Property Tax Incentive Makes Roselle MF Property Attractive to Goldcrest Properties
“Buyers are attracted to new construction and gut-renovated properties when there is a PILOT program in place, and this property had a 30-year PILOT program in place already,” says Kislak's Joni Sweetwood.
ROSELLE, NJ—An existing “payment in lieu of taxes” or PILOT agreement sealed the deal recently for Goldcrest Properties, which acquired a 35-unit apartment building at 533 East 2nd Avenue in Roselle, NJ, from Teleflora Realty Group for $5.3 million.
In New Jersey, “PILOTs” help with community growth and progress in areas most in need of redevelopment or rehabilitation, attracting commercial, residential or industrial development more easily to such areas. Under such programs, municipalities are authorized to grant developers exemptions from traditional property taxes for a set time to encourage property improvements or to locate a project in a distressed area.
The Kislak Company’s senior vice president, Joni Sweetwood, represented Teleflora Realty Group—a long-time Kislak client—as well as the buyer, Goldcrest Properties, a new client.
“Buyers are attracted to new construction and gut-renovated properties when there is a PILOT program in place, and this property had a 30-year PILOT program in place already,” says Sweetwood. “With 28 years remaining on the tax PILOT program at a $15,000 fixed, annual rate payment, the buyer will continue to maintain the property in pristine condition and increase rents.”
Instead of property taxes, developers make annual PILOT payments to municipalities which benefit both the municipality and the developer alike: the payments are structured so that the municipality receives more benefit than from typical property taxes; and since the PILOT payment is less than typical property taxes, the developer gains an increase in the fair market value of the property as a result of a higher net operating income.
The Roselle property is located on the border of Elizabeth, New Jersey’s fourth largest municipality; near shipping and Warinanco Park, an expansive, green space offering lake activities, an ice-skating rink and multiple playing fields and trails. The property is a four and one-half story brick, elevator building consisting of 32 one-bedroom and 3 two-bedroom renovated units. Arnold Budin was the buyer’s attorney and Chaim Dahan represented the seller with Meridian Capital Group utilizing Arbor as provider of agency financing.