Government Maplewood Towns

Maplewood to Close on Post House Deal, Vote on PILOT Transfer Monday

Monday, November 16 is a pivotal date in the long, contentious saga of the redevelopment of the former Post Office site in Maplewood Village.

That day, the Maplewood Township Committee will officially close on the sale of the site to the developer. Then, at a 7:30 p.m. meeting at Town Hall, the TC will vote on final approval of the transfer of a 5-year tax abatement agreement (PILOT) from the original developer, Maplewood Redevelopers, LLC, a division of JMF Properties, to two new entities: JMF Maplewood LLC and Gladstone of Maplewood LLC.

(The meeting is rescheduled from its usual Tuesday night because of the League of Municipalities Conference in Atlantic City.)

Joe Forgione of JMF Properties is the sole principal of JMF Maplewood LLC; the sole principal of Gladstone is Steve Kalafer, owner of the Flemington Car and Truck Company and the Somerset Patriots minor league baseball team.

The committee approved the introduction of the ordinance, 4-0 last week. See the entire ordinance below.

Download (PDF, 352KB)

Some members of the public, most notably members of several groups formed to oppose the development, have questioned the TC’s decision to preliminarily approve the transfer and the PILOT.

At issue for some is the fact that Forgione availed himself of a legal provision of a section in the federal tax code that allows a seller a window of time to use the proceeds of one sale to invest in another purchase, thereby deferring capital gains taxes. (Forgione sold the PSEG property to Avalon Bay last fall and reinvested those funds in the Post Office site.)

David Huemer recently sent a letter to the TC asking it to revisit the PILOT and consider altering its terms because JMF sold part of the deal to another entity. “JMF applied to you for a PILOT and provided you with financial documentation in support of that application,” wrote Huemer. “After JMF got preliminary site plan approval from the Planning Board, they sold part of their interest to another entity…therefore, the financials of this project for JMF have changed.”

Mayor Vic DeLuca said in an email earlier last week that the redevelopment agreement between the township and JMF allowed them to make the transfer request and that the TC cannot reasonably withhold that consent. Further, the tax benefits afforded to Forgione and Kalafer “are governed by federal law and have nothing to do with the Township.” DeLuca noted that homeowners are entitled to similar tax breaks if they purchase another home within a certain time period after selling a home.

Maplewood will benefit from the accelerated closing date for several reasons, said DeLuca:

  • The township will receive $1,055,000 from the sale now rather than wait until all final approvals are given in 2016. They will immediately place $100,000 into the Affordable Housing Trust Fund, which is now at zero, and market the rehabilitation program to line up 4 or 5 homes for work. The balance, $955,000, will go into Maplewood’s reserve fund and will be used to lower property tax increases in the 2016 budget.
  • The Township will no no longer be responsible for the upkeep of the building or the property; JMF will be responsible to remove snow and ice and make any emergency repairs.
  • The new owners of the property will begin paying taxes on the land.
  • The redevelopment project is now personally guaranteed by Forgione and Kalafer. Because they are both paying for the project’s construction they will not need bank financing, which will “help move the project forward,” said DeLuca.

The PILOT, in which payments to the Township are increased by 20 percent each year, was based on the financial viability of the project and “has nothing to do with the benefits of any federal tax law,” said the Mayor. “I made a judgment that the project would only be built with a financial incentive. Reasonable people can disagree. In fact two of five members of the Township Committee did just that.” Those two TC members were Marlon K. Brownlee (who had initially voted in favor of the PILOT and then changed his mind) and India Larrier.

“I did not feel that it was necessary to grant the PILOT last April when we voted on this matter, and my position is unchanged,” said Brownlee in an email.

“I did vote against the PILOT, and stand by that decision,” said Larrier in an email. “I believe Mr. Forgone would likely not have walked away without it; he’s hanging with this project through a whole lot, so I doubt the loss of this relatively small PILOT would truly have chased him away.”

Larrier said the tax issue is a separate one, and is regularly and legally used by investors. “Likely any savvy investor, in the same circumstances, would avail themselves of it,” she said. “Arguments regarding the merits of it must be made at higher levels of government than Maplewood’s Town Hall.”

She continued, “That said, I look forward to moving ahead with the sale, this project, and the vital part of Maplewood Village the Post House will play.”

TC member Jerry Ryan had initially voted “reluctantly” for the PILOT. Asked recently if he would have voted in favor if he had known Forgione planned to use the capital gains tax break, he said they are two separate issues.

“The PILOT is very short term. Given that the building won’t be occupied for the first several years of ownership anyway, and [that]…the township will be getting MORE money that it would have been getting if the property was on the tax rolls, I decided in favor of the PILOT.”

The personal finances of the parties involved are irrelevant, he said. “Do we really think that anyone buying land and building something is impoverished? …development gets done where the best return can be made. Our due diligence indicated that this sort of arrangement was necessary for this development to happen.”

Ryan said the accelerated closing means the buyer assumes all the risk and still has to comply with the redevelopment plan. “If the final project approvals fall through, then he owns a piece of property that can only be developed the way we have determined that it can be developed.”

“I would vote again for PILOT because the concern about the school district not getting tax revenue is unwarranted,” said Deputy Mayor Kathleen Leventhal. “And, in the end, based on the evolved plan and PILOT, Maplewood is gaining through the redevelopment.”

The Planning Board met Tuesday to discuss at length the developers’ final site plans; it granted conditional approval last month. Because there had been “sufficient changes in the text” of the plan, the board met again on Friday with a revised copy of the full site plans, said PB Chair Tom Carlson. At that meeting, the board unanimously passed a resolution which reflected the wording changes. It is now up to the developers to prepare and file revised plans that reflect the relocation of the building to the south and west, Carlson said.

Meanwhile, asked if there were any tenants who had signed leases for the retail spaces, Forgione said in a recent phone interview, “I have no leases signed for any retail.” He explained that he cannot negotiate leases until he has a construction schedule, which will follow the town’s issuance of demolition and foundation permits.

“I am going to be very selective about what tenants are in the building,” said Forgione. “It has to be added value for the town.”

DeLuca said he too wanted any tenants to be “solid businesses that add value to the overall shopping and dining experience in Maplewood Village.” He continued, “I hope [Forgione] is able to attract existing Village businesses that might want to expand and new businesses. In the end though, it is his building and he will enter into the leases with the tenants.”

“Real estate discussions are sensitive and generally done in confidence,” DeLuca said in response to a question about why the Township cannot disclose potential tenants. “Throughout the years of debate about the post office site, I have been approached by existing business owners, some for and some against the project, inquiring about space there. I honored their requests to keep those discussions confidential. I will continue to respect the confidentiality concerns of potential tenants and the developer.”

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