Dear Editor:
At the January 6 council meeting, Councilman McGrath made a motion to introduce an ordinance that would repeal the PARQ Lanidex PILOT and the Lanidex Warehouse PILOT. When no one seconded the motion, the matter was immediately dropped. Since then, I have performed my own inquiry and have determined that there is sufficient reason to declare both PILOTs null and void. The Lanidex Warehouse PILOT should be repealed because the developer breached one of the clauses contained in the PILOT agreement. The PARQ Lanidex PILOT should also be repealed because, in my opinion, the developer made a fraudulent claim for personal gain, i.e. to obtain a lucrative $117 million tax break.
Regarding the Lanidex warehouse PILOT, the language in Article 15, titled Certification as to the Commencement of Construction, is crystal clear. It prohibits the developer from beginning construction of the project prior to the approval of the PILOT application by an ordinance authorizing the PILOT by the Township’s Governing Body. The uncontested fact that the Lanidex warehouse was more than half complete BEFORE the ordinance was adopted is an obvious violation of Article 15 and thus constitutes a breach of contract. I believe that the Governing Body has no choice but to move Councilman McGrath’s motion forward and ultimately vote to repeal Ordinance 2025:32.
The PARQ Lanidex apartment PILOT should be repealed for an entirely different reason. As I stated earlier, I believe that the developer made a fraudulent claim in order to mislead the Governing Body into approving a PILOT agreement that would grant the developer a mind-boggling $117 million tax break. The developer’s assertion that the PARQ project was not financially feasible without a PILOT convinced the council to approve the PILOT. But in my opinion, there is a preponderance of evidence indicating no PILOT was ever needed.
This evidence includes the fact that interest rates are lower now than when the 275 apartments and 75 town houses in PARQ Phase 1 were built without a PILOT, so it will actually be cheaper to finance Phase 2. In addition, there are substantial savings in construction costs that can be achieved by constructing identical apartment buildings on the same property after the first building has been in operation for a while. Drawing information from the Construction Review Online website and other construction websites, AI estimates that the savings from just one more 275-unit building can amount to 12-15% of total development costs, which translates to construction cost savings of $8 to $20 million. For 4 extra buildings the savings would be $32 -$80 million. The handout that the council received lists about a dozen areas where savings can be achieved. For example, architectural and structural plans can be re-used. And only minor extensions and lateral connections are required for the roads, water, sewer, and gas and electric utilities that were installed for the first building.
Therefore, construction of Phase 2 of the PARQ development will cost tens of millions of dollars less than Phase 1. Logically, if the developer was able to complete Phase 1 without a PILOT, then certainly he can complete the much less expensive Phase 2 without needing one. In my opinion, the assertion that Phase 2 is not financially feasible without a PILOT is a fraudulent statement solely intended to secure the council votes necessary to obtain a $117 million tax break from Parsippany.
I believe that the Lanidex warehouse developer knowingly breached a clause in the PILOT agreement, and that the PARQ Lanidex apartment developer knowingly misrepresented the project’s financial need for a PILOT. By their deceptive actions the developers showed contempt and disrespect for the Township of Parsippany and especially for the administration and the town council. Unfortunately, these actions also misled the council into granting $100 -$200 million in tax breaks that are totally undeserved.
So, I would like to request two things:
- The council votes YES to introduce Councilman McGrath’s ordinance that would repeal both PILOTs so that there can be a thorough discussion of the pros and cons of each PILOT agreement.
- I would like the township attorney to confirm that the Lanidex warehouse developer did indeed violate Article 15 of the PILOT agreement.
