What has transpired since the prior agreement?

Avalon Bay and the prior property owner, during their due diligence in the course of the purchase of the property, discovered an environmental contamination on the premises. The contamination is estimated to cost between $10 and $15 million to clean up. As part of Avalon Bay’s desire to continue with this project, they undertook two objectives (a) they settled with the prior owner of the property and received a reduction in the purchase price of approximately $2.5 million; (b) they approached the Town of Boonton and asked for a modified PILOT and after a series of meetings over the summer between the Board of Aldermen, the Administration and Avalon Bay, the parties came to an understanding that a modification to the agreement would be formally considered. As part of this modification, the PILOT rate would be reduced from 10% to 9%. However, over the past three years the estimated rents for the project have increased from $7.7 million to $9.5 million and accordingly the amount of projected revenue to the Town of Boonton, notwithstanding this amendment from 10% to 9%, will not change. In order to change this agreement it is required that the Town issue redevelopment bonds. The interest on the redevelopment bonds will be paid by the Town of Boonton so long as the Town of Boonton maintains at least $700,000 in projected revenues from the project. If the projected revenues were to amount to less than $700,000, the Town would still be guaranteed that payment from Avalon Bay. The original $300,000 contribution towards the community was increased to $350,000. Finally, if the clean-up costs fall below $12 million, the entire deal reverts back to the original 10%. 

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1. What was the project approved for in 2013?
2. What was the original financial agreement with Avalon Bay?
3. What has transpired since the prior agreement?
4. What are the risks regarding the issuance of a $1.2 million bond?
5. What happens during the interim periods prior to the completion of this project?
6. What is the comparison between conventional taxes for the property, the 2013 agreement and the 2016 agreement?
7. What if there is a default on these bonds?