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Minutes: September 17, 2014*

Township Council Work Session

The Workshop Meeting of the Township Council of the Township of Vernon was convened at 6:30 p.m. on Monday, September 17, 2014 in the Vernon Municipal Center, 21 Church Street, Vernon, New Jersey with Council President Brian Lynch presiding.

Statement of Compliance

Adequate notice of this meeting had been provided to the public and the press on August 26, 2014, and was posted on the bulletin board in the Municipal Building in accordance with the Open Public Meetings Act, N.J.S.A. 10:4-7.

Salute to the Flag

Council President Lynch led the assemblage in the salute to the flag.

Roll Call of Members

Present were Council Members Dan Kadish, Jean Murphy, Patrick Rizzuto, Dick Wetzel and Council President Lynch. Also present were Township Mayor Victor Marotta and Special Township Attorney John Ursin.

There was no Executive Session.

Public Comment

Council President Lynch asked for a motion to open the meeting for public comments.
Motion: Patrick Rizzuto
Second: Jean Murphy
All members were in favor.

Gary Martinsen, Vernon, stated that it was his opinion that this ordinance should be brought to the people. Mr. Martinsen opined that it could have a good or bad effect on the Township and should not just be decided by 5 people. Mr. Martinsen expressed concern that the ordinance was for all redevelopment zones and would not be subject to additional votes, just paperwork. Mr. Martinsen pointed to other projects in town that were to be built and were not done. Mr. Martinsen indicated that things could not be done just on promises and the ordinance needed to go to the people.

Marika Bazzone questioned the accuracy of Mr. Martinsen’s comments.

Closed to Public Comments

Seeing no other members of the public wishing to speak, Council President Lynch asked for a motion to close the public portion of the meeting.
Motion: Patrick Rizzuto
Second: Jean Murphy
All members were in favor.

Items For Discussion

Ordinance #14-16: An Ordinance of the Township of Vernon, County of Sussex, and State of New Jersey Establishing the Eligibility of Redevelopment Projects within Designated Areas in Need of Redevelopment for Thirty (30) Year Tax Exemptions and Abatements Pursuant to the Long Term Tax Exemption Law, N.J.S.A. 40A: 20-1, et seq.

Council President Lynch opened the floor for discussion. Council Member Kadish asked why thirty (30) years was needed across the board in all five (5) redevelopment zones. Attorney Ursin explained that this was not an operative ordinance, it allowed the developer to come forward and ask for an agreement which would have to be approved. Attorney Ursin stated for short term projects it is a different process. Council Member Kadish asked why the ordinance said thirty (30) years and not “up to” thirty (30) years; expressing that this left no room for negotiations even if it was a small project and questioning why the water park needed thirty (30) years. Attorney Ursin noted the developer had requested thirty (30) years but that thirty (30) year tax abatements are generally reserved for large transformative projects. Attorney Ursin stated that this ordinance was designed for this project.

Mayor Marotta indicated there are only 2 redevelopment zones in town, Mountain Creek and McAfee, noting that Town Center had been removed by the Council previously and others had not been approved by the State.

Council Member Murphy questioned what was the issue if the ordinance said “up to thirty (30) years.” Attorney Ursin indicated there was fine line distinction, the ordinance is separate from the water park but crafted as a result of the request for the water park. Attorney Ursin cautioned not to get bogged down in thinking there would be a lot of these agreements. Council Member Murphy expressed that she had received a lot of feedback about the water park and that thirty (30) years was a long time. Council President Lynch asked that if the ordinance read up to thirty (30) years would they have to vote on each PILOT separately. Attorney Ursin said each one is approved separately. Attorney Ursin stated that in the event that the Township got another project of this magnitude the best practice would be to modify this ordinance and then consider the agreement.

