The $5 Million “Loss” That Was Really a Profit Target

By Edmund Tom Maciejewski

Town Hall said no builder would touch it without a PILOT. Its own slides had the building clearing about $2.6 million a year after full taxes, before the mortgage. Most of the “loss” was the developer’s profit allowance. Now asking rents have nearly doubled, the required profit reports have not been produced, and a $200,000 PILOT check was logged and reversed the same day. Fifty questions. Zero answers.

Short on time? Read the short version. Every document cited below is posted on the campaign’s Research page.

The pitch: “Nobody would build this”

In October 2017, Berkeley Heights handed the developer of 100 Locust Avenue a 30-year pass on regular property taxes. The reason, straight off the town’s October 10, 2017 slideshow: “No developer would build a project with these economics, absent an Annual Service Charge.” That charge is what everyone calls a PILOT: a payment the developer makes to the town instead of taxes. [1]

Nine years later, that “unbuildable” project is Woodcrest: 196 apartments, 29 of them affordable. In 2025 it took in $7,102,012 in rent and fees, according to its own audited PILOT report. The 2017 pitch told the public the finished building would collect $4,537,428 a year. The real number came in 56% higher. [3, 6]

So here is the question every taxpayer in town should be asking: if this building was such a dog that no developer would build it, how is it pulling in $7 million a year while paying less than $1 million a year in lieu of taxes, with $0 going to the schools?

We went through the town’s own slides, the signed agreement, the council minutes and the developer’s audited reports. Nothing here proves anyone broke the law. All of it suggests nobody at Town Hall has been checking, or, if they have, they are not sharing what they found. The “loss” the town showed the public was mostly the developer’s own profit allowance. The safeguard that was supposed to catch “excess profits” is set so high it may never go off. And the financial reports the developer promised, in writing, to file every year? They are nowhere in what the town handed over.

The 2017 numbers, in plain English

Here is what the town’s redevelopment lawyers’ slide deck, dated October 10, 2017 and presented on October 24, showed, line by line, with what each line actually means. [1, 2, 3]

• Rent the building would collect each year: $4,537,428. After assuming 5% of the apartments sit empty.
• Cost to run the building each year: $970,200. Operating expenses, including a $98,000 capital-improvement reserve.
• Money left before any taxes: $3,567,228. Rent minus running costs.
• Regular property taxes on the finished building: $977,735. What it would owe with no PILOT.
• Money left after regular taxes: $2,589,493. About $2.6 million a year, before the mortgage.
• What they said the building was “worth”: $45,442,395. Their formula: income divided by 7.85%.
• What they said it would cost to build: $50,449,804. Includes $3,519,754 that the fiscal plan labels “Developer’s Profit @ 7.50%.”
• “Gap (Loss)”: $5,007,409. Cost minus “worth.” This is the number that sold the PILOT.

Sources: presentation slides 10–13 and the fiscal plan attached to the signed agreement, pages 97–98. The $2,589,493 line is our subtraction of the printed figures. Everything in this table is a 2017 forecast, not a result. [1, 3]

Read that table again. 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.

The “loss” was a different animal. They said the finished building would be worth about $5 million less than it cost to build. Nobody builds a $50 million building that is worth $45 million, the argument went, so the town had to cut the taxes until the numbers closed.

How a money-maker became a “loss”

Look inside that $5 million. About $1.5 million is the real gap between what they said the building was worth and what they said it cost to build. The other $3.5 million, 70% of the whole “loss,” is the developer’s profit allowance, typed right into the cost column. [1, 3]

Put another way: “This project loses money, if you count my 7.5% profit as a cost.” The slide called that a loss. The council voted on it as a loss. Nothing in the minutes shows anyone on the dais asking whether the “loss” was really a profit allowance. The council voted 6–0.

“Wait. Who spends $47 million to build something worth $45 million?”

Nobody. That was the pitch. A developer builds when the finished building is worth more than it cost; the difference is the profit. The 2017 model said this building would cost $46.9 million and be worth $45.4 million. No profit, so no one would build. That is the whole argument in one sentence. [1, 3]

How can a building that costs $47 million be “worth” only $45 million? Because a rental building is worth what its income is worth, not what the bricks cost. The town’s formula valued it like a savings account: if investors want 5.7% a year, it takes about $62.6 million in the bank to earn the building’s $3.57 million. Then property taxes take another 2.15% of value every year, which knocks the number down to $45.4 million. Income drives the value. That is why today’s rent matters so much: run $7.1 million of rent through the same formula and the building is worth $65 to $78 million against the same $47 million cost. [1, 6]

The house analogy actually cuts the other way. A builder who puts up a $1 million house does not spend a fraction of that; land, materials and labor eat most of it, and the margin is thin. What makes a developer wealthy is doing it at scale, with borrowed money, and then owning the building for thirty years while the rents go up. The 2017 model built in a 7.5% developer’s profit, $3.5 million. By the town’s own math with today’s rents, the margin is somewhere between 38% and 66%. That is five to nine times the profit allowance the model used. [1, 3, 5, 6]

The formula had a thumb on the scale, too. The building’s “worth” was figured by dividing its income by 7.85%: a 5.70% investor return plus 2.15% for taxes. That is an appraiser’s shortcut, not a bank saying no. The public record contains no letter from any lender turning this project down. [1, 2]

The slide says the PILOT ends up “reducing” the developer’s return to 5.86%; its table prints 5.90%. The appraiser’s own worksheet shows the method: a line labeled “RE Taxes to Meet Gap (PILOT)” is the amount that makes the gap, profit allowance included, read zero. The tax break was sized around the developer’s profit allowance. So what happens when rents come in at nearly double the numbers used to size it? 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. [1, 3, 5]

Is 13% a lot? State law sets the floor at 10% of revenue. The developer’s 2016 proposal asked for 10%. The town’s own appraiser’s earlier worksheet put the charge that would close his version of the gap at 15.08%. The Council settled at 13%: above the floor, below the number in its own appraiser’s worksheet. It is also above the 10% or 11% used in the approval-stage models we found for four of the other five PILOTs in town. [2, 5, 10, 12, 18]

