Morristown council approves tax deal for ‘Gateway’ project

By Kevin Coughlin

Morristown’s council approved a financial agreement on Tuesday that paves the way for a triangular five-story office building between Market and Bank streets that has been heralded as a gateway to downtown.

Council members convened the special meeting to ensure that the prospective tenant, the Roseland law firm Fox Rothschild, would not exercise an escape clause in its lease with the developers, the Hampshire Companies.

Fox Rothschild could have walked away if all approvals were not nailed down by Sept. 1, 2015, according to a letter from the developers to the town earlier this month.  The fiscal agreement — “payments in lieu of taxes,” or PILOT in planning jargon — was the last major approval needed from the town.

That agreement spells out 30 years of payments to the town in lieu of conventional taxes. Over that span, the town actually is projected to receive about $480,000 more than it would have if normal taxes were assessed.

So why would the new owners want that?

Because their tax obligation to Morris County will be reduced drastically, and they won’t pay a dime to the Morris School District.

Council President Rebecca Feldman, who was in the 6-1 majority supporting the deal, estimates the school tab would have added up to about $8 million over three decades.

But the school district can’t really view this as a loss, according to town Redevelopment Attorney John Inglesino.  Without this PILOT agreement, he said, the $20.46 million project would not get off the ground.

“Without the PILOT, there would be no project,” he said.

With the agreement, Inglesino said, the town stands to welcome its first new office construction “in decades,” a snappy 42,000-square-foot structure that will create many construction jobs in the short term and will bring 116 full-time employees downtown, possibly as soon as December 2016.

Presently, the town’s share of taxes from the wedge-shaped parcel is only $7,100 a year, Inglesino said.

In year one of the PILOT deal, the town will reap $134,000, the attorney said. By year 30, the yearly payment will rise to almost $609,000, according to an analysis prepared by the Banker Group LLC.

A 20-year agreement for employee parking in a nearby garage already has been secured with the Morristown Parking Authority.  The developers have committed to building a small park, installing sidewalks, replacing a dingy alley with a pedestrian walkway, and contributing up to $100,000 for public art on-site.

“I’m looking forward to Fox Rothschild coming to town and boosting corporate investment,” said Mayor Tim Dougherty.

Councilwoman Michelle Dupree Harris cast the only no vote, explaining that she missed the prior meeting at which the PILOT plan was introduced.  Rushing to support the plan would have “felt forced,” she said.

Alison Deeb, the Fourth Ward councilwoman who represents that part of town, suggested scheduling a charrette— a special public information session. The Mayor agreed to include project literature at the town booth during next month’s Morristown Festival on the Green.

Although the council would have liked more time to digest a thick stack of PILOT documents, Feldman said, she considered Tuesday’s circumstances as unique.

“We’re doing this [special meeting]  because this project is pivotal to the future of the town,” said the council president.

“I’m proud to serve on a governing body that operates as an effective and informed redevelopment agency, where we are experienced with local housing and redevelopment law,” Feldman added.