Council Member Kadish asked what is the difference for thirty (30) years. Attorney Ursin answered it was the judgment of the Council; the statute did not give a benchmark but basically it was for transformative projects; the size and scope of what makes a project transformative would be dependent upon the size and characteristics of the community. Attorney Ursin indicated there is no bright line in defining what type of project would be defined as transformative; he further opined that he would be surprised if another project of this size came along. Council Member Murphy expressed concern about locking the township into thirty (30) years and adopting the ordinance with that term. Council Member Kadish stated that taxpayers in Jersey City are up in arms about the amount of PILOTs in that town and the cost to the tax payers. Council Member Rizzuto indicated that there seemed to be a lack of understanding about the magnitude of this project and its effect. Council Member Rizzuto stated he has received a number of queries from residents about the thirty (30) years and he has pointed out to them the advantage of having a solid cash stream for thirty (30) years, particularly since the Township has lost so much assessed valuation due to tax appeals. Council Member Rizzuto noted that the taxable base for this project would be maintained for thirty (30) years, similar to an annuity. Council President Lynch noted the fact that the developer had the right to appeal their assessment if there was not a PILOT agreement in place and by having a PILOT, it provides the Township will receive a set dollar figure each year. Council Member Murphy expressed concern about other zones getting approved and the applicability of this ordinance. Attorney Ursin noted the projects are usually either thirty (30) year or five (5) year projects depending on size and there are not a lot in between. It is unusual to go in the middle of the spectrum. Attorney Ursin indicated the language was up to the Council. Council Member Murphy stated it should not just be a strict thirty (30) years. Council Member Murphy asked about the schools getting any funds in light of the fact that it was a hotel and questioned if the project became a condominium. Attorney Ursin stated turning the building to a condominium would be constrained by land use approvals and the financial agreements and would violate their bond agreements.

Mayor Marotta stated he senses a misunderstanding, noting units pay the full tax; all $3.25 million comes to Vernon and Vernon only pays the bond holder the remainder of what is left to the Township, school and county. Council Member Kadish discussed a resale. Mayor Marotta stated the hotel will pay $3.25 million every year and 50 percent goes to the bond holder, the remainder stays at the Township to be passed through. Council Member Murphy indicated the Township was giving away the money. Council Member Kadish indicated the project seemed to be risky to the investors without the PILOT. Council member Kadish asked if the 400 rooms could be assessed as individual units. Attorney Ursin stated the units will not be individually assessed because it violates the land use approval, the financial agreement and bond covenants. Attorney Ursin noted that if the project goes bankrupt they are stuck with the land use approvals and the financial agreement. Attorney Ursin said it would be an extraordinary event to change the agreement; the bond holders do not get the best of both worlds, the PILOT and the new zoning, but neither of these were by operation of this ordinance. Attorney Ursin further opined he did not see how the PILOT could extend to existing structures already built in the Township. Council Member Kadish asked if this could be used to re-establish taxation across the street. Attorney Ursin stated no, not for this project. Attorney Ursin noted if the water park is a tremendous success and they need to add fifty (50) percent more to the current hotel, the Council would have the right to determine whether that does or does not apply. If they wanted to bulldoze the current hotel and build new, the base-line for taxes would be the existing taxation, they could not go below that.

Council Member Murphy questioned leaving the ordinance the way it is. Council President Lynch asked if she would like to change it. Council member Murphy asked if small changes to the ordinance could be made at the meeting. Attorney Ursin indicated small changes could be made at the meeting. Council member Kadish asked if thirty (30) years was a substantial or small/clerical change. Attorney Ursin stated he was leaning towards clerical because he felt someone would not come to the hearing because of the change. Council Member Kadish questioned if changing section 8 would be clerical. Attorney Ursin indicated that appeared to be clerical.

Council Member Rizzuto indicated that there is a lot of concern about the project failure for a $140 million project and asked where is the taxes. Attorney Ursin explained someone would be the redeveloper and file an application with financial information. After approval, the financial agreement is drawn and that financial agreement includes what happens in the event of the default. Attorney Ursin noted the Township is still the first priority in taxation in the event of a default. Council Member Murphy questioned if this type of ordinance had been prepared by Attorney Ursin before. Attorney Ursin noted he had not as this is an optional step and not required but the State studies indicate this is a best practice. Council member Kadish indicated that the $25,000 application fee does not appear to be enough. Mayor Marotta noted that is paid by the applicant along with the fees for the studies and the experts; but this is just the fee to apply, the expert fees are additional.

Council President Lynch asked for any further discussion. No members of the Council indicated they would like additional discussion at that time.

Council Comments

There were no comments.

Adjournment

There being no further items of business to be conducted on the Work Session Meeting agenda, a motion for Adjournment was made by Council Member Rizzuto, seconded by Council Member Kadish with all members voting in favor.

The Work Session Meeting of the Township Council of the Township of Vernon was adjourned at 9:25 p.m.

Minutes approved: October 16, 2014