Westfield finalizes tax agreements for $440 million downtown redevelopment

WESTFIELD – The One Westfield Place project, the largest development in the town's history, took another step forward with the Town Council's approval of financial agreements with the developer and bonds to fund public improvements.

The approvals solidify the "long-term binding commitment" to the public-private partnership between the town and Streetworks, the real estate development arm of the Hudson's Bay Company, the owner of the vacant Lord & Taylor property.

The Town Council also approved a $57 million bond, which will not be issued until 2026, for public improvements, including $31 million for the construction of two parking garages and other projects including sidewalks, landscaping, two town greens and traffic mitigation.

All the agreements include conditions on Streetworks' performance and actions if those conditions are not met.

Mayor Shelley Brindle said the bonds will be paid for by Payment in Lieu of Taxes (PILOT) funds the developer will pay over three decades.

A PILOT is a common property tax abatement used by New Jersey municipalities to encourage redevelopment.

The PILOT agreement reached with Streetworks is projected by the town's financial consultants to yield $213 million to Westfield over the next 30 years.

A unique aspect of the proposed PILOT financial pact is eight separate agreements for each part of the project.

That will allow Westfield to start collecting the PILOT money as each segment is completed, rather than waiting for the entire project to be completed.

The PILOT tax abatements cover only the assessment of the improvements, not the assessed value of the land which will still be subject to property taxes.

The PILOT payments are based on an escalating percentage of the project's gross revenue starting at 13% in years 1-5 then ending at 15% in years 16-30.

After 30 years, the developer will pay "conventional" property taxes.

Also see:Westfield bakery run by French pastry chef serves pastries, pies and Jeff's Cookies

The Council voted to approve the financial arrangements despite continuing criticism of the project at the public hearing on the ordinances.

Residents said the financial analysis supporting the PILOT was flawed and that the process should be delayed until an independent analysis is conducted.

Others questioned why a "corporate giant" should get a tax break that residents are not going to get.

But Council member Linda Habgood said officials rechecked the numbers after objections were raised and confirmed the projections were valid.

"We wanted to make sure this deal works for Westfield," she said.

Brindle again reaffirmed support of the project, which she called "a once-in-a-lifetime opportunity to create a vibrant downtown" and to continue Westfield's status as "one of the premier places to live in the state."

Brindle said the financial agreements needed to be put in place so Streetworks could obtain financing and equity partners.

“We are extremely pleased to see our vision for One Westfield Place continue to move through the approvals process,” Ken Narva, Streetworks’ development chairman and chief development officer, said in a news release. “As the largest landowner in Westfield, we are committed to working with the Town to ensure a sustainable, environmentally friendly, and economically viable future for Westfield.”

The next step in the project, in the works for four years, is to obtain a site plan agreement from the Planning Board under the terms of the redevelopment agreement approved by both the Town Council and Planning Board.

"This agreement is a culmination of years of engagement and active listening that allowed us to work collaboratively with public officials, residents and community members to better understand the needs of the community,” said Carolina Simon, vice president of development of Streetworks. “We look forward to the next steps in this approval process and want to thank Mayor Shelley Brindle and the Town Council for their continued support and collaboration to ensure a strong future for Westfield.”

One Westfield Place

What's planned: 310,000 square feet of office space, 205 total residential units (154 of which are 55-plus age restricted), two public spaces, 27,000 square feet of street-level retail, two commuter garages, improved streetscapes.

Estimated value: $440 million.

When: Construction expected to begin in 2024.

Completion: Estimated 2030.

Preview Center: 76 Elm St. 2,000 visitors since October 2022. Open through the end of the year. Staff will oversee self-guided tours during regularly scheduled hours of operation.

Website: onewestfieldplace.com.

Hudson's Bay Company: A holding company of technology, retail operations and real estate businesses, including majority ownership Saks and Saks Off Fifth. Former owner of Lord & Taylor. It is North America’s longest continually operating company and headquartered in New York and Toronto.

Streetworks Development: The real estate development division of Hudson’s Bay Company.

Email: mdeak@mycentraljersey.com

Mike Deak is a reporter for mycentraljersey.com. To get unlimited access to his articles on Somerset and Hunterdon counties, please subscribe or activate your digital account.

This article originally appeared on MyCentralJersey.com: Westfield finalizes tax agreements for $440M redevelopment