How PILOTS Steer Municipalities, Developers into New Waters

Jerry Lombardo is chairman of the Main Street Business Alliance.

HACKENSACK, NJ—As more once-distressed or undervalued areas and aging downtowns are being redeveloped, PILOTS (payments in lieu of taxes) have become a critical tool of local government to encourage the needed improvements. Not only do they serve as a valuable incentive for real estate investment that enables developers to attain financing and move forward with more certainty on projects, they also allow municipalities to revive neighborhoods and provide public benefit, while continuing to generate revenue. Such is the case in Hackensack, NJ, the county seat of Bergen County in northeast New Jersey, which had been home to a thriving business district for bustling department stores and service merchants for the better part of the 20th century, until the 1970s.

In an effort to revitalize Hackensack’s flailing downtown area, the Hackensack Main Street Business Alliance was formed in 2004 with the primary goal of attracting new retail and residential projects to the Special Improvement District now designated along Main Street. While there are currently 153 commercial properties and over 375 businesses within the district, there is room for more. To that end, in combination with the governing body and City planners, the Alliance is helping to create a series of mixed-use neighborhoods where people can live, work, play and dine in a vibrant, relevant downtown with the help of PILOTs.