Town Hall had its own reason to like the deal. On a regular tax bill, the town keeps about 17.6 cents of every dollar; the rest goes to the schools and the county. On a PILOT, the town keeps 95 cents, the county gets a nickel, and the schools get no automatic share. The slide bragged that the town’s take would jump 225%. That is a real incentive, for the town’s budget, not for the taxpayers who fund the schools. [1]

The council voted 6–0 on October 24, 2017. According to the minutes, the town’s PILOT lawyer said its experts, appraiser Paul Beisser and planner Michael Mistretta, concluded the project “could not be constructed” without a PILOT. Their written opinions are not in anything the town has produced so far. The town did push the developer’s 10% request up to 13%, and did get fewer units, age restrictions, a nicer design and a traffic light at Snyder and Locust, subject to its traffic engineer and state approval. Fine. None of that answers whether the break had to be this big, or last 30 years. [2, 10]

Profit in the cost column

Here is how the “loss” was built, document by document. The fiscal plan attached to the signed agreement is honest about it, and the same profit line appears in the developer’s 2017 application. It lists Total Development Cost of $46,930,050, then a line reading “Developer’s Profit @ 7.50%: $3,519,754,” then a line labeled “Total Cost Plus Profit: $50,449,804.” The cost slide shown to the public prints that same $50,449,804 as “Total Development Cost,” with the profit folded into a line called “Soft Cost/Development/Finance.” The word “profit” does not appear anywhere on that slide. [1, 3, 4]

State law does let a developer count some overhead as a project cost, but it caps it at 5% of construction cost, about $2.1 million on this budget. The pitch used 7.5% of everything, land included: $3.5 million. Under that statutory limit, at least $1.4 million of the “loss” could not count as a project cost. [3, 4, 12]

The PILOT side of the plan was built the same way, backwards. The slide’s no-PILOT case valued the building at a 5.70% investor return. The PILOT case quietly uses 5.90%, and with the 13% charge plugged in, the printed “market value” comes out to $50,449,804, the cost plus profit to the dollar. The line underneath reads “Gap: 0.” That is not a test of whether the project works. It is a spreadsheet solved to make it work, and the slide then calls the 5.90% a “return on equity.” [1, 3]

Call it what you want. Residents were shown a red number labeled “Loss.” Seventy percent of it was the developer’s profit allowance. The documents that said so were the developer’s application and the fiscal plan, not the slide, and the minutes record no one on the dais mentioning it.

Two weeks, two votes, no hard questions

The timeline is short. The PILOT was in the picture a year earlier: a settlement the Township filed with the court in October 2016, in its affordable-housing case, carried the developer’s request for a 10% PILOT as an exhibit. On October 10, 2017, the ordinance approving the deal was introduced on first reading and passed 6–0. The minutes record no slide presentation that night. Councilman Faecher gave what he called a “high level” summary: a PILOT would spur redevelopment, keep density down, hold the project to high design standards and, as he put it, drop the county’s share of the money from roughly 25% to 5%. Six PILOT buildings later, with two more in the pipeline, does it feel like the Council did a good job of keeping density down? The “broader discussion with our professionals” was promised for the public hearing. [2, 16, 17]

That hearing was October 24, fourteen days later. The town’s PILOT lawyer walked through the slide deck, told the Council its experts had concluded the project could not be built without the PILOT, and the Council voted final approval 6–0 the same night. The agreement is dated November 27. From first public reading to final vote: two weeks. From the financial case being laid out in full to the vote: the same evening. [2, 3]

What did the Council ask? The minutes record questions about how the affordable units hurt the numbers, whether the developer could appeal its taxes (no), when the Township would start receiving its $560,000, how the money would affect the budget and the town’s debt, and whether this was a “back room deal” (no), plus a brief discussion of “the PILOT audit.” The Mayor asked the one question that matters most in hindsight: what happens in later years when the rents go up? The minutes record the answer in three words: “Mr. Jessup responded.” The minutes do not record anyone asking about the cost figures, the profit allowance, the valuation formula, whether any lender had turned the project down, whether a shorter or smaller break would do, or what the Township would do if the forecast turned out to be wrong. [2]

The minutes are a summary, not a transcript. But the record the Township kept shows a Council that asked what it would get, never what it was giving up, and approved a thirty-year deal two weeks after it first read the ordinance.

What actually happened

• 2017 plan: $4,537,428 in rent and fees. What the public was told to expect.
• 2022: $3,385,516. Partial year; the buildings opened in phases.
• 2023: $6,395,302. First full year.
• 2024: Not produced. The accountant’s letter says a 2024 audit was issued. The town has not produced it.
• 2025: $7,102,012. 56.5% above the plan.

Audited PILOT schedules, page 5 of each. These count rent when it comes due, not necessarily when it is collected. [6, 7]

Per apartment, 2025 works out to about $3,000 a month in rent across all 196 units, affordable ones included. The 2017 plan assumed about $1,930. The appraiser’s worksheet priced a two-bedroom at $2,100 to $2,620 a month; the signed fiscal plan used $2,200 and $2,600. This fall, Woodcrest’s own website listed two-bedrooms at $4,230 to $4,930. Those are asking prices, not every lease in the building, but they are roughly double the rents the 2017 models assumed. [3, 5, 6, 11]

And the PILOT? In 2025 the building paid $923,262 plus an $18,465 “administrative fee”: $941,727 total. That left $6,160,285 before running costs, the mortgage and the owners’ take. What are the running costs? We don’t know. Nobody has produced them. [6]

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

No. The $977,735 on the 2017 slide was the tax bill for a building collecting $4.5 million in rent and valued at $45.4 million. Property taxes follow value, and value follows rent. Run the town’s own formula with the real 2025 rent and the building is worth roughly $65 to $78 million, with a tax bill of roughly $1.4 to $1.7 million, depending on what it costs to run. The PILOT is still a 33-to-44% discount, about the discount the deal was built to give in 2017. At 2025 revenue, that is somewhere between $450,000 and $740,000 a year; the agreement’s minimum-payment floors narrow the gap only in the later stages of the term. [1, 3, 6]

