Sayreville reverses course, OKs tax abatement plan for massive warehouse

SAYREVILLE – The borough could realize nearly $100 million over 30 years under the terms of a Payment in Lieu of Taxes (PILOT) agreement with the developer of a $220 million warehouse project on Callahan Boulevard in the Hercules Redevelopment Area.

In an often-tumultuous meeting, the Borough Council voted 4-2 in favor of the agreement with Parlin Section 1 Urban Renewal LLC. Councilmen Dan Balka and Christian Onuoha voted against the proposal.

The 73-acre site now generates only $390,000 in annual property taxes.

The project is in the first phase of a larger development, Arsenal Trade Center. The project will consist of three warehouses totaling nearly 1.1 million square feet on the 500-acre property near the intersection of South Minisink Avenue and Cheesequake Road.

Phase 1 of the project is ready for occupancy, Sayreville Economic and Redevelopment Agency (SERA) Vice Chairman Steve Grillo said.

The developer is investing about $20 million in onsite infrastructure, including environmental cleanup, utility upgrades, intersection and road improvements and solar efficiencies, said Bryan Morris, of Phoenix Advisors, the borough's financial advisor.

More: Former Sayreville student teacher charged with child porn, including photo of student

Mayor Kennedy O'Brien, who supported the PILOT agreement, said the agreement is a good deal because Sayreville needs a new source of revenue for necessary projects.

"Those that don't want change will vote against it," the mayor said. "Those who say change is needed, change is natural and change is appropriate, will vote for it."

"This is a new source of revenue where we can improve our infrastructure, improve our water, our sewer and our recreation," O'Brien said. "This is about the future of Sayreville."

But that didn't convince some residents who believed PILOT agreements favor developers and the school system doesn't gain any money from the deal."There are many people in this town that think that a tax break to a multi-billion-dollar corporation is basically a Robin Hood in reverse," borough resident Ken Olchaskey said. "It's stealing from the poor – the poor taxpayers of Sayreville – and giving the money to a multi-billion-dollar corporation."

Bill Henry, chairman of the Sayreville Democratic Organization who ran unsuccessfully for mayor last November, agreed.

"Ask yourself who needs to the money more - a multi-billion-dollar corporation or the children and taxpayers of Sayreville," he said. "They can increase their rents to their tenants and lose no money."

Under state law, the revenue from a PILOT agreement is divided between a municipality, which gets 95%, and the county receives the remaining 5%.

Resident Jim Robinson said the school district receives nothing from the PILOT.

If school taxes go up, those paying the school property taxes will pay the increase while those with a PILOT will not, Robinson said.

Other residents wondered why the PILOT agreement was coming before the Council again and others said it was just a bad deal for the borough. Others took issue with the truck traffic.

Morris explained that the borough will realize about $1.7 million in the first year of the agreement, with the revenue increasing in the following years.

If the developer's revenue increases beyond the projections, the borough would share in that success and the PILOT would be increased, Morris said.

In November, the redeveloper filed a lawsuit in Middlesex County Superior Court alleging the Borough Council did not follow state law in rejecting PILOT agreement in October.

In a PILOT, redevelopers pay a fixed sum to a municipality for a period of years instead of property taxes as a financial incentive to redevelop distressed properties and obtain financing for the project.

A global commercial real estate developer and wholly owned subsidiary of CBRE Group, Trammell Crow's projects include the three-building, one-million-square-foot industrial development, Arsenal Trade Center, at 50 South Minisink Ave., in the vicinity of Cheesequake Road.

As of the fourth quarter of 2023, Trammell Crow had $15,8 billion of projects in process and $13.3 billion in its development pipeline, according to its website.

Email: sloyer@gannettnj.com

Susan Loyer covers Middlesex County and more for MyCentralJersey.com. To get unlimited access to her work, please subscribe or activate your digital account today.

This article originally appeared on MyCentralJersey.com: Sayreville reverses course, OKs tax abatement plan for massive warehouse