Elizabeth gave an $82M FreezPak warehouse a 30-year tax break. The school district gets no set share of the payments

Elizabeth approved a 30-year tax exemption in July for an $82 million cold-storage warehouse being built for FreezPak Logistics on the former Phelps Dodge site. City Ordinance 6311 says the developer will pay about $705,985 a year instead of regular taxes on the building. Under state law, the city keeps that payment except for a 5% share it must send to Union County. The Elizabeth school district gets no set share. A Senate bill that would change that has not moved since February.

The deal

Ordinance 6311 approves a long-term tax exemption and financial agreement with SDE Bayway Urban Renewal LLC for 701-733 South Front Street (Block 761, Lot 4) and 713-743 Amboy Avenue (Block 752, Lot 1), which the ordinance calls “the home of the old Phelps Dodge.” The project is a new cold-storage and distribution building of about 146,068 square feet. The ordinance names FreezPak Logistics as the future tenant.

According to the ordinance, total project costs are expected to be about $82 million, and the project would pay the city an annual service charge of about $705,985 “with incremental increases and the possibility of future tax assessment of the project being memorialized in the financial agreement.” It estimates 175 to 225 construction jobs and 50 to 75 permanent jobs.

The council found that “without the incentive of the tax exemptions, it is unlikely that the Project will be undertaken,” and that the benefits “would substantially outweigh the costs, if any.” The ordinance lists the urban renewal entity’s statutory agent at 2 Paddock Street in Avenel, the Woodbridge address FreezPak lists as its corporate address. The council adopted the redevelopment plan for the site, Ordinance 6246, on Feb. 11, and the Planning Board approved the site plan May 7.

NJBIZ first reported the groundbreaking on Oct. 19. Developers Elberon Development Group and Saoud Development, FreezPak’s real estate arm, expect to deliver the building in the fourth quarter of 2027, according to that report.

Where the money goes

Under New Jersey’s Long Term Tax Exemption Law, the building is exempt from property taxes for the term of the agreement, and the developer pays the annual service charge to the city instead. The law requires the city to send 5% of the charge to the county (N.J.S.A. 40A:20-12). At about $705,985, that works out to roughly $35,300 a year for Union County and about $670,700 for the city.

The law gives the school district no automatic share of the charge. A district receives PILOT money only if it signs a separate contract with the city under a 2023 law tied to school construction bonds. The land under the building stays on the tax rolls, and the developer gets credit against the annual charge for the land taxes it pays.

For a sense of scale, Elizabeth’s 2025 general tax rate was $2.017 per $100 of assessed value, according to the state’s 2025 Abstract of Ratables for Union County. Of that, $1.300 was for municipal purposes, $0.375 for the school district and $0.342 for the county. As a rough yardstick only: if the finished project were assessed at its $82 million estimated cost, a conventional tax bill would be about $1.65 million a year, including about $307,500 toward the school levy and about $280,400 toward the county. The actual assessment could be higher or lower than the project cost.

How was the charge set?

State law gives two ways to set the annual service charge on a project like this: at least 10% of the project’s annual gross revenue, or, if the city chooses or revenue can’t be reasonably determined, at least 2% of total project cost. Two percent of $82 million would be $1.64 million a year. The $705,985 figure equals about 0.86% of the $82 million estimate.

The ordinance doesn’t say which method the agreement uses. If it’s based on revenue at the 10% minimum, the charge would correspond to about $7.1 million in yearly gross revenue. The financial agreement itself is “on file with the City Clerk,” according to the ordinance, and isn’t posted with the ordinance on the city’s website. Jersey Intel is asking the city for a copy and for how the charge was calculated.

A bill to give schools a share

Senate Bill S1807, sponsored by Sens. Troy Singleton and Benjie Wimberly, would require towns to send school districts 5% of PILOT payments on nonresidential and mixed-use projects, or an in-kind contribution of equal value, unless the town, developer and district agree on special school projects instead. For a payment the size of this one, 5% would be about $35,300 a year. The bill would also require PILOT applications and agreements to be sent to school districts and posted on the state Department of Community Affairs website.

The Senate Community and Urban Affairs Committee approved the bill with amendments on Feb. 5 and sent it to the Senate Budget and Appropriations Committee, where it has had no recorded action since, according to the Legislature’s records. The committee statement does not say whether the bill would apply to agreements already approved, like this one.

What’s next

The City Council introduced Ordinance 6330 on Oct. 13. It would grant a 30-year exemption to CenterPoint Butler Urban Renewal LLC for a 207,800-square-foot single-story warehouse at 110-140 Elizabeth Avenue and 31-51 Butler Street, with about 100 construction jobs and 50 to 75 permanent jobs, according to the published legal notice. The final hearing is scheduled for Oct. 27 at 7:30 p.m. in City Council Chambers at City Hall.

Jersey Intel is seeking comment from Mayor Bollwage’s office, Council President Manny Grova Jr., the city’s chief financial officer, Elberon Development Group and FreezPak Logistics. This story will be updated with any response.

Do you know about a tax break in your town? Tell us at jerseyintel@gmail.com.