In tough economic times, everyone looks to save wherever they can, especially in the area of taxation. Even Snooki and her friends sought a film-production tax credit to help cover the costs of whatever it is they do. But while Seaside Heights has no trouble attracting attention due to the popularity of a television show, many municipalities are having a difficult time attracting attention to stalled redevelopment projects.
There are many incentives by which a municipality can encourage a redevelopment project to go forward, such as favorable zoning and an accelerated application review process. But one area that many municipalities do not consider in advance of a project is tax incentives. Financial incentives for a developer are essential because prior to engaging in any project, a developer must examine all of its anticipated costs for the entire scope of the project, including land price, approval costs (not only the cost of its professionals, but the escrows necessary to pay the municipality’s professionals), infrastructure costs, utility costs, market value of the project upon completion, cost of financing and carrying costs including future taxes. While municipal assessors typically have no obligation to assess a project until completion, such uncertainty may scare potential developers away long before a shovel ever hits dirt. Many redevelopers look to negotiate a “payment in lieu of taxes” (PILOT) as an incentive to invest in infrastructure and proceed with a project, where the investment might otherwise be made elsewhere.
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