The Princeton Council voted unanimously on Monday night to approve an ordinance authorizing a payment in lieu of taxes financial agreement with apartment developer AvalonBay for a new 220-apartment complex that will be build at Thanet Circle. The development will include 11 affordable apartment units.
AvalonBay entered into a contract to puchase 100 and 101 Thanet, a former 110,000-square-foot office site, in 2019. AvalonBay will subdivide a 2.5-acre parcel at the 15-acre site and give it to Princeton for an age-restricted affordable housing development.
Under the PILOT agreement, AvalonBay will be exempt from paying taxes for the land and the improvements for 30 years. AvalonBay will instead pay the town an “annual service charge” or payment in lieu of taxes. In New Jersey, PILOT payments go into municipal coffers, with five percent going to the county, and no funding going to the school district. The municipality can choose to give the school district a portion of the PILOT payments.
For the first 10 years of the agreement, AvalonBay will pay the municipality an annual service charge of 11% of annual gross revenue.
For the following five years, the annual payment will be equal to 11% of annual gross revenue or 20% percent of the amount of the taxes otherwise due on the value of the property and the Improvements, whichever is greater.
For the following five years after that, the annual payment will be equal to 11% of annual gross revenue or 40% percent of the amount of the taxes otherwise due on the value of the property and the Improvements, whichever is greater.
From the first day after the twentieth anniversary of the annual service charge, the annual payment will be equal to 11% of annual gross revenue or 60% percent of the amount of the taxes otherwise due on the value of the property and the Improvements, whichever is greater.
For the final five years of the 30-year agreement, the annual payment will be equal to 11% of annual gross revenue or 80% percent of the amount of the taxes otherwise due on the value of the property and the Improvements, whichever is greater.
The owners of the Thanet site paid just over $150,000 in property taxes for the site in 2020. The assessment for the site was slashed from about $10.2 million to $6.5 million after the property was sold to a New Jersey real estate group.
According to property tax records, AvalonBay paid $1.6 million in property taxes in 2020 for the company’s apartment complex on Witherspoon Street, which is a 9-acre site that includes 280 units. Fifty-six of the units are affordable.
In the February 2020 application for tax exemption, AvalonBay estimated that the annual gross revenue for the Thanet project would be about $7.3 million, with the annual revenue for each market-rate unit being $34,121. The estimated annual PILOT payment is $801,579.
April 29, 2021 at 08:45PM
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Princeton Council approves 30-year PILOT financial agreement with AvalonBay for Thanet property - - Planet Princeton
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