOT payments distributed? We were directed to the web site of PKF O’Connor Davies. This accounting and advisory firm is rated among the nation’s top 25 accounting firms by Accounting Today (Click Here)


What does PKF O’Connor Davies’ website say about NJ PILOTS and to whom its PILOT payments to municipalities are made? We quote it below word-for-word with two items highlighted in yellow. In part, the website says:)


PILOT Agreement Negatives

The PILOT agreement funds all go toward the city budget with only 5% going to the county and no funds going to the school district budget. The city will actually garner more funds for the annual budget with the successful PILOT than under the old assessed value at the assessed rates.


The cities have over many years granted payment in lieu of tax (PILOT) agreements with various property owners wherein no tax is levied on the properties with PILOT agreements for the school tax of the cities.


This creates a gap between education service requirements and related costs with no support by the property owners for the costs associated with education of students in the cities.


As the real estate values and neighborhoods are revitalized, there would no longer be a need for future PILOTs. Often, the PILOT agreements have been extremely lucrative for the developers over time.


Additionally, developers have often taken advantage of municipalities with creative contracts and operations to ensure the developer pays the lowest amount under the agreement.



Pitfalls and Problems of PILOT Agreements: Hands-on Experience


Over the past 35 years, working with New Jersey municipalities, we have seen the following pitfalls and problems related to PILOT agreements.

Some developers:

  • Structure a master lease with an affiliated entity to artificially lower the revenue of the PILOT entity. The master lease affiliated entity then collects the higher rents from all of the actual tenants and the developer builds up additional profits in its affiliate by underpaying the percentage under the PILOT based on the artificially lower revenue paid by the affiliate.
  • Set up management agreements with affiliates to overpay expenses for management and maintenance of the property to artificially lower the profits of the PILOT entity to underpay the city.
  • Comingle expenses of multiple projects to overstate expenses of the PILOT entity thereby lowering profits and underpaying the city.
  • Sell municipalities on entering into a PILOT when the area is not blighted or in need of redevelopment. Developers, in an effort to increase their profits, will pitch municipalities that a PILOT is needed when, in fact, the subject property is extremely valuable and maybe even one of the most lucrative development sites in a community; in effect, abusing the intent and spirit of the PILOT legislation to further enrich the developer at the detriment of the municipality.
  • Did not comply with prevailing wage and minority hiring during construction to increase profits by having lower costs while knowing the municipality did not have the appropriate infrastructure to oversee audit compliance.
  • Structure the operations with a lower base rent and separately invoice tenants for reimbursed expenses. The developer, then based on the definitions in the agreement for rent, exclude the reimbursed expenses from revenue to underpay the city.
  • Did not comply with minimum wage laws and/or with submission of annual required audit reports.


We have also encountered during our assignments:

  • Municipalities not ensuring that all required documents are received for construction projects and costs and supporting information.
  • There are no consistent audit standards relative to what the municipality requires in order to consider an audit complete.
  • There is only limited cursory review of audits by the municipality administration. There is a reasonable doubt as to whether this review is adequate because of a lack of in-depth professional accountants and auditors who are experienced and trained.
  • Noncompliance does not result in any punitive action or penalty to the entity (developer) by the municipality.
  • There are no outside or third party reviews conducted to ensure the appropriateness of submitted entity audits.

 

https://www.pkfod.com/insights/benefits-and-pitfalls-of-pilot-agreements-for-nj-municipalities/

The “Secret” of Where Teaneck’s

Development & Redevelopment Ideas Come From


Whoops! Teaneck Voices may unintentionally have led our readers to assume that if we had Workshop Meetings we would have transparency in our Council’s ideas and discussions about how Teaneck should be developed and by whom. We were only half right! Workshops have open, public discussions and interviews with developers and other vendors ONLY if Council puts them on the Workshop agenda.


And right now, why should they? There is a mechanism to discuss development, redevelopment, zoning and a variety of land use actions – and to meet with developers – in secret! That is, in secret from the Public!


This mechanism is the COUNCIL ZONING SUBCOMMITTEE. Like other Council subcommittees, this one can have only 3 members of Council. BUT – this subcommittee includes at least the Manager, the township lawyer, members of the Building Department, possibly representatives from the Planning Board and/or the Board of Adjustment and the Town Planner.


The present Council members of the Council Zoning Subcommittee are:

·       Hillary Goldberg, Councilmember

·       Michael Pagan, Mayor

·       Mark Schwartz, Councilmember,

·       Denise Becher, Councilmember, Council Alternate


The Zoning Subcommittee apparently meets one Friday a month. The Zoning Subcommittee minutes are now only released in Council agenda packets within 24 hours of the next Council meeting. The released minutes from the most recent Council Zoning Subcommittee meeting known to the public were from the Subcommittee’s July 11 meeting and solely published deeply embedded (Click Here p. 21-2) in the Council agenda packet less than 24 hours before the August 8 Council meeting.  If one did not know to go looking for them there who would find them?

We are making some progress on governmental transparency with this new Council. The most recent minutes (for July) did include a list of meeting participants and topics. There apparently will be minutes of recent or future Subcommittee meetings similarly posted at some time in the future on the Township website.  But the Town’s important agenda decisions are still shrouded in these closed meetings – and there is no way for the public to know they are coming until several hours before Council starts.


If the residents/taxpayers/stockholders of Teaneck are really demanding openness and transparency, WHAT SHOULD WE DO ABOUT THE ZONING SUBCOMMITTEE?

The Week that Was - August 22-28, 2023

Teaneck Board of Education Special Meeting - Wednesday August 23, 2023 at 6:00 pm at THS

·      For Video of Meeting Click Here


Planning Board – Thursday August 24, 2023 in Council Chambers at 8:00 pm. Click Here for video of the 51 minute meeting.


·      Chair Thompson and Attorney Kelly announced that Holy Name attorneys had requested that the site plan hearing on 2022-13 (temporary gravel parking lot) be continued until September 17 in Chambers with no further notice to the public due to unavailability on 8/24 of an expert attorney for the applicant.

·      Mayor’s representative to the Board, Alan Sohn was officially sworn in by attorney Kelly

·      An architect for the School Board explained the addition to Bryant School for pre-K students being planned by the BOE

·      One of the two sign applications for the medical facility at 381Teaneck Road were presented and approved by the Board. Location planned for the second sign will need to come back to the board for its approval. 

This Week in Teaneck - 8/28 to 9/2, 2023


Just one meeting this week.

Stigma Free Advisory Board- Monday August 28, 2023 at 6:00 pm. Click Here for access with passcode 85729. For agenda Click Here

 

Still Waiting: Board of Adjustment Mtg. Minutes

Our troubled Township website needs a major redesign - but in the meantime we depend on it for information we can obtain nowhere else.


Case in Point: We have not had meeting minutes for Board of Adjustment meetings posted on the website since April 7, 2022.


During that 17-month period the Board has made MANY KEY DECISIONS. But the public has no way of knowing what they are and what is upcoming.


Voices has pressed both the Board and the Clerk's office to get this issue addressed. We have repeatedly been told it is for them - as it is for us - a priority.


Priority matters do not take 1 & 1/2 years to correct!

ANNOUNCEMENTS

Contacting Teaneck Voices


Co-Editors: Dr. Barbara Ley Toffler and Dr. Chuck Powers

By Email: teaneckvoices@gmail.com

By Phone: 201-214-4937

By USPS Mail: Teaneck Voices, PO Box 873. at 1673 Palisade Ave. 07666

Teaneck Voices' Website is www.teaneckvoices.com


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