A few years ago, I came across a property in Wood Ridge, NJ. It was few of the lower priced properties in the area and was advertised as ‘very close to the site of the new train station’. Everything was in the works, and as such, a risky game. (After all, we are familiar with the fate of American Dream Meadowlands, which is still incomplete after more than 10 years of being originally proposed).
The Westmont Train station opened and started operating in May 2016. The next phase of Wesmont Station construction, 64 town houses and 15 single-family detached homes, is almost ready to break ground now that the mayor and council are set to approve a redevelopment amendment and tax agreement with Fleet Wood-Ridge, LLC.
The amendment is to add the 79 units of housing to the existing Wesmont properties under the developer agreement.
The agreement contains the details of a tax abatement program for Wesmont Station in which homeowners pay no taxes or less in taxes the first year. Taxes are then slowly increased over five years, and by the sixth year, the owner pays 100 percent of the taxes. (This only relates to taxes on property assessed value. Land portion of taxes have to be paid regardless).
I don’t plan to go into details about the 5-year tax formula. It certainly is an incentive to new home-buyers who want easy commute to NYC.
In the town’s defense, “These tax abatements provide a strong incentive for selling homes. Last year, Pulte [the company used by the developer to build] sold nearly 100 town houses, attributable to the tax abatement program,” said Borough Administrator Chris Eilert. “Since last year, Wesmont brings in around $1 million [in taxes] annually. It’s self-perpetuating.”
My questions are:
- EASY NYC commute in BERGEN county has been a great selling point. Historically, Buyers looking at the 2 criteria pay decent prices/rent for such properties. How does this abatement help the town? Is this considered a distressed area?
- Who will pay the burden of the share of these new Westmont homebuyers? (In terms of added infrastructure and schools). The existing residents of the town?
- It may increase revenue of the town; however is it shared with the schools? Do the schools and their budgeting benefit from it?
- Other towns have used the PILOT (Payment In Lieu Of Taxes) program successfully. EG: Montclair has lured commercial and businesses- by charging them (BUSINESS OWNERS) in a different manner as opposed to traditional tax computation. A lot of these come with clauses like ‘they employ 25% local residents on the project’ OR ‘fixed monetary payments equal to full property taxes that municipal tax assessors determine would ordinarily be due on developed property. These programs offer developers cost certainty and help get funding for project’. Does the current abatement in question provide any other benefits to the town similar to examples quoted?
Conclusively, home buying in these new communities near Westmont Station has gotten more lucrative right now. A lot of these questions can be answered once we know the exact nature of agreement.
Do you know any other town comparable to Wood Ridge that has given such freebies to Home Buyers? IF yes, please feel free to share.