The Politics of Hastening Development in Parsippany

Abandoned commercial buildings do a town no good. They’re not attractive and tax revenue is limited.

But redevelopment is not always easy. Just ask Parsippany.

Officials are on the verge of sanctioning a so-called PILOT agreement to hasten redevelopment of about 11 acres at 1515 Route 10, which is on the south side of the highway and roughly across the road from the Parsippany Hilton. PILOT stands for payment-in-lieu-of taxes. Rather than pay property taxes, the developer makes an annual payment direct to the municipality.

These arrangements are often controversial. One drawback is that money usually just goes to the municipal government, unlike property taxes which are apportioned among the municipality, school district, county and sometimes an open space fund or fire district.

Another problem is that PILOT agreements just about always give a huge financial break to a well-heeled developer.

In this case, the Parsippany Council endorsed a PILOT agreement for the Ohio-based Stanbery Corp. by a 3-2 vote last month. Simple politics is not in play here. Two Republicans and one Democrat on the council voted yes; one Democrat and one Republican voted no. A final vote is scheduled for next week, Dec. 18.

Critics say the plan is a give away to the developer.

“I believe we are getting ripped off,” says resident Bob Venezia, who has spoken against the PILOT at council meetings.

Paul Carifi Jr., one of the two “no” votes on the council, scoffs at the notion that the developer needs a PILOT to make the project feasible. Carifi reasons that if this developer, Stanbery, can’t make the project financially viable, maybe another one can. He also is worried about setting a precedent for mixed-use developments.

In general, PILOT agreements are more common in cities and have become an important tool to redevelop depressed areas. That really doesn’t describe land alongside busy Route 10 in Parsippany, although the area in question has been vacant since 2016.

The development plan itself is seemingly not as controversial as the financing.

Stanbery’s website talks about “an exciting new mixed-use project” in an area that is “ideal for a new destination that provides a combination of upscale national and local retailers, cafes and specialty services in a vibrant town center environment.”

Specifically, the development plan calls for 441 residential units, 70,000 square-feet of retail development and 30,000 square-feet of restaurants.

The retail and restaurant component may raise some eyebrows, because notwithstanding the company’s contention to the contrary, there are restaurants and a variety of retail shops all along Route 10 in Parsippany.

There are also plans for a public square that will “engage the public and energize the project from the inside out,” the company says. In its application for a tax break, the developer says it could not make money if it had to pay full property taxes. The 30-year PILOT agreement obligates the developer to pay a percentage of the yearly project revenue – from 9 to 11 percent – to the township. The company estimate that the project will generate $58 million over the 30-year life of the PILOT. It estimates its total investment as $210 million.

With nothing yet built or assessed, it’s difficult to gauge precisely what the township would get if the developer paid full taxes, but all officials acknowledge Stanbery is getting a nice break.

Long-time Councilman Michael DePierro, a Republican who backs the tax break, said, “This could not be done without the PILOT and the area is in need of redevelopment.” DePierro did say that he helped correct a loophole that would have given tax breaks to owners if apartments were converted to condos; he said that is no longer the case.

DePierro brushed off the fact money from the PILOT does not have to go to the school district, saying the council does a lot for the school board. He noted that the school district pays only a symbolic $1 a year to rent a township-owned building for its headquarters.

The Parsippany school district is not as gung-ho about all this. It said in a statement that it understands the township’s need to fulfill low-income housing obligations, which the new residential construction would do.

But it added, “Unfortunately, the township has not adequately addressed the anticipated fiscal and enrollment demands that will certainly result from the proposed PILOT agreement …” The statement ended with the hope there will be future dialogue between the township and the school district.

Mayor Michael Soriano, in fact, says he hopes to work something out with the district. Soriano’s role here is interesting. He became mayor last January and the redevelopment plan predates him. Still, he says he was able to increase the developer’s annual estimated contribution to the township from $800,000 to $1.3 million, He also takes credit for reducing the number of residential units from 500 to 441 and for accelerating infrastructure improvements to improve traffic flow in what already is a congested area.

Nonetheless, Soriano was blunt, and a bit earthy, in sizing things up.

“I was handed a s— sandwich by the previous administration,” the mayor said. That’s not exactly a ringing endorsement of what’s about to happen in Morris County’s largest town.

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