And of what Woodcrest does pay, the schools get no automatic share. On a regular tax bill the town keeps about 17.6 cents of every dollar and the schools and county get the rest. On a PILOT the town keeps 95 cents and the county gets a nickel. The school budget does not shrink because one building is off the tax rolls; that building’s share is spread across everyone else’s bill. [1]

Run the town’s own math with the real rent

Here is the test that matters. Take the exact formula the town used in 2017. Keep its $970,200 expense budget, its 7.85% rate, its $50.4 million cost-plus-profit. Change one thing: plug in the real 2025 rent. [1, 3, 6]

• The building’s “worth” becomes ($7,102,012 − $970,200) ÷ 7.85% = about $78.1 million. Against $50.4 million of cost plus profit. The $5 million “loss” is now a $27.7 million surplus.
• Say running costs really doubled, to $2 million a year. The “worth” is about $65 million. Still $14.5 million over cost plus profit.
• Expenses would have to hit $3,141,702 a year, more than triple the 2017 budget, before the town’s formula showed any gap at all.
• The slide’s 5.9% “return” becomes about 10.3% using 2025 rent and the 2017 expense budget.

These are what-ifs, and we will say so plainly. Construction may have cost more than budgeted. Interest rates and investor return targets changed after 2017. Nobody could have known 2025 rents in 2017. But that is exactly the problem: the town locked in a 30-year break on one year’s guess, with no mechanism to shrink the break when the guess turned out wrong. Run the real numbers through the town’s own formula, and this project does not get a PILOT.

So when does “excess profit” kick in? Basically never.

Slide 5 promised that “any ‘excess profits’ are paid to the municipality.” Sounds like a safety net. Here is how it actually works under the signed agreement and state law. [1, 3, 12]

Step one: the developer is allowed a profit of 12% of the total project cost, every single year (more if its mortgage rate is high). On the $46.9 million pre-profit budget, that is about $5.6 million a year. On the full $50.4 million, about $6.1 million. [3, 12]

Step two: before anything counts as profit, the developer gets to subtract all of these: every running cost; the PILOT itself; every dollar of mortgage payments, principal included; and on top of that, another one-thirtieth of the entire project cost each year, roughly $1.6 to $1.7 million, as a paper write-off. Yes, the cost of the building gets counted against profit twice: once through the mortgage, once through the write-off. [3, 12]

Step three: whatever is left is “net profit.” Only if it tops the 12% ceiling does the excess go to the town, and the developer can first use it to fill a reserve capped at 10% of the prior year’s revenue. [3, 12]

Now run 2025. Rent and fees: $7,102,012. Subtract the PILOT: $6,160,285. Subtract the write-off, about $1.56 million: about $4.6 million. That is already under the $5.6 million ceiling, and we have not subtracted one dollar of running costs or mortgage payments yet. With zero expenses and zero mortgage, the building would need somewhere between $8.3 million and $8.9 million a year in rent before “excess profit” could even exist on paper. With real expenses and a real mortgage, the number is far higher.

Bottom line: the “excess profit” clause is not a trigger. It is a prop. On the 2017 forecast it could never have sent the town a dime, and anyone who ran the formula in 2017 could have seen that. Even at the rents the council was shown in 2017, the building was projected to keep about $3 million a year before its mortgage, and not one dollar of that was ever going to be called “excess” under this formula. So the real question was never “will they make excess profit.” It was “how much profit is enough?” And that question was answered by the 7.5% developer’s profit written into the cost column.

One more thing. The agreement requires the developer to calculate net profit every year, in a CPA-audited report delivered to the Mayor, the Council, the Tax Collector, the Clerk and the state. We have seen three audits. They cover rent and the PILOT math. Not one of them calculates net profit. [3, 6]

The paperwork that isn’t there

Article VII of the signed agreement says the developer must do three things: file a full financial report every year that calculates net profit; file an audit of actual construction costs, certified by its architect, within 90 days of substantial completion (that was January 2022); and file a list of its owners every year. None of these are in the records the town has produced so far, and our records request to the Township is still open. Either they were never filed, or they exist and nobody has put them on the table. When we asked the Clerk’s office about these reports, staff did not seem to know what they were. Residents deserve a straight answer: were these reports received, by whom, and when? [3, 19]

Then there are the town’s own ledgers. [6, 7, 8]

• On December 22, 2022, the town logged a $200,000 check from the developer, then reversed it the same day with the note “PAYMENT FOR PILOT.” The PILOT account shows nothing paid for 2022. The developer’s 2022 audit counted the $200,000 as paid; its 2023 audit quietly added it back, turning $34,980 owed into $234,980. The 2022 balance was finally paid on June 18, 2024, about 18 months after year-end, with no interest recorded. What happened to the original check?
• On November 7, 2024, the town posted a negative adjustment of $216,244.35 to the PILOT account, wiping out the fourth-quarter 2024 installment. No calculation, no authorization and no description appear in the records.
• The 2024 audit itself has not been produced. The accountant’s letter says it was issued.
• The audits say the developer’s LLC was formed on May 1, 2020. But the state approved the same LLC’s certificate of formation in April 2017, and the agreement it signed is dated November 27, 2017. Which is right, and why do the audits say otherwise?
• The accountant’s 2024 letter notes three apartments given to employees rent-free, and says the tenant security-deposit account was not being reconciled monthly.

Every one of these may have a boring explanation. If so, it has been easy to give for years. Nobody has.

Who, exactly, is watching?

