The city council granted preliminary approval for a 30-year tax abatement agreement with Cooke Hamilton Associates which owns apartment buildings on Mill and Market Streets.
Under the PILOT (payment in lieu of taxes) agreement the company which owns both the Cook Mill and the Hamilton Mill apartment complexes will pay 10-percent of its gross income to the city for the first 10 years.
From the 11th year it will pay $12.5-percent of its gross income until the 21st year in which it will pay 15-percent, according to city records.
The city will receive $174,771 per annum at the 10-percent cut from the company’s $1.87 million anticipated rental revenue. The developer would have paid $347,797 under full taxation at the 2.90-percent tax levy, according to city records.
“Even though most folks consider it as just money they have to do with quality of life and investment to the city,” said economic development director Ruben Gomez of tax abatement agreements. He underscored the amount of money the developer will be investing into the city.
George McLoof the owner of the apartment complexes located at 21 Market Street, 20 Mill Street, and 21 Mill Street will spend $25 million to further develop his buildings, according to city documents.
Of that $25 million $10.2 million will be used on construction, according to city records. The developer will obtain financing through the New Jersey Housing and Mortgage Finance Agency, two separate federal HUD/FHA loans, and the New Jersey Economic Development Authority’s Economic Recovery and Growth (ERG) program all of which require “stability in real estate tax expenses” over the term of the financing, according to a Paterson Economic Development Department memorandum.
The project will create 100 construction and permanent jobs, according to the city.
McLoof will convert 39,000 square feet of commercial space to 34 residential units and leave 10,000 square feet as commercial, according to documents. 102 units of affordable housing, deed restricted to individuals and families whose income does not exceed 60-percent of median, will be rehabilitated, according to the city.
“It’s a good thing because he has a track record of bringing funds into the city,” said James Staton, 1st Ward councilman, of McLoof. He said the project is a plus for his ward. He emphasized the quality of life improvement the additional investment will bring.
The Cooke Mill Building on Market Street has an existing PILOT agreement with the city that expires on 2033, according to city records. The company pays 6.28-percent of its rental income to the city under that agreement, the new agreement will supersede the existing accord and increase that rate to 10-percent, according to city records.
Council members gave the 30-year tax abatement agreement with Cooke Hamilton Associates a preliminary approval during a special meeting on Wednesday.
Another 30-year tax abatement for the Colt Arms senior housing complex was also up for approval, but was postponed. Council members expressed reservation at the Godwin Street developer’s plan to keep host seniors at a community center while construction was on going at the site.
The Colt Arms plans to expend $30 million — of that amount $10.9 will go towards construction — to renovate the building which was erected in 1975.