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NJ-Based BNE Group Seeking 15-Year Pilot & Tax Breaks For Proposal To Build 300-Unit Luxury Apartment Complex
By Tina Traster
A developer that is planning to build a 300-unit luxury apartment complex on the former Letchworth Village complex in the Town of Haverstraw says it needs tax breaks and other financial incentives to make its project viable.
The Haverstraw Group, LLC, an affiliate of New Jersey-based BNE Real Estate is scheduled to come before the Rockland County Industrial Development Agency on Thursday to seek a green light for a PILOT (payment in lieu of tax) program and other perks for its proposed housing plan at 2 Ridge Road in Thiells. The 23-acre parcel sits on a vacant portion of the former Letchworth Village.
The developer, who originally proposed 250 units last year, had agreed to buy the town-owned land for $12 million. The application submitted to the IDA says BNE is planning on constructing 300 units with a purchase price for the land of $14.4 million. The housing project does not include any “affordable” units. Estimated rents for two-bedroom apartments, according to the developer, will be $3500-$4000 per month.
Last year, the Town of Haverstraw changed its 2006 Urban Renewal Plan and added BNE Acquisitions, LLC of Livingston, NJ as a “qualified and eligible sponsor” which gave the Town the authority to enter into a “conditional contract” with BNE to purchase a portion of the Letchworth property for redevelopment.
For its luxury housing project to be economically feasible, the developer is seeking mortgage and sales tax relief, as well as a PILOT (payment in lieu of tax) program.
Developers first go to the IDA to greenlight a project but final approvals for tax breaks rest with town and school taxing authorities. After that, a public hearing will be held at the Town of Haverstraw, town hall.
If the incentives are granted by the local town and school district, the proposed luxury complex would pay nominal taxes for the first three years on vacant land, $385,000 in taxes beginning in years four to five under the PILOT; then increase to $770,000 per year in years six to seven and rise to $1.15 million for years eight to 15.
In comparison, The Henry in Pomona, a 169-unit complex of one and two-bedroom units paid about $1.46 million dollars in taxes to the school district, town and county last year. Mountainside Apartments, a 225-unit garden apartment complex in Pomona paid about $1.05 million in taxes. Neither development has a PILOT program. It is widely believed in the real estate field that it is unusual for “luxury” housing developments to receive such incentives.
The developer is proposing 505,000 square-feet of buildings at an estimated construction cost of $84 million. Soft costs and infrastructure work will add another $50 million, according to its application.
BNE plans to finance $90 million. The developer is asking for relief from mortgage recording tax in the amount of $942,000 and relief from sales tax in the amount of $502,000.
Specifically, the developer is asking to pay $75,000 annually in real estate taxes for the first three years, saying the land should be assessed as “vacant.” For the balance of the PILOT (years 4 through15), a “Base Rate” figure of $3,840 per unit would be used to calculate the payments. For years 4 through 5, the payment would equal 1/3 of the base rate multiplied by the number of approved units. For years 6 through 7, the payment would equal 2/3rd of the base rate multiplied by the number of approved units. For the balance of the term, the payment would equal 100% of the Base Rate multiplied by the number of approved units and would have to be paid whether the project gets built or not. At the end of 15 years, the property would be reassessed and taxed based on that assessment.
To facilitate the project, the zoning on the parcel had to be changed. The original zoning was R-120 (Rural Residential) that only allowed single family homes on 3-acre lots. The new zoning, LA-17 allows Luxury Apartment Multi-Family Residences, up to 17 units per acre, as a matter of right. There is no requirement for any affordable units. The only mandate requires the developer to provide on-site recreation in the form of at least one of the following: a clubhouse, pool, walking trail, playground, dog park, gym, tennis court, business lounge or bicycle room.
Luxury units in the LA-17 zone are limited to studios, one-bedroom and two-bedroom units.
BNE Real Estate Group is a national, family-owned company with more than 60 years of experience in the development, investment, ownership, and management of high-quality and vastly diversified real estate assets.
BNE is the developer and operator of the Club and the developer of the Club West at 1000 Murray Court in Pearl River, an active adult rental community for residents aged 55 and older with rentals from $2800 to more than $5,000 per month.
Most of BNE’s development projects are in New Jersey.
(Featured Image: BNE Project in South Amboy, NJ)