The agreement is specific about who is supposed to be. Every year the developer’s Auditor’s Report goes to the Mayor, the Council, the Tax Collector, the Clerk and the state’s Division of Local Government Services. The Township can demand to see the developer’s books on five days’ notice. Somebody at Town Hall was supposed to open the envelope, read the Net Profit line and ask questions. [3]

We looked for any sign of that happening. The Council minutes we reviewed show it voting on PILOTs: approving Locust 6–0 in October 2017, and approving a transfer of ownership interests in the Clarus PILOT entity 5–0 in November 2025. The one time a council member pushed back was July 2018, when Councilwoman Poage questioned whether PILOT money was as certain as the town was assuming and cast the only vote against a $4 million borrowing. The 2017 hearing briefly discussed “the PILOT audit.” What the minutes we reviewed do not show is any council member, in the years since, asking to see an annual PILOT report, a Net Profit calculation or a cost audit. Nine years. Six deals. Not one recorded request that we could find. [2, 13, 14]

Berkeley Heights now has six of these agreements: Woodcrest, Clarus, Modera, Berkeley Terrace and the two Berkeley Crossing buildings. The town’s 2024 audit shows more than $2 million a year in PILOT money coming through Town Hall, and the Township’s own debt presentation counts all six as paying full PILOT revenue. Every one of those six deals carries the same reporting rules and the same “excess profit” promise as Locust. If nobody is reading the Locust reports, who is reading the other five? [15]

Is anyone surprised that none of this has come up at a Council meeting? It is not a campaign issue for a single incumbent running this year. And the next ones are already in the pipeline: the Terrace II redevelopment agreement the Council authorized on June 30 contemplates another tax-exemption financial agreement, and the Township’s own project page for the Bell Labs campus discusses a possible PILOT. [16]

Before the Council votes on another thirty-year deal, it owes the public an answer about the six it already has: who reads the reports? We could not find anyone. If the Council can, now would be the time to say so.

What should have happened

Everything in this section is hindsight, and we will say so plainly: nobody in 2017 knew what 2025 rents would be. But a thirty-year deal is supposed to be built for what you do not know. This one was built for one year’s guess. Here is what a deal written for the public would have looked like, using the town’s own numbers.

• Size the help to the need, not to the rent. The 2017 model said the project was short about $388,000 a year: $977,735 in taxes versus $589,866 in PILOT. A break worth that much, indexed for inflation, would have closed the gap the experts described. Instead the break was written as a percentage of revenue with no ceiling, so it grew with every rent increase. [1, 3]
• Share the upside. Keep the 13% up to the forecast rent, and take 25% of everything above it. On that formula Woodcrest would have paid about $1.23 million for 2025 instead of $923,262, roughly $308,000 more, and still far less than full taxes. For 2023 and 2025 together the difference is about $530,000. [3, 6]
• Put the “excess profit” test where residents can see it. The statutory test cannot trigger. A plain one could: when revenue runs more than 25% above the forecast for two years running, the charge steps up toward full taxes.
• Give the schools a seat. Once the PILOT passed half of what full taxes would have been, a fixed share should have gone to the district. The slide said the deal did not preclude sharing PILOT money with the school district. The records we reviewed show the Township never has. [1, 15]
• Fifteen years, not thirty, with a look-back at year five and year ten using the audited numbers the agreement already requires.
• Read the reports in public. The annual Net Profit report should be presented at a Council meeting every year, not mailed to four officials and filed.

None of that required a crystal ball. It required someone on the public’s side of the table asking what happens if the developer’s numbers are wrong in the developer’s favor. The Mayor asked a version of that question on October 24, 2017. The Council approved the deal that night anyway. [2]

Five more questions, in hindsight

These are not among the fifty. They are the ones that come after you have read the fifty.

• How could the Township’s planner, its appraiser and the developer’s own numbers all land at roughly half of today’s rents, on a project the developer was staking $47 million on?
• Why did a thirty-year agreement contain no scenario in which the forecast was wrong on the upside: no rent growth, no sensitivity, no reopener, when the Mayor himself asked what happens when rents rise?
• Why was the developer’s take not capped harder once the project outran the forecast, when the Council was told the law would catch “excess profits”?
• Why has not one dollar been directed to the schools, when the Township’s own slide said the deal allowed it?
• The experts wrote it, the lawyers presented it and the Council voted for it. Who, if anyone, answers for how far off it was?

Looking back at the sales presentation with the signed exhibit beside it, it is hard to see it as anything other than misleading: a “loss” that was mostly profit, a formula solved to zero, a safeguard that cannot fire, and a county share presented as the main thing residents needed to know. The people who built it were paid to know better than the people who voted on it. So far, nobody has answered for it.

Answer these first

All 50 questions below deserve answers. These eight cannot wait, because the signed agreement already requires the records. The town either has them, or has to admit it never got them.

• Question 21: What did it actually cost to run the building each year? Without expenses, nobody can compute a profit, and the whole debate stays in the dark.
• Question 44: Where is the net-profit calculation the agreement requires every year, and has a dollar of “excess” ever been paid?
• Question 42: Where is the audit of actual construction costs, certified by the architect, that was due within 90 days of January 2022?
• Question 41: On what dates did the Mayor, Council, Tax Collector, Clerk and the state receive each required report, and which were never filed?
• Question 22: Where is the 2024 audit the accountant says exists?
• Question 33: What happened to the $200,000 check the town logged as “PAYMENT FOR PILOT” and reversed on December 22, 2022, and why was no 2022 PILOT payment recorded until June 2024?
• Question 34: Who authorized the $216,244.35 negative adjustment on November 7, 2024, which wiped out the fourth-quarter 2024 bill, and why?
• Question 2: Did any lender ever actually turn this project down under regular taxes? If “no developer would build” had evidence behind it, produce it.

The 50 questions

These are not 50 accusations. They are 50 things the records reviewed do not answer. Some answers may make the town look fine. Others may show a smaller or shorter break would have done the job. Either way, residents paid for this deal, and they are owed the answers.

