Redevelopment, Real Property Tax Abatements and PILOTS
Building on our firm’s core real estate valuation litigation experience, our firm brings a unique and valuable skill set to redevelopment projects that adds value. Our attorneys have extensive experience with all facets of the redevelopment process in New Jersey, from the initial investigation studies to determine if an area qualifies as a redevelopment, to the preparation of and adoption of the redevelopment plan, negotiation of the redevelopment agreement and drafting and negotiation of the financial agreement for payments in lieu of taxes (PILOTS). The PILOT process requires the negotiation and execution of a financial agreement between the redeveloper and municipality setting forth requirements for payments to be made in lieu of taxes.
What sets Zipp & Tannenbaum, LLC apart is our understanding of real estate valuation. Our lawyers are able to leverage our deep experience with real estate valuation to assist our clients and the project team to assess the economic viability of redevelopment projects, quantify the impact of the project on municipal finances, and appropriately structure and justify the type and amount of PILOT to contribute to the success of the project.
Municipalities grant PILOTS to encourage and stimulate redevelopment. PILOTs are statutorily authorized under a number of different bases including the Long Term Tax Exemption Law, Redevelopment Area Bond Law, Five Year Tax Exemption and Abatement Law, Housing and Mortgage Finance Law and County Improvement Authority Law. Because our attorneys understand real estate valuation and economics, we are particularly adept at assisting clients to select the PILOT program best-suited to achieve the goals of a particular redevelopment project.
Importantly for our clients, we view our role as extending beyond completion of construction of the project. Post-construction, we guide our clients through the total project cost audit and counsel and aid our clients to comply with the ongoing annual excess profits audit. Furthermore, we continue to facilitate the project’s success by monitoring the PILOT charge on an annual basis and comparing the PILOT to conventional real property taxation to ensure the project is not paying more than its fair share.
In those instances where the PILOT no longer comports with economic reality, we assist the client in attempting to negotiate a restructuring of the PILOT with the municipality, or in appropriate circumstances, to relinquish the PILOT and return the project to conventional real property taxation. Lastly, should the time come when the client wishes to sell its interest in the redevelopment project, we aid in the sale and transfer of the PILOT. Similarly, we regularly participate in the due diligence process for clients looking to acquire a project subject to an existing PILOT agreement by analyzing existing financial agreement and obligations. In the event the acquisition moves forward, we assist the client to facilitate a seamless transfer of the PILOT.