The Morristown council on Tuesday approved a 30-year tax break and authorized a complex funding agreement for M Station, an office redevelopment project that may take a dozen years to complete.

Mayor Tim Dougherty hailed M Station as an example of “great leadership” and “a great project for the future” that will bring jobs and boost the local economy.

By a 6-1 vote, the governing body approved a PILOT– short for “Payments in Lieu of Taxes”–intended over 30 years to quadruple revenue the town had been receiving from the former strip mall at Spring and Morris streets known as the Midtown Shopping Center.

The arrangement, recommended by town financial consultant Robert Powell, cuts out taxes for schools and Morris County. Powell said COVID-19 has changed the economic landscape to the point where the project probably would not get built without the tax break.

Councilman David Silva said the town is exploring sharing some of its payments with the Morris School District; he did not share details during the two-and-a-half hour virtual meeting.

Additionally, the council endorsed issuing up to $8.8 million bonds to make possible a traffic roundabout and other off-site improvements that had been promised by shopping center owner Scotto Properties and SJP Properties, the project’s redevelopers.

They propose nearly 400,000 square feet of offices and retail in two buildings, with a public promenade and plaza, parking garage and other amenities. If fully built, M Station could bring up to 1,400 jobs into town, and boost local restaurants and businesses, proponents say.

Casting the sole vote against the PILOT and the redeveloper agreement, Councilman Robert Iannaccone said the redevelopers used the pandemic to shift costs of their promised traffic improvements to the town.

A chunk of the town’s PILOT revenue will go towards bonds to help pump up the redevelopers’ equity stake, which they now contend is necessary to attract investors, Iannaccone said.

“Basically with this financial arrangement, we’re assuming the obligation to pay for those off-site improvements via these bonds and the repayment of the principal and interest,” said the councilman, who is familiar with finance as an attorney and CEO of a Newark hospital.

Morristown Council, Oct. 13, 2020. Screenshot by Kevin Coughlin

Council members only received the final agreement hours before Tuesday’s meeting, not enough time to scrutinize it, Iannaccone said. He also noted the town planning board signed off on M Station before it was split into stages that could take 12 years to complete.  The board should review the revised plans, he said.

Public participation was hindered, Iannaccone added, when planning board and council deliberations moved online in March because of COVID-19.

But several residents, most notably former zoning board Chairman Cary Lloyd,  called into Tuesday’s meeting sharing Iannaccone’s concerns.

“It is trying times, but I don’t believe we need to go to a 30-year tax abatement,” said Lloyd, who otherwise supported the project.

Office buildings are a risky bet for a post-COVID world, added resident John Williams. And if things work out and the economy rebounds, the PILOT could amount to a huge windfall for the developer, he said.

Defending the deal, Council President Stefan Armington said opposition may boil down to fiscal semantics. “I see that…the project is paying for the revenue bonds,” he said.

The mayor bristled at Iannaccone’s characterization of the project.

“There is no way, no way in the world, that if we delay this project, this project is going to go forward. And this is a good project for Morristown,” Dougherty said.

“Yes, did COVID change it? Absolutely. It changed everything in the world. And those who can’t see that, that can’t understand that, it’s just beyond my comprehension.

“So when Mr Iannaccone sits there and says we need more time, well, we’ve been at this since 2004,” the mayor said, referring to the property’s original designation as an area needing redevelopment.

“It is now 2020. We have an amazing deal on the table. I hope the council sees the opportunity here, and the benefits to this community so far outweigh any negative, that it would be beyond my comprehension if there was another no vote,” Dougherty said.

The mayor lavished praise on town Administrator Jillian Barrick and added thanks to town financial consultant Robert Powell and M Station attorney Frank Vitolo.

The town’s redevelopment agreement with M Station’s developers requires completion of  the traffic roundabout and all other traffic improvements during Phase One, which includes a six-story office building for anchor tenant Deloitte to be finished by October 2022.

“The cost of all these developments are borne by the developer,” said the town’s redevelopment attorney, John Inglesino.

Phase Two–including a seven-story office building, completion of a parking deck and construction of a public plaza–must start in eight years and be concluded three years later.

“We hope there’s not that long a wait. But there may be,”  Inglesino said.

During the interim, a passive-recreation park must be installed by the redevelopers, at an estimated cost of $200,000, if construction of Phase Two (dubbed M Station West) does not start in one year.

About $400,000 in landscaping will be required if construction does not start in seven years. Money will be placed in escrow for the public improvements, with penalties if the project goes belly-up. If the redevelopers default during Phase One (“M Station East”), the town can revoke the PILOT and impose full taxes, Inglesino said.

The redevelopers will produce a “transportation management plan,” pay for town planning and engineering, and contribute $2.5 million to the town’s affordable housing trust fund.

The town’s issuance of up to $8.8 million in Redevelopment Authority Bonds must pass muster with Morris County’s Local Finance Board. If it does, the council is likely to give its final approval to the funding plan at its meeting of Nov. 24, 2020, Inglesino said.

Other council members echoed the mayor’s sentiments about M Station.

“It’s a hard decision…but I think it’s a good decision for the town,” said Council Vice President Toshiba Foster.

“A lot of people like to complain about it…they’ve had an opportunity for months now to call in,” said Councilwoman Sandi Mayer, calling M Station good in the long term.

Councilman Michael Elms called it a tough decision, asserting that “COVID has changed everything.”

“We really really took our time to ask questions,” said Councilwoman Tawanna Cotten. “The end goal was to make sure would not be a burden on our taxpayers.

Silva said “there is risk in everything in life,” but concluded “there is no loss in this.”

MORE TO COME

 

MORE COVERAGE OF M STATION



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