Vernon residents seek referendum on Omega Drive PILOT agreement

On the heels of Vernon Township Council’s passage last month of a payment in lieu of taxes (PILOT) agreement with the developer of a 27-unit four-story residential building on Omega Drive, a group of residents plans to submit a petition that calls for the matter to be put to referendum.

A PILOT agreement is a government-granted financial incentive that allows a property owner or developer to make a negotiated annual payment to a municipality instead of paying conventional property taxes. These programs are used to encourage development and revitalization in specific areas that might otherwise remain vacant or underutilized.

In New Jersey, such an agreement has to be approved by the Department of Community Affairs. Upon receiving approval from that department, the Vernon council voted 3-1 Dec. 29 to approve a 30-year PILOT with a subsidiary of The O’Neill Group, a real estate development company headquartered in Hackensack.

“The petition calls for the PILOT to be repealed and the public to have a vote on the matter,” said Peg Distasi, a former councilwoman. “Tax incentives for a builder that has multiple projects in the town is not prudent financial management and many are concerned about the effect on the school district.”

At the Dec. 29 council meeting, Matthew Jessup, an attorney for The O’Neill Group, told the council the project would not be economically viable without the PILOT agreement and Council President Patrick Rizzuto added that Newton Township has 13 PILOT agreements in place, which have been strong revenue producers there.

The PILOT does not provide money for the school district, which, according to estimates, could take on an additional eight students generated from the residential development. Per the PILOT agreement, about $3.7 million will flow into town coffers over 30 years versus what would have been $1.3 million from traditional property taxes, according to Vernon Mayor Anthony Rossi. The school district will receive no money from the PILOT, compared to approximately $3.2 million it would have received via traditional property taxes.

The matter was discussed at the Jan. 5 Vernon Township School Board meeting. Some estimated a per student cost of $13,000 while others suggested a number closer to $20,000. According to state data for the 2023-24 school year that factored in salaries, facilities maintenance, supplies, extracurriculars and other basic costs divided by the number of students in the district, the average per student cost in Vernon was $18,561.

Petition timeline

Distasi said the deadline to submit the petition to the town clerk is Friday, Jan. 16, and must contain a number of signatures amounting to no less than 15 percent of the 9,642 ballots cast in the Nov. 4, 2025, election. It is unclear what the timeline will be once the petition is submitted and if township attorneys will recognize the petition. Rossi said the developer is aiming to break ground in the spring.

The O’Neill Group

In addition to the Omega Drive project, Vernon entered into a PILOT agreement with The O’Neill Group in 2024 for the three-story housing development containing 55 one-bedroom units with parking for those ages 55 and older on Theta Drive.

The group also has an application before the Land Use Board for three four-story multi-family residential buildings consisting of 33 units each on Route 515.