WESTFIELD — The One Westfield Place redevelopment project took another step forward on Tuesday when the mayor and council voted to approve the redevelopment agreement with HBC|Streetworks and to introduce three key ordinances, including one that will allow the town to bond for up to $57 million to see the project through to fruition.
“I think it’s really important to note that the first series of bonds cannot be issued by the town until Streetworks achieves certain milestones in the West Zone [the existing Lord & Taylor site and its neighboring parking lots],” said Matt Jessup, the town’s bond counsel, adding that this milestone is expected to be reached in 2025. “With those triggers in mind, we’re also not borrowing anything until our parking deck [slated for construction on the South Avenue train station parking lot] is basically shovel-ready. We’re not borrowing money in advance of when we need it; we’re not paying interest on bonds in advance.”
Mr. Jessup went on to note that the bond valuation described in Special Ordinance 2023-01 is effectively a “not to exceed” amount intended to provide a cushion in the event that one or more components of the project comes in under budget.
Debt service on the redevelopment area bonds, town officials said Tuesday, is expected to be financed through a pending 30-year PILOT agreement with HBC|Streetworks.
Mayor Shelley Brindle, along with Council members Mark Parmelee, Emily Root, Dawn Mackey, Mike Dardia, Scott Katz and Linda Habgood, voted to approve both the resolution adopting the redevelopment agreement and the three related ordinances. Councilman Mark LoGrippo, who has expressed numerous concerns about the project since its inception, voted against each measure in turn.
“[This agreement] excuses a major international conglomerate from paying their fair share in taxes to our schools. It creates hundreds of thousands of square feet of office space when more and more employees are working from home,” Mr. LoGrippo said, adding that in his estimation, the bond amounts were “outrageous and irresponsible.”
Councilman David Contract, who attended the meeting via Zoom due to a business conflict, was not able to vote in Tuesday night’s proceedings.
“As I stated at the last council meeting when the One Westfield Place Redevelopment Plan was approved, I fully support this project because it directly addresses Westfield’s major goals, offers more pros than cons, and significantly vacates drawbacks,” Mr. Contract said via a written letter which was read into the record by Mayor Brindle on Tuesday. “I want you to know that I would have voted yes [on each of these actions] had I been able to do so.”
The 338-page redevelopment agreement, which can be found in its entirety on the town’s website, includes a requisite schedule of construction milestones that the redeveloper must meet and the penalties that would be imposed if those deadlines are missed; a breakdown of the project’s overall concept plans, and a list of potential remedies in the event of a default. It also limits allowable transfers of any of the properties in question and establishes the terms upon which town properties are to be sold to Streetworks Development.
Tuesday night’s meeting, which wrapped up just after midnight, began with a detailed financial presentation by the town’s redevelopment finance expert, Bob Powell of Nassau Capital Advisors, attorney Steve Mlenak of Greenbaum Law and Mr. Jessup.
The project, Mr. Mlenak explained, will be broken down into eight separate urban renewal entities (designated in town documents as SWD Westfield I Urban Renewal, LLC, through SWD Westfield VIII Urban Renewal, LLC) in order to “attract capital partners for different components” and “obtain advantageous financing.”
According to information provided by the town, the sale price of approximately 2.25 acres of town property slated for inclusion in the project has been increased to about $11.1 million based on an independent assessment of fair-market value completed by the Otteau Group.
“The redevelopment agreement sets forth a lot of general conditions that have to be met before we ever sell those properties,” Mr. Mlenak said. “Obviously, they cannot be in default, and most importantly, they have to demonstrate to us based on the current project budget that they have the resources to come up with the equity necessary to complete the project, and they will also need to demonstrate construction financing with a responsible lender.”
In addition, Mr. Mlenak said, each individual segment of the project will need to meet its own unique conditions before any town-owned property can be sold.
The redevelopment agreement also includes numerous construction-related provisions (including pedestrian access and safety, parking and equipment staging) designed to mitigate community impact as the project is being developed.
The agreement as presented is still contingent upon the successful adoption of Ordinance 2023-07, which will allow the town to enter into financial agreements with each of the eight identified urban renewal entities.
Mr. Powell, whose firm, Nassau Capital, was tasked by the town with creating a detailed financial analysis of the project, said Tuesday that given the internal rate of return (the annual rate of growth that an investment is expected to generate), the project would not likely be considered “financially feasible” without the implementation of a PILOT program.
Over the total term of the requested 30-year tax exemption, Mr. Powell said, the combined development zones are projected to generate project revenues to the town in excess of $213 million, or an average of $7.1 million per year, before factoring in debt service on whatever bonds the town ultimately decides to issue.
Mr. Powell was recently replaced as the financial advisor to a similar project in Summit.
Councilman LoGrippo asked Mr. Powell to provide the council with some details surrounding his departure from the other group, but did not receive an immediate response.
Councilwoman Habgood, however, said that she had reached out to Summit’s town administrator directly to clarify the situation and was told that the city had simply opted to move in another direction.
“I asked whether there had been anything incorrect about Nassau Capital’s work, and the answer was no,” Ms. Habgood said. “When I asked if they would hire Nassau Capital again, they said they absolutely would.”
The final ordinance (2023-08) that was introduced on Tuesday allows the town to impose a special assessment on each of the properties (pursuant to agreements with each of the eight urban renewal entities). These assessments, town officials said, are intended to protect the town against having to utilize general municipal revenue to pay debt service on the redevelopment area bonds before the PILOT payments are stabilized.
Nine residents, including Frank Fusaro, Tony LaPorta, Carla Bonacci and others connected to at least one of two established local opposition groups (Westfield Advocates for Responsible Development and Residents for Westfield), spoke out against various aspects of the project Tuesday, citing the project’s size, scope and accelerated timeline as areas of major concern.