The evidence behind the original decision

We have the analyses. What we don’t have is the evidence behind them, or any sign that anyone looked at a cheaper option. [1, 2, 3, 4, 5]

• 1. What real-world evidence, not just opinions, backed the claim that no developer would build this project without a PILOT? [1, 2]
• 2. Did any bank actually turn this project down, or set loan terms it could not meet, under regular taxes? Show the letters. [1, 2, 3]
• 3. Which numbers in the pitch came from the developer and its architect, and which ones did the town check on its own? [2, 3, 4]
• 4. Where is appraiser Paul Beisser’s written opinion? A spreadsheet is not an opinion. [2, 5]
• 5. Where is planner Michael Mistretta’s written analysis? The minutes say he concluded the project could not be built without a PILOT. Based on what? [2]
• 6. Did anyone ask whether a different developer would build the same project with a smaller break, or none at all? [1, 2]
• 7. What is the smallest tax break that would have made the numbers work, and did anyone bother to calculate it? [1, 3, 5]
• 8. Did anyone test a shorter deal, say 10 or 15 years, instead of 30? [1, 3]
• 9. How much did the town’s demands (fewer units, age limits, nicer design, the traffic light) actually change the cost and the rent? Show the before-and-after. [2, 3]
• 10. The 29 affordable units were blamed for hurting the numbers. By how much, exactly, and how much of the break did that justify? [2, 3, 10]

The assumptions that made the model work

A spreadsheet can spit out a precise answer from a shaky guess. These questions are about the guesses. [1, 3, 5]

• 11. When was the undated Beisser worksheet made, how many versions were there, and why do its numbers differ from the signed plan? [3, 5]
• 12. The $4.5 million rent forecast: which year was it supposed to be, and what did the model predict for 2025? [1, 3]
• 13. Which real apartment buildings were used to justify rent assumptions that turned out to be about half of today’s asking prices? [3, 4, 5]
• 14. Where did the $970,200 expense budget come from, and which comparable buildings supported it? [3]
• 15. Why 5.70% for the investor return? Who picked it, and based on what? [1]
• 16. Why was the developer’s 7.5% profit put in the cost column and then described to the public as a “loss”? [1, 3]
• 17. The slide called the 5.9% number a “return on equity.” Equity means the developer’s own cash. How much cash was the developer actually putting in? [1, 3]
• 18. Did the valuation account for the PILOT ending someday, the later tax floors, or the admin fee? [1, 3]
• 19. The slide’s cost components add up to $300,000 more than its printed total. Why, and was the council ever told? [1, 3]
• 20. Why does the Beisser worksheet raise repairs from $196,000 to $245,000 in the PILOT version, a change that makes the project look needier? [5]

What the property actually earns

We know the rent. We do not know the costs, the mortgage or what the owners have taken out. Those come from the developer’s books, not from asking rents. [3, 6, 7]

• 21. What did it actually cost to run the building each year? Without that, nobody can calculate the profit. [3, 6]
• 22. Where is the 2024 audit? The accountant’s letter says it exists. [7]
• 23. What did the project really cost to build, and how does that compare to the $46.9 million budget, not counting the profit allowance? [3, 4]
• 24. What capital repairs and reserve deposits have actually been made since the building opened? [3, 6]
• 25. What are the real loan terms: the amount, the interest rate, and the yearly payments? [3, 4, 6]
• 26. How much cash did the owners put in, how much have they taken out, and when? [3, 6]
• 27. How much has been paid to the developer, the management company and any related businesses, and for what? [3, 6]
• 28. How much of the reported rent was actually collected, after concessions, vacancies and unpaid rent? [6]
• 29. How much of the 56% revenue jump is rent increases, versus inflation, occupancy, concessions, unit mix or accounting differences? [3, 6]
• 30. Using real costs, expenses, debt and cash flow, what return are the owners actually earning, with the PILOT and without it? [3, 6]

The tax benefit and the town’s own accounts

The ledgers add up. Several entries in them still have no paperwork behind them. [6, 8]

• 31. What would the finished building owe in regular taxes each year, using a real assessment? [1, 3]
• 32. What is the developer’s total tax saving so far, counting everything: the PILOT, the fee, land taxes, credits, minimums and the later floors? [3, 6, 8]
• 33. The town logged a $200,000 check as “PAYMENT FOR PILOT” on December 22, 2022, reversed it the same day, and never credited it to the PILOT account. The developer’s 2023 audit added the $200,000 back to what it owed. What happened to that check, and why does no 2022 PILOT payment appear until June 2024? [6, 8]
• 34. Who authorized the negative $216,244.35 adjustment on November 7, 2024, which wiped out the fourth-quarter 2024 installment, and what was it for? [8]
• 35. The town’s ledger labels a $17,828.62 August 2024 entry “2022 PILOT ANNUAL FEE,” while the 2025 audit treats $17,828 as a 2024 amount, and the same figure appears again inside the May 2025 $34,391.39. Which year is right, and was it paid twice? [6, 8]
• 36. The $34,391.39 posted May 12, 2025 for 2024 matches the 2025 audit’s $16,563 carried balance plus $17,828. What final 2024 charge does that imply, and where is the calculation? [6, 8]
• 37. The 2026 bill assumes $7,056,585.83 in revenue. Where did that number come from? [9]
• 38. What legal basis supports the $213,939 land-tax credit the developer took in 2022? [3, 6, 8]
• 39. When exactly did the PILOT clock start? The audit notes give conflicting dates, and the start date controls when the deal ends and when the tax floors kick in. [3, 6]
• 40. Show the checks: did the county get its required 5% share, and does the total collected match what the town kept? [3, 8]

The reports and public benefits the agreement promised

The agreement names the Mayor, Council, Tax Collector and Clerk as the people who get the annual reports and the cost audit. Somebody at Town Hall was supposed to be reading them. [3, 10]

• 41. On what dates did the Mayor, Council, Tax Collector, Clerk and the state receive each required annual financial report, and which ones were never filed? [3, 6]
• 42. Where is the audit of actual construction costs, certified by the architect, that was due within 90 days of substantial completion in January 2022? [3, 4]
• 43. Who at Town Hall reviewed the developer’s filings, what problems did they find, and did anyone ever open the books? [3]
• 44. What does the required net-profit calculation show for each year, and has a penny of “excess” ever been paid? [3, 6]
• 45. Where are the yearly ownership disclosures, and why do the audits say the LLC was formed in 2020 when the state approved its formation in April 2017? [3, 6]
• 46. The accountant said the security-deposit account was not being reconciled monthly. Was that ever fixed? [7]
• 47. Three apartments were given to employees rent-free. Was that handled the way the agreement requires, and were the other fees counted correctly? [3, 6, 7]
• 48. Where are the recorded deed restrictions on the 29 affordable units, with the dates their control periods started? [10]
• 49. Are all 29 affordable units actually rented to income-qualified households, at the right income levels, today? [10]
• 50. Which promised public improvements, the traffic light and the rest, were actually finished, paid for and accepted, and what did they cost? [2, 10]

Fifty questions. The town has had the records since 2017.

