Plans for One Essex, a mixed-use project by an affiliate of Alfred Sanzari Enterprises, call for 250 apartments, amenities for residents and 16,000 square feet of commercial space. — Rendering by Minno & Wasko Architects and Planners/Courtesy: Sanzari
By Joshua Burd
The Hackensack city council has voted to rescind payment in lieu of taxes agreements for three high-profile development projects, raising major questions about the fate of proposals that would bring another 650 luxury apartments to the municipality.
The governing body adopted the ordinances on Monday night, voting unanimously despite the prospect of legal action by any or all of the builders behind the plans at the former Sears property on Main Street, at 1 Essex St. and at 132 Main St. The action follows a major shakeup of the council and the installation of a five-member slate known as Hackensack Unites, which won convincingly in the city’s elections in mid-May, ousting the incumbents that helped shepherd a surge in development over more than a decade.
Led by Mayor Caseen Gaines, the new council was making good on a campaign pledge to scrutinize the PILOT agreements for the benefit of residents, while calling for greater transparency and public engagement. They began by taking aim at three tax abatements approved by the outgoing council during the lame-duck period in late May and June, which supported projects by affiliates of Russo Development, Alfred Sanzari Enterprises and Enburg Group.
“I think that any time a municipality or any governmental entity enters into a long-term agreement in the waning days — literally, days of an administration leaving office — it leaves a question mark,” Gaines said Monday. “There is no doubt that many folks have been wonderful contributors to the city over years. We appreciate that, and I mean that sincerely, but I don’t think it’s in anyone’s best interest, including the developers, to have a question mark left of this magnitude, especially after the people of Hackensack spoke so resoundingly just a couple of weeks ago.”
Representatives of each developer were on hand at the meeting, sharply criticizing the council for taking action that they said was unlawful. They also said the move would derail projects that were years in the making and would revitalize vacant land or buildings, create hundreds of construction and permanent jobs and provide major infusions of revenue that are significantly higher than the taxes each property currently generates.
Developers throughout the state often seek PILOTs — which allow them to make predetermined payments to municipalities rather than pay taxes that may fluctuate over time — to help them predict their costs and provide certainty that lenders favor. Municipalities, in turn, often use them to incentivize redevelopment in areas that have long sat dormant or underused.
“The law is clear — the city cannot unilaterally terminate the financial agreement we have in place,” said Carl Rizzo, an attorney for Hackensack-based Sanzari. “Doing so without our consent is a direct violation of law. This action is beyond the authority of this council.”
Rizzo, a member with Cole Schotz PC, told the council that Sanzari “has been a pillar and model corporate citizen of this community for over 80 years,” citing past projects that have helped eliminate blight, including the Court Plaza office campus downtown. But he said pulling the 30-year PILOT for the firm’s 250-unit project at 1 Essex St. would negate “significant and impactful community benefits,” including $66.7 million in additional revenue over the life of the agreement beyond the current tax revenue generated.
Sanzari, in a recent letter to the council, also said One Essex would create 300 new construction jobs and 85 permanent jobs, while coming with a $1 million developer contribution to Hackensack’s open space trust fund. Rizzo added that the project would include 25 affordable units, meaning the ordinance “would undermine the city’s ability to meet its obligation” under the latest round of state-mandated affordable housing obligations.
“We have repeatedly reached out for the mayor and council in an effort to discuss this matter,” said Rizzo, whose firm is also based in the city. “However, the silence from the governing body in response has been disturbingly deafening. By wrongfully attempting to rescind the financial agreement, the city is rendering this project financially infeasible for One Essex.”
The comments reflected those of Christopher Minks, executive vice president and chief legal officer for Russo Development, who spoke earlier in the meeting. That came ahead of a separate vote to rescind a 30-year PILOT for RHR Hackensack Urban Renewal LLC, a Russo affiliate, to build 300 units at the iconic but vacant Sears property at Main and Anderson streets.
In a third vote, the council rescinded a 15-year PILOT for Sapphire Urban Renewal LLC, an affiliate of Hackensack-based Enburg Group, which plans to build a seven-story, 100-unit building at 132 Main St. alongside the city’s bus terminal. An attorney for the developer, Leo Hurley of Connell Foley LLP, raised similar objections and pleaded with officials to reconsider a vote that would cost the city added revenue and other benefits.
More than a dozen residents also spoke, many of them expressing concerns about the increased traffic and overcrowding at schools from the thousands of new rentals built in recent years. Others blasted the cost of the new units as unaffordable for locals, while questioning whether Hackensack was becoming overbuilt and whether PILOTs were even still necessary to attract investors.
“This city can’t bear any more empty storefronts in beautiful new buildings,” Pedra Del Vechio, a Hackensack resident, said the during a public comment period. “There’s still empty storefronts, yet we have thousands and thousands of new residents here. They don’t need any more incentive to come here. This is a valuable real estate market, a highly valuable community.
“We don’t need to incentivize it anymore. It’s time (that), if they want to build here — we know they’re going to make a profit — they can pay their taxes like I do.”
Alfred Sanzari Enterprises President Ryan Sanzari also spoke Monday, reiterating the firm’s decades of commitment to and philanthropy in the city and asking officials to “keep the lines of communication open, and hopefully we can work out whatever differences we have surrounding this project.” But he also criticized the vote to rescind the PILOT for One Essex, which came minutes later, doing so in a statement Tuesday afternoon.
“We are disappointed in the city council’s vote, because rescinding a signed PILOT agreement is likely illegal as well as concerning as it would set a bad precedent for development across the State of New Jersey,” Sanzari wrote. “Realize these are completed, signed agreements that the City of Hackensack has now chosen not to honor in the new City administration. We had reached out to the City numerous times since we learned of the administration’s intention to rescind the PILOT in order to brief them on the project, tell them about the community benefits and correct the assertions being made. The city did not respond. Therefore, we’re exploring every option available to address the situation.”
Gaines, for his part, closed Monday’s meeting by encouraging the developers to move forward without the tax abatements.
“To clear up any misconception, all of these buildings can be built,” the mayor said. “We did not pull anyone’s site approval, we did not pull anyone’s redevelopment plan. The buildings can still be built. Saying the city council is preventing the buildings — that’s not the action that we took. It was the PILOT specifically. We welcome redevelopment that is responsible and in the best interest of the community. If you have your approval, we hope that you move forward and don’t leave an empty parcel there. You’re invited to do it. But not everyone is afforded the ability to do it with a 30-year exemption.”
