EXHIBIT A

Date: April 4, 2018

From Terence M. Wall, Township Administrator

Lavona Patterson, Chief Financial Officer

To: Township of Cranford Township Committee

Re: SUMMARY AND RECOMMENDATION OF THE APPLICATION FOR

A LONG TERM TAX EXEMPTION SUBMITTED BY BIRCHWOOD
DEVELOPERS URBAN RENEWAL ASSOCIATES, LLC

I. INTRODUCTION

We have reviewed the application of Birchwood Developers Urban Renewal Associates, LLC
(“BDURA”) seeking a tax exemption under the Long Term Tax Exemption Law of 1992,
N.J.S.A. 40A:20-1 et seq., (“LTTE”) for the Project described below and provide the following
summary and recommendation to the Township Committee.

II. PROJECT SUMMARY

Project Name:

The Birchwood Avenue Redevelopment Project

Project Location:

215 and 235 Birchwood Avenue

Block 291, Lot 15.01 and Block 292, Lot 2

The Township Committee adopted Resolution No. 2017-188A designating the Property as a
non-condemnation area in need of redevelopment pursuant to the Local Redevelopment and
Housing Law, N.J.S.A. 40A:12A-1 et seq.

Existing Use:

The Property is undeveloped and vacant land owned by the Township. It currently generates no
revenue to the Township.

Description of Project/Units:

The Project consists of the construction three apartment buildings consisting of 225 residential
units, of which 34 units shall be affordable units, together with a clubhouse of no less than 4,000
square feet that will include a large community room, a multi-purpose room and exercise facility,
an outdoor terrace of no less than 2,500 square feet and covered and surface parking spaces.

Project Cost:
The total estimated project costs (hard and soft costs) are $64,611,625.

Construction Schedule:

BDURA estimates that the building site preparation will begin August/September 2018 and
estimates that the Project will be substantially complete and occupancy will begin by Feb-June
2020.

Jobs Created:

Per the developer’s estimate, the Project will create approximately two hundred forty-six (246)
full-time equivalent construction jobs over the duration of the construction of the Project, as well
as approximately twelve (12) full-time permanent jobs in connection with operation of the
Project

Proposed Initial Rents

Type SF # of Estimated Monthly Rent Annual Rental

Units Rent Total Income

1 Bedroom 900 51 $2,000 $102,000 $1,224,000

1 Bedroom/w Den 1,250 15 $2,200 $33,000 $396,000
Affordable 950 34 $941 $31,994 $383,928
2 Bedroom 1,340 98 $2,500 $245,000 $2,940,000
(Interior)
2 Bedroom 1,600 27 $2,650 $71,550 $858,600
(Corner)
Total 225 $5,802,528

III. SUMMARY OF TAX EXEMPTION/PILOT REQUESTED

Applicant:

Birchwood Developer Urban Renewal Associates LLC

820 Morris Turnpike
Short Hills, New Jersey 07078

BDURA has represented and demonstrated that it is a duly formed urban renewal entity pursuant
to the LTTE, and has been approved by the New Jersey Department of Community Affairs.

Term/Annual Service Charge:

BDURA has submitted an application, pursuant to the LTTE, requesting a tax exemption on the
Project for thirty (30) years with an Annual Service Charge/PILOT payment (“ASC”) to begin
upon substantial completion of the project and calculated as follows:

ASC: 11% of Annual Gross Revenue for all 30 years (AGR is calculated by rental income)

 Stage 1: Years 1-15 - Entity pays the ASC.

 Stage 2: Years 16-21 - ASC or 20% of the taxes otherwise due, whichever is greater.
 Stage 3: Years 22-27 - ASC or 40% of the taxes otherwise due, whichever is greater.
 Stage 4: Years 28-29 - ASC or 60% of the taxes otherwise due, whichever is greater.
 Stage 5: Year 30 - ASC or 80% of the taxes otherwise due, whichever is greater.

The Entity shall pay an additional annual amount of 2% of the Annual Service Charge as an
Administrative Fee to the Township.

The Township shall pay annually 5% of the Annual Service Charge to the County of Union
pursuant to N.J.S.A. 40A:20-12.

The complete terms of the tax exemption are set forth more fully in the Financial Agreement
negotiated between the Township and BDURA and provided with the ordinance.

Estimated First Year PILOT Payment/Net Revenue to Township:

Annual Gross Rental Income (Proposed $5,802,528

Initial Rents)
Vacancy Factor (5%) $290,126
Effective Annual Gross Revenue (AGR) $5,512,401

Annual Service Charge (11% of AGR) $606,364

Administrative Fee (2% of ASC) $12,127

Total Payment to Township $618,491

Less 5% of ASC to County $30,318

Net Revenue to Township (Year One) $588,173

IV. RECOMMENDATION

We have reviewed the Application, and related information, and have consulted with Bryan
Morris of Phoenix Advisors, LLC with respect to the costs and benefits of the requested PILOT,
Thomas S. Dolan, Esq., who has reviewed for compliance with the LTTE and other applicable
law, and the tax assessor Peter Barnett, with respect to the proposed assessment on the Project
upon completion.
The following Township benefits of the Project have been identified:

 The Project will revitalize and effectuate the development of a deteriorated and unused,
abandoned area.
 The Project provides new residential housing units, including 34 new affordable housing
units, within the Redevelopment Area, assisting with the Township’s COAH obligations
with a lower density project to the Township.
 The Project site, currently owned by the Township, generates no revenue for the
Township. As part of the Project, title to the Project site will be transferred to the Entity
for development and will result in anticipated revenue to the Township of approximately
$588,173 in the first year after substantial completion. If the Property was taxed under
conventional taxation, it would only generate approximately $328,000 in revenue to the
Township.
 The revenue to the Township anticipated over the term of the Financial Agreement is
greater than the anticipated costs resulting from the Project, and will likely result in a net
surplus to the Township.
 It is anticipated that the Project will create approximately two hundred forty-six (246)
full-time equivalent construction jobs over the duration of the construction of the Project,
as well as approximately twelve (12) full-time permanent jobs in connection with
operation of the Project.

BDURA has identified the PILOT as necessary for the Project for the following reasons:

 Without the exemption, BDURA would not be able to finance and construct the Project
in a manner that will allow it to establish rents that are consistent with the market for new
multi-family rental units in the Township, and to provide affordable housing units. As a
result, probable occupants of the Project may not choose to reside in the Project.
 The relative stability and predictability of the Annual Service Charge payments under the
Financial Agreement will assist in the long term success and viability and of the Project.

Based on the above, and consultation with the appropriate professionals, the PILOT application
on the terms requested as set forth above and more specifically in the Financial Agreement is
recommended to the Township Committee.