Maybe every one of these has an innocent answer. Maybe construction came in way over budget, the mortgage is brutal and the owners are earning a modest return. If so, the records will show it, and they are records the developer already promised, in writing, to file every year.

But here is what the public record shows right now. Residents were sold a “loss” that was mostly a profit target. They were promised an “excess profit” safeguard that cannot trigger. They were given a 30-year deal built on rents that turned out to be about half of today’s. And run through the town’s own formula, today’s rent says the building would have penciled out with no tax break at all, unless its running costs tripled.

The Township Administrator should pull together a written response from Finance, the Tax Collector, the Clerk, the town’s counsel and the original advisers. Beisser and Mistretta can explain the opinions the minutes attribute to them. The developer and its accountant can supply the numbers behind the real performance. And the Mayor and Council, past and present, should explain what they relied on, what they checked, and what they have done with the paperwork since.

Was the PILOT justified? The records do not say yes, and they do not yet say no. What they say is that nobody has shown the work, and that the people who were supposed to collect it may not know it exists. Fifty questions. Let’s see the paper.

Sources and calculation notes

Every document marked “posted” is a copy obtained under the Open Public Records Act and published on the campaign’s Research page. The posted 2023 bill redacts one handwritten personal email address; every other posted file is unaltered.

• 1. Overview of Annual Service Charges (or PILOTs) for the 100 Locust Avenue Redevelopment Project, McManimon, Scotland & Baumann, dated October 10, 2017 and presented at the October 24, 2017 hearing. Slides 5, 9, 10–14 and 16: the “no developer” claim, the forecast, the cost/value gap, the 13% calculation (slide 12 reads “reducing their return on equity to $2,977,362 or 5.86%” and its table prints 5.90%), the township-share comparison and the stated profit safeguard. The slide’s three listed cost components match the architect’s August 24, 2017 estimate and sum to $50,749,804, $300,000 more than its printed total; the printed total matches the signed fiscal plan. Township copy · posted OPRA copy
• 2. Township Council minutes, October 24, 2017, PDF pages 3–6. PILOT counsel Matthew Jessup’s presentation; the “but for” necessity conclusion attributed to Beisser and Mistretta; the developer’s original 300-plus-unit request; the traffic light; the brief discussion of “the PILOT audit”; Township Attorney Joseph Sordillo’s statement that the 2016 settlement exhibit carried a 10% request and the final rate was 13%; and the 6–0 vote. Minutes summarize the hearing; they are not the experts’ written opinions.
• 3. Financial Agreement between the Township and Locust Berkeley Developers Urban Renewal, LLC, dated as of November 27, 2017; signature acknowledgements notarized November 28 and December 4, 2017. PDF pages 5–8 for the Allowable Net Profit, Allowable Profit Rate, Net Profit and Total Project Cost definitions; 12–16 for term, the 13% charge, minimum-payment floors and the 2% fee; 19–20 for Article VII reporting (including delivery to the state Division of Local Government Services), the actual-cost audit, inspection rights, the 10% reserve and the excess-profit charge; 88 for the April 2017 certificate of formation; 97–98 for the fiscal plan. Posted signed copy · posted unsigned execution version
• 4. Locust PILOT application, PDF pages 2–3, 8–9 and 12–13: 196 age-restricted units including 29 affordable; the August 24, 2017 architect’s estimate of anticipated costs, prepared from developer-provided figures and including $3,919,754 of “Developers Overhead and Profit”; and the application fiscal plan. It is not the later actual-cost audit.
• 5. 100 Locust PILOT Analysis from Paul Beisser, PDF pages 1–3. Undated worksheet with per-unit rents ($830 affordable; $1,870 to $2,620 market), $842,800 or $891,800 expenses, a 15.08% calculated PILOT and a 10.55% developer ask. Its rents, unit mix and costs differ from the signed plan. The two supplied copies are identical.
• 6. Locust Berkeley Developers Urban Renewal LLC audited Schedules of Payment in Lieu of Real Estate Taxes, Wilkin & Guttenplan: 2022 (report dated April 6, 2023), 2023 (April 19, 2024) and 2025 (March 24, 2026). PDF page 5 of each for revenue, charge, fee, payments and payable; pages 6–8 for the basis of accounting, the May 1, 2020 formation note, the conflicting January 10 and February 10, 2022 dates and the charge schedule. The auditors’ opinion covers the PILOT calculation only, on a basis other than GAAP; these are not full financial statements.
• 7. Accountant’s communication letter for 2024, dated March 23, 2025, PDF pages 1–2. States that the firm issued its report on the 2024 schedule; notes three employees provided apartments at no charge; and says the tenant security-deposit cash account was not reconciled monthly.
• 8. Township records for 100–200 Locust Avenue: PILOT account history (printed October 7, 2026, PDF pages 1–3), Detailed PILOT Account Status Report (printed October 5, 2026, pages 1–4) and land-tax ledger (printed June 25, 2024, pages 1–3). The December 22, 2022 $200,000 postings and same-day reversals annotated “PAYMENT FOR PILOT”; tax-year 2022 PILOT payments of $0.00; the June 18, 2024 payments labeled “2022 PILOT BILLING” ($234,980) and “2023 PILOT BILLING” ($246,354) with no interest; the November 7, 2024 adjustment of $216,244.35; and the August 2024 and May 2025 entries.
• 9. Township PILOT bills for 100–200 Locust Avenue: 2023 (billed on the 2017 forecast, $4,537,428 at 13%), 2024, 2025 and 2026. The 2026 bill’s $7,056,585.83 revenue is a billing input, not 2026 performance.
• 10. Signed Redevelopment Agreement, dated as of November 27, 2017. PDF pages 15–17 for public improvements (the Snyder and Locust traffic signal if the Township traffic engineer finds it necessary, subject to state approval); 20–23 for the 29 affordable units; 68–80 and 112 for the October 13, 2016 court settlement and the developer’s proposed 10% PILOT terms. Pages 113–116 contain an unsigned restriction prototype, not a recorded deed restriction. Large scanned file (18 MB).
• 11. Woodcrest at Berkeley Heights owner leasing page, Garden Communities, captured September 26, 2026 and rechecked October 16, 2026. Floor-plan asking rents: 1A $3,830; 1D $4,080; 1D.2 $4,280; 2A $4,230; 2C $4,830; 2B $4,930, with a one-free-month offer on select units. Asking rents are offers, not leases, affordable rents, occupancy or collections.
• 12. New Jersey Long Term Tax Exemption Law, DCA compilation. N.J.S.A. 40A:20-3(b) and (c) (allowable profit rate; net profit, including deduction of all debt service and an annual amount to amortize total project cost), 40A:20-3(h)(9) (developer overhead cap), 40A:20-12 (charge of at least 10% of annual gross revenue; 5% remitted to the county) and 40A:20-15 (excess profits, 10% reserve). The chapter gives school districts no share.
• 13. Township Council minutes, July 10, 2018, PDF pages 10 and 14–15. A $4 million supplemental borrowing for the municipal complex passed 5–1; Councilwoman Susan Poage cast the only no vote, saying that “promising the tax payer a $3 increase based on PILOT projects has uncertainties.”
• 14. Township Council packet, November 5, 2025, PDF pages 15–17 (Resolution 2025-331 consenting to a transfer of membership interests in Berkeley Heights Developers Urban Renewal, LLC, the Clarus/Kings entity) and approved minutes, pages 3–5 (adopted 5–0 on the consent agenda; Councilwoman Poage and the Mayor absent). Execution, closing and consideration are not established by these records.
• 15. Township of Berkeley Heights 2024 municipal audit (regulatory basis), PDF page 19, Sheet A-2: $2,196,237.12 realized as Payment in Lieu of Taxes (a separate $348,870 “Berkeley Heights Developers Urban Renewal” row is a special item, not PILOT revenue); page 92, A-21, local school district taxes; page 99, A-31, PILOT payments due the County. And the Township’s April 7, 2026 debt presentation, slide 7, listing six PILOT projects receiving full PILOT revenue. These are municipal accounting categories, not a reconciled per-project total.
• 16. Terrace II redevelopment agreement, June 30, 2026 Council packet, section 10.3, which contemplates a later tax-exemption application and financial agreement; and the Township’s Nokia/Bell Labs project page, which discusses a possible PILOT. Both prospective: no executed financial agreement for either has been verified.
• 17. Township Council minutes, October 10, 2017, PDF pages 11–13. Ordinance approving the Locust long term tax exemption and financial agreement introduced on first reading (Faecher motion, Kingsley second, 6–0), public hearing set for October 24; Faecher’s summary of PILOT benefits including the county share; a resident’s request that the Locust PILOT get the same presentation as Kings. No slide presentation is recorded that night.
• 18. Berkeley Heights approval records for the other PILOTs: Kings/Clarus 2017 presentation (10%), Modera 2018 draft agreement (10% of covered revenue), Berkeley Crossing/Florist 2020 fiscal plan (11% model charge) and Berkeley Crossing II/Mondelli 2020 approval (11% model charge). Berkeley Terrace’s rate is not established in the reviewed records. These are approval-stage models; not every executed rate has been verified against a signed agreement.
• 19. Certificates of occupancy and temporary certificates for 100–200 Locust Avenue, Berkeley Heights Construction Code Division: first temporary certificate January 10, 2022; final certificates January 21, 2025.

