Wednesday, October 18, 2017

Mostly True

It’s election season in Aberdeen and the Democrats are wagering they can extend their two-decade monopoly on the town council.

Statements on Facebook purporting to be from the candidates warrant a response.

“In the case of the Glassworks, 85% of the property is not part of a PILOT and will just pay ordinary taxes from day one.

Glassworks is being built in stages. The 85% refers to the entire development but the PILOT only refers to the first stage. Nothing precludes the township from offering additional PILOTs for the later stage developments.

Furthermore, PILOT is only one of many ways to reduce a developer's cost. For example, the township had a practice of not assessing a property until a certificate of occupancy was issued. Since the developer didn’t request a C of O until the property was under contract, properties were nearly tax free until they were sold. Other likely benefits include scale of development, variances, infrastructure support, and ignoring violations.

In short, we don’t know what concessions the township is providing to the developer or whether they are appropriate.

“[P]eople confuse the fact that the the PILOT Payment on the 15% does not get shared with the school district with the notion that they're paying no taxes. And there's nothing that we can do on the local level to change that. The State Redevelopment Law says that it doesn't go to the schools.”

This is only half true. When the Jefferson (Avalon at Aberdeen