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The $5 Million “Loss” That Wasn’t

Berkeley Heights gave 100 Locust a 30-year tax break because officials said nobody would build it otherwise. The building now takes in $7 million a year. Here is the math you were not shown.

By Edmund Tom Maciejewski
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The $5 Million “Loss” That Wasn’t

_Originally published by Edmund Tom Maciejewski at TomForTown.com._

*By Edmund Tom Maciejewski*

*Berkeley Heights gave 100 Locust a 30-year tax break because officials said nobody would build it otherwise. The building now takes in $7 million a year. Here is the math you were not shown.*

In 2017, Berkeley Heights handed the developer of 100 Locust Avenue a 30-year pass on regular property taxes. The pitch was simple. “No developer would build a project with these economics,” the town’s slideshow said, without a PILOT, a payment the developer makes instead of taxes. [1]

Nine years later, that “unbuildable” project is Woodcrest: 196 apartments. In 2025 it took in $7,102,012 in rent and fees, by its own audited numbers. The town was told it would collect $4,537,428. The real number is 56% higher. [3, 6]

So how does a building nobody would build pull in $7 million a year while paying less than $1 million in lieu of taxes, with $0 going to the schools?

The “loss” was mostly the developer’s profit

The slide shown to residents said the building would cost $50.4 million and be worth only $45.4 million: a $5 million “Gap (Loss),” printed in red. [1]

Here is what the slide did not say. The signed paperwork lists the cost before profit at $46.9 million, then adds a separate line: “Developer’s Profit @ 7.50%: $3,519,754.” The slide folded that profit into the cost and labeled the total “Total Development Cost.” The word “profit” does not appear on that slide. [1, 3]

Take the profit out and the “loss” is $1.5 million. Seventy percent of that red number was the developer’s profit allowance. [1, 3]

And the town’s own slides showed the building clearing about $2.6 million a year after paying full taxes, before the mortgage. That is not a loss. That is a building that makes money. [1]

The math was solved backwards

The town’s appraiser left a worksheet. It has a line labeled “RE Taxes to Meet Gap (PILOT),” and the number on it is whatever makes the gap, profit allowance included, read zero. The tax break was sized around the developer’s profit allowance. [3, 5]

Then rents came in at nearly double what was used to size it. The appraiser priced a two-bedroom at $2,100 to $2,620 a month. This fall, Woodcrest’s own website listed two-bedrooms at $4,230 to $4,930. [5, 11]

What happens to the deal when that occurs? Nothing. The allowance does not move. The 13% charge rises with the rent, the discount rises right along with it, and every dollar above the allowance stays with the developer.

Run their own formula with the real rent

Take the town’s 2017 formula. Keep every assumption. Change one number: the rent. [1, 3, 6]

  • The building is now “worth” $65 to $78 million. The $5 million “loss” becomes a $15 to $28 million surplus.
  • Running costs would have to triple before the formula showed any gap at all.
  • The 2017 model built in a 7.5% developer’s profit. By the town’s own math the margin is now 38% to 66%: five to nine times that allowance.

These are what-ifs. Construction may have cost more; interest rates have changed. But the town locked in thirty years on one year’s guess, with no way to fix the deal when the guess turned out wrong.

“Isn’t $941,727 about what they’d pay in taxes anyway?”

No. The $977,735 tax figure on the 2017 slide was for a building collecting $4.5 million. Run today’s rent through the same formula and the tax bill is roughly $1.4 to $1.7 million. The PILOT is still a 33-to-44% discount, worth $450,000 to $740,000 a year. And of what Woodcrest does pay, the schools get no share. On a regular tax bill they would get the biggest one. [1, 3, 6, 12, 15]

The safety net that cannot catch anything

Residents were promised that “any ‘excess profits’ are paid to the municipality.” Here is how that clause actually works. The developer is allowed to keep 12% of total project cost every year, about $5.6 million. Before anything counts as profit, it subtracts every running cost, the PILOT itself, every mortgage payment, and another $1.6 million a year as a paper write-off. At 2025 rent, even with zero expenses and zero mortgage, what is left falls under the ceiling. The clause cannot fire at today’s rent, and on the 2017 forecast it never could have. [1, 3, 12]

The paperwork nobody can find

The agreement requires the developer to file, every year, a full audited report that calculates its Net Profit, delivered to the Mayor, the Council, the Tax Collector, the Clerk and the state. It also requires a certified audit of actual construction costs, due in 2022, and an annual list of the owners. [3]

None of those are in the records the town has produced. The three audits we have cover rent and the 13% math. Not one of them calculates profit. [3, 6]

On the town’s own books: a $200,000 check logged as “PAYMENT FOR PILOT” in December 2022 and reversed the same day, with the 2022 balance not paid until June 2024; and a $216,244.35 negative adjustment on November 7, 2024 that wiped out a quarter’s bill, with no paperwork behind it. [6, 8]

Two weeks, no hard questions

October 10, 2017: the ordinance was introduced, 6–0. October 24: the slide deck was presented and the final vote taken, 6–0, the same night. November 27: the date on the agreement. [2, 3, 17]

What did the council ask? When the money would arrive. Whether this was a “back room deal.” The Mayor asked the one question that mattered, what happens when rents go up, and the minutes record the answer as “Mr. Jessup responded.” The minutes do not record anyone asking about the cost figures, the profit line, the formula, or whether a shorter deal would do. [2]

Who is watching?

Berkeley Heights now has six PILOTs. More than $2 million a year flows through Town Hall under them. The minutes we reviewed show the Council voting on PILOTs. They do not show it ever receiving a report, reviewing a profit calculation, or asking why one was missing. Two more possible PILOTs are in the pipeline. [13, 14, 15, 16]

What the town should do now

  • Produce the reports the agreement requires, or admit in writing it never got them.
  • Explain what happened to the $200,000 check and the $216,244.35 adjustment.
  • Use its right, already in the agreement, to open the developer’s books.
  • Share the upside on every PILOT: 13% up to the forecast, more above it.
  • Before voting on another thirty-year deal, answer one question about the six it already has: who reads the reports?

Maybe there is an innocent answer to all of it. Then it should be easy to give. Nobody has given it.

Sources

Every figure above comes from one of these records. The full version, with 50 open questions and complete calculation notes, is published on this site, and the OPRA records are posted on the campaign’s Research page.

All dollar figures are from the documents cited. “Worth,” tax and margin figures for 2025 apply the Township’s own 2017 formula and cost figures to the audited 2025 revenue; they are illustrations, not appraisals. Actual operating expenses, debt and owner returns have not been produced and are not estimated here. “Not in the records the town has produced” refers to the records reviewed through October 16, 2026; our records request to the Township remains open.