UPDATE: Developer Wants to Build Workforce Apartments in Rio Grande

COURT HOUSE — Municipal employees, teachers, retail workers, police officers and newspaper reporters in Middle Township could soon have local affordable housing rental options.
Although real estate values have decreased in this area during the current economic downturn, prices are still out of reach for many in the local workforce.
To that end, Topsail Development, Inc., a real estate development company based in Missouri, wants to construct a seven-building, 168-unit apartment complex off Route 9 and Rio Grande Boulevard, on a plot of land known as the Mattera site. The project has been named “The Meadows of Rio Grande.”
The “workforce housing” apartments there would be priced below-market rates based on the income of the renters.
At a Tuesday, Feb. 17 Township Committee meeting, the company distributed a thick book of information regarding their proposal that detailed state regulations, company qualifications and housing needs in the area.
According to Topsail’s information: 20.9 percent of families in Rio Grande fall below the poverty level; Rio Grande has the third lowest median income in Cape May County; the county is second only to Salem County for lowest wage and salary disbursements in the state; and 50.2 percent of Middle Township households would qualify for the proposed housing.
The project’s land use attorney, F. Thomas Hillegass, of Court House, touted the experience of Topsail’s leadership. He said the company has not only developed many similar projects in other states, but also has local ties.
Topsail’s President Stephen Westhead graduated from Middle Township High School and Vice President Donna Lilley owns property in the area, Hillegass said.
“They really know the area. They know how expensive real estate is in Middle Township and believe this workforce type housing is really needed here,” Hillegass said. “This project will help keep young families from moving away.”
He said Topsail has been researching this project for two and a half years.
“One of the great things about this company is that they concentrate on one project at a time,” Hillegass said.
Topsail asked Committee for a supporting resolution stating the project would meet the township’s housing needs as well as an agreement for payment in lieu of taxes (PILOT).
The company needs these measures to be acted upon quickly to qualify for an upcoming round of funding.
Committee members seem generally enthusiastic about the project as it would benefit many in community looking for such housing as well as help the township meet certain state affordable housing regulations.
But not everyone was onboard.
Middle Township Tax Assessor Joseph Ravitz told the Herald he thinks the project is a great idea, however he has a problem with granting the project’s developer a PILOT agreement.
Under the agreement, Topsail Development, Inc. would pay the township an amount equivalent of what it would under a normal tax structure, but may not provide fees to offset other local taxes. Ravitz said that would not be fair to the rest of the property owners in the county who would have to make up the difference.
In a memo to Township Committee, Ravitz gave the following example:
“Example: $20,000,000 project paying the 2008 general tax rate of $1.185 would pay $237,000 per year in taxes. The municipal tax rate for 2008 was $0.32. If the project pays in lieu of taxes equal to the municipal tax rate, that payment would be $64,000 per year. Then $237,000 -$64,000 = $173,000. That is the amount that the Middle Township taxpayers would have to make up for county and school taxes,” Ravitz stated.
“For a project in Rio Grande, (if the fire district rate is not included in the in lieu tax) and additional $104,000 would have to be picked up by the tax payers of Rio Grande.”
Ravitz expressed similar concerns last March when the township considered a PILOT agreement with the Roman Catholic Diocese of Camden to build a 73-unit age-restricted development, also in Rio Grande.
Under that agreement, instead of paying taxes for the property, the diocese agreed to pay an annual service charge for municipal services to the property amounting to 15 percent of the rents received from residents, Committeeman Steve Barry told the Herald at that time.
A third of that fee would go to the county, but the development would not contribute to Middle Township schools as the over-55 population without school-age children would not impact the district, Barry noted.
The diocese paid $7,236 in taxes on the unimproved property in 2007, broken down into $1,793 to the township, $4,069 to the school district, $1,059 to the county and $313 to the fire district, Ravitz told the Herald.
In part due to the township’s willingness to work with the diocese, that project was recently awarded a $12 million grant from the U.S. Department of Housing and Urban Development, which is similar to the type of funding Topsail is looking for.
Westhead told the Herald in an email how the project’s financing would work.
“We will be appying for an allocation of federal tax credits through NJ Housing and Mortgage Finance Agency,” Westhead said. “These tax credits are made available by IRS code section 42 for the production of affordable housing. Once allocated to the project, we will sell the credits and the money received is used to reduce the debt on the property. With a lower debt service obligation, we are able to offer a high quality rental option for families at rents well below market.”
He added that the property would have to remain affordable housing for a period of 45 years.
At the Feb. 17 hearing, Police Chief Joseph Evangelista also expressed concerns that the new development would add responsibilities to an already taxed Middle Township Police Department. With his and another officer’s retirements planned for sometime this year, Evangelista said the department would be stressed.
Mayor F. Nathan Doughty said that Committee was aware of the potential impacts and assured the chief they would address any problems as they arose.
Barry emphasized the need for a project that offered rental housing for young families rather than age restricted facilities. He said apartments offer middle income workers the flexibility to move as they advance in their careers.
He agreed that PILOT programs are not perfect calling them an “unpleasant reality.”
But he said the township is not only legally required by the state to provide affordable housing, but also morally obligated to do so. If Middle Township is a community that cares about all its people and not just the rich ones, then residents will just have to deal with the imperfect PILOT program, Barry said.
He then pointed to a Bible verse that speaks to government’s obligation to care for its people.
In Matthew 25: 31-46, those who offer food to the hungry, drink to the thirsty, shelter to the stranger, clothes to the naked, care to the sick and companionship to the imprisoned were granted salvation.
“The King will reply, ‘I tell you the truth, whatever you did for one of the least of these brothers of mine, you did for me,’” the Gospel read.
In a related matter, the township zoning board is scheduled March 12 to review an application for the construction of a 90-unit workforce housing development at 8 Railroad Ave., Court House.
It seems these workforce projects could not only answer the prayers of those in need of affordable housing, but also those of the developers during the current real estate slump. The impact to local taxpayers, however, is yet to be seen.
Contact Hart at (609) 886-8600 Ext 35 or at: jhart@cmcherald.com