All amounts are US dollars. 2017 money left after regular taxes: $4,537,428 − $970,200 − $977,735 = $2,589,493, before debt service. Real gap before the profit allowance: $46,930,050 − $45,442,395 = $1,487,655. Printed gap: $50,449,804 − $45,442,395 = $5,007,409. Profit-allowance share of the printed gap: $3,519,754 ÷ $5,007,409 = 70.3%. Township shares from slide 13: $977,735 × 17.61% = $172,179; $589,866 × 95% = $560,373; $560,373 ÷ $172,179 − 1 = 225%. Revenue change: $7,102,012 ÷ $4,537,428 − 1 = 56.52%. Per-apartment monthly rent: $4,537,428 ÷ 196 ÷ 12 = $1,929 (2017 plan, collected basis); $7,053,305 ÷ 196 ÷ 12 = $2,999 (2025 audited rent net of concessions, all 196 units including affordable). 2025 after PILOT and fee: $7,102,012 − $923,262 − $18,465 = $6,160,285.

Town’s 2017 formula with 2025 revenue: ($7,102,012 − $970,200) ÷ (5.70% + 2.15%) = $78,112,255; minus $50,449,804 = $27,662,451. With $2,000,000 of expenses: $64,993,783; minus $50,449,804 = $14,543,979. Expense level at which the formula shows no gap: $7,102,012 − $50,449,804 × 7.85% = $3,141,702. Slide-12-style return: ($7,102,012 − $970,200 − $941,727) ÷ $50,449,804 = 10.29%. These combine 2025 contractual revenue with 2017 cost, expense and rate assumptions. They are not an appraisal, a current tax estimate, or a finding of actual profit.

Statutory profit illustration under N.J.S.A. 40A:20-3 and 40A:20-15 as incorporated in agreement Article VII: allowable net profit at 12% = $5,631,606 on $46,930,050 or $6,053,976 on $50,449,804; straight-line amortization over an assumed 30-year term = $1,564,335 or $1,681,660 a year. 2025 test on the $46,930,050 basis with zero operating expenses and zero debt service: $6,160,285 − $1,564,335 = $4,595,950, below $5,631,606. Revenue at which excess could first exist with zero expenses and zero debt, with the charge at 13% plus a 2% fee on the charge (13.26% of revenue): ($5,631,606 + $1,564,335) ÷ (1 − 0.1326) = $8,295,989; on the $50,449,804 basis, $8,918,188. 2017 forecast case before debt service: $4,537,428 − $970,200 − $589,866 − $1,681,660 = $1,295,702. The actual certified Total Project Cost, mortgage rate, exemption term and reserve elections are unknown; the allowable rate rises above 12% if the mortgage rate plus 1.25% exceeds 12%.

Conditional current-tax comparison: value at the 2017 expense budget $78,112,255 × 2.15% = $1,679,413; value at $2,000,000 expenses $64,993,783 × 2.15% = $1,397,366. PILOT plus fee $941,727 is 56.1% and 67.4% of those amounts, a 44% to 33% discount; the 2017 design ratio was $589,866 ÷ $977,735 = 60.3%. Savings range: $1,397,366 − $941,727 = $455,639 to $1,679,413 − $941,727 = $737,686. The agreement’s staged minimum payments (a rising percentage of full taxes in later stages) would narrow the discount late in the term. No current assessment or current tax rate is in the reviewed records; these apply the 2017 rate and formula to 2025 revenue and are not a tax estimate.

School share: N.J.S.A. 40A:20-12 requires the municipality to remit 5% of each Annual Service Charge to the county, leaving 95% with the municipality; the school district receives no statutory share. The 2017 presentation (slide 16) says the arrangement does not preclude allocating a portion to the school district to cover increased costs attributable to the project. The Township’s 2024 municipal audit shows the full local school levy paid from the tax levy and records no PILOT-funded transfer to the school district.

Cost-versus-value box: $3,567,228 ÷ 5.70% = $62,582,947 (unloaded); $3,567,228 ÷ 7.85% = $45,442,395 (town’s loaded formula). Margin over the $46,930,050 pre-profit cost at 2025 revenue: $64,993,783 ÷ $46,930,050 − 1 = 38.5% ($2,000,000 expenses) and $78,112,255 ÷ $46,930,050 − 1 = 66.4% (2017 expense budget); divided by the 7.5% profit allowance, 5.1 to 8.9 times. The 2017 pitch valued the building at 10.0 times gross revenue; the same formula at 2025 revenue gives 11.0 times. Conditional on 2017 costs, expenses and rates.

Profit-in-cost notes: the signed fiscal plan (Financial Agreement PDF p. 98) prints Total Development Cost $46,930,050, Developer’s Profit @ 7.50% $3,519,754 and Total Cost Plus Profit $50,449,804; presentation slide 10 prints $50,449,804 as “Total Development Cost” with no profit line. Its three listed components sum to $50,749,804 and match the architect’s estimate (application p. 9), whose soft-cost items include $3,919,754 of “Developers Overhead and Profit.” Statutory overhead cap, N.J.S.A. 40A:20-3(h)(9), construction cost over $10,000,000: 5% × $42,730,050 fiscal-plan construction cost = $2,136,503; $3,519,754 − $2,136,503 = $1,383,251. On the architect’s $33,152,625 construction cost, the cap is $1,657,631 and the excess $1,862,123. PILOT-case value (p. 97): $2,977,362 ÷ 5.90% = $50,463,763 versus the printed $50,449,804, implying an unrounded rate of 5.9016%; the printed gap is 0. Timeline: ordinance introduced October 10, 2017; public hearing and final adoption October 24, 2017 (14 days); Financial Agreement dated as of November 27, 2017; the 2016 settlement exhibit is described at October 24 minutes p. 5 and appears in the Redevelopment Agreement at p. 112.

$200,000 notes: the 2022 audit (p. 5) deducts “Payments made in 2022 (200,000)” and shows $34,980 payable; the land-tax ledger (p. 1) shows December 22, 2022 postings of one check totaling $200,000, each reversed the same day and annotated “PAYMENT FOR PILOT”; the PILOT account history (p. 1) shows tax-year 2022 PILOT payments of $0.00; the 2023 audit (p. 5) opens with $234,980 payable; on June 18, 2024 the ledger records $234,980 for “2022 PILOT BILLING” and $246,354 for “2023 PILOT BILLING,” together the 2023 audit’s $481,334 year-end payable, with $0.00 interest. The records reviewed do not show whether the December 2022 check was returned, refunded or applied elsewhere.

Hindsight illustrations: gap-closing help in the 2017 model = $977,735 − $589,866 = $387,869 a year. Shared-upside formula: 13% × $4,537,428 forecast + 25% × (actual revenue − $4,537,428). 2025: $589,866 + 25% × $2,564,584 = $1,231,012 versus actual 13% charge $923,262, difference $307,750. 2023: $589,866 + 25% × $1,857,874 = $1,054,335 versus $831,389, difference $222,946. Two-year difference $530,696. These are illustrative alternative terms applied to audited revenue; they are not proposals the Township considered and do not account for any amendment, minimum or floor in the signed agreement.

Charge-rate comparison: statutory first-stage floor 10% of annual gross revenue (N.J.S.A. 40A:20-12; presentation slide 9); developer’s 2016 proposal 10% of $4,704,000 = $470,400 (Redevelopment Agreement p. 112; October 24, 2017 minutes p. 5); Beisser worksheet p. 3, “BH Calculated” $672,580 = 15.08% of $4,460,250 EGI versus “GH Ask” $470,400 = 10.55%; the 2017 application already proposed 13%; signed rate 13%. Other local rates from approval-stage models, see source 18.

This article concerns Locust Berkeley Developers Urban Renewal LLC, Woodcrest at 100–200 Locust Avenue, Berkeley Heights. Records reviewed through October 16, 2026: 20 supplied OPRA files containing 18 unique documents, the 2017 approval records, the owner’s rent listing and the current Long Term Tax Exemption Law. “Not produced” and “not in the records” mean absent from the material reviewed; they do not establish that a record was never filed or is being withheld. Nothing here is a CPA opinion, a legal finding, or a determination of dishonesty, actual profit or recoverable excess. Asking rents are offers, not leases or collections. The 50 questions are an editorial list of what the records do not answer; they are not 50 violations and not a claim that each was previously asked and refused.