PILOT Goes Unpaid on Short-Lived Supermarket in Middlesex Borough

MIDDLESEX, NJ—It seemed like a match made in heaven. A politically connected developer wanted to construct an apartment building on the Middlesex Borough site where a paint factory exploded and burned in 1985.

The site would be remediated first, and the Middlesex County Improvement Authority would even take part by securing $200,000 in federal funding for the site cleanup.

A 30-year PILOT (Payment In Lieu of Taxes) agreement was sought by the builder to sweeten the deal. Town officials agreed, as the payment would be much-needed municipal revenue from a depressed property.

Under PILOT’s, also known as long-term tax exemptions, developers pay a percentage of gross revenue from their buildings instead of assessment-based taxes. The primary reason municipalities use such abatement programs is to spur redevelopment of blighted sites.

Questions remain, however, whether these tax breaks are really needed to attract redevelopers. The benefit for the average taxpayer is also debated.

Municipal governments typically reap 95% of the PILOT revenue while none goes to the local school district. County governments get the other 5%.

The developer’s website includes a quote from the county’s top elected official.

Nine years later, the paint factory redeveloper’s relationship with Middlesex Borough is contentious.

The PILOT payments started later than they should have. The redeveloper is headed for a tax sale on a second property and is in arrears on its PILOT.

Along the way, Middlesex Borough’s then-mayor Ron DiMura got indicted in 2019. He pleaded guilty earlier this year to one count of laundering campaign money through a scholarship fund.

The history between Middlesex and redeveloper Massimo Pinelli has had its ups and downs.

Massimo Pinelli, President of Forte Real Estate Development

Pinelli is the managing partner of the limited liability company (LLC) that got approval in 2012 to build the 146-unit complex, The Lofts, on the former Chemray factory site on Lincoln Boulevard.

Pinelli also heads the LLC constructing the 212-unit project, The View, just up the road.

The View gained municipal approval in 2017 as part of a project that also called for the overhaul of an adjacent food store.

The food store operator opened for a few months in 2019, then closed after running aground financially. The landlord, the Pinelli-led LLC, hasn’t paid its supermarket PILOT for 2019 or 2020.

In late October, town officials listed the property for a December 2 tax sale due to more than $59,000 in unpaid 2019 land taxes.

All told, the borough claims the food store site is about $285,000 arrears when the PILOT, land taxes and penalties are considered.

From 2018 through 2020, more than $1 million in PILOT money has been paid by The Lofts. But borough officials contend more is owed.

“They still haven’t provided us with a certified audit,” said Middlesex Mayor John Madden of the redeveloper. “They’re fudging the numbers. It’s annoying.” Madden added that the borough “is not going to back down.”

“We’ve let the interest keep accumulating,” said Middlesex Business Administrator Marcia Karrow. “They claim they want to get current. We’ll see.”

Pinelli is president of Forte Real Estate Development. He did not reply to an email seeking comment for this story.

It wasn’t always this way between the town and builder. In 2011, the Borough Council loosened the zoning to allow The Lofts to be a four-story building, rather than three.

During those discussions, Pinelli was represented by State Senator Bob Smith, whose law firm became the Middlesex council’s own legal counsel the following year and served through 2018.

State Senator Bob Smith

Smith’s link to Pinelli created taxpayer suspicions when it appeared the redeveloper got kid-glove treatment in later years.

Pinelli and an associate combined to donate $13,800 to Smith’s campaigns from 2004-17. Another $40,100 was donated to the Middlesex County Democratic Party, according to state campaign filings.

During a 19-day period in October 2007, Pinelli was particularly generous, making a pair of donations to the county Democratic party totaling $18,200.

Lincoln Boulevard, where his two apartment buildings and the supermarket sit, is a county road so the project needed approval from the county’s Planning Board, as well as the municipal government.

Those donations came six months after the Pinelli-led 150 Lincoln Boulevard LLC had its organizational paperwork filed by Smith with the state in April 2007.

The Lofts received Middlesex Planning Board approval in 2011. Three years later, the Borough Council approved the PILOT deal for the project.

Pinelli was not required to include any affordable units in his new apartment complex, and in exchange, the borough was paid a paltry $100,000.

The first 78 units at The Lofts opened in 2016 to much fanfare and a ribbon-cutting attended by DiMura and Middlesex County officials.

In July 2017, the certificate of occupancy was issued for the last of The Lofts’ 146 apartments.

That should have triggered the start of PILOT payments but didn’t. They began in 2018. Recently, officials explained the delay occurred because the then-zoning officer neglected to inform the municipal tax office of the final C.O. issuance.

It was not the only bizarre occurrence connected to The Lofts’ PILOT and DiMura played a role in others.

Middlesex Borough Mayor Ronald DiMura in attendance for the ribbon-cutting ceremony
Then-Mayor Ronald DiMura at the ribbon-cutting celebration for Massimo Pinelli’s “The Lofts.”

In February 2018, DiMura turned in a check to finance, supposedly handed in by the LLC as its first PILOT installment.

It was posted and deposited, then had to be subtracted from the borough account the same day. DiMura had initially forgotten to direct that the check be held for two weeks so it wouldn’t bounce, according to officials.

By year’s end, the PILOT generated $330,000 in town revenue.

In 2019, The Lofts’ first PILOT payment for the year was not made until July. It became a political issue as DiMura faced a tough re-election challenge from Madden.

By year’s end, the apartments produced $325,000 in PILOT revenue, but DiMura was trounced by Madden in the mayoral election.

Also in 2019, the eight-month delay in commencing payments two years earlier was uncovered by administrator Karrow, who took over the administrator job from Brandon Goldberg, who jumped ship to take the Assistant Business Administrator role in New Brunswick.

Pinelli was told to pay up. Random payments began arriving at borough hall, creating a bookkeeping headache for finance staff who had to calculate interest penalties.

In December 2019, DiMura was indicted by the State Attorney General’s Office on charges that he took money from municipal political campaigns that he served as treasurer and from private investors in a Ponzi scheme.

It was alleged he laundered money through a scholarship fund he administered. In the indictment, the Attorney General noted that one or more LLC’s “controlled by M.P.” had donated $10,000 to that fund, not realizing it was being pilfered.

M.P. was widely believed to have been Pinelli.

After pleading guilty to one count in August, DiMura is awaiting sentencing.

A journalist in Central Jersey for nearly four decades, Dave has won awards for news, education and opinion writing. Since 2017, he’s been a member of Friends of the Middlesex Taxpayers, a citizen’s group that has exposed corruption and waste in Middlesex Borough and promoted greater transparency.

Read Dave's blog Pundit at https://punditsdotblog.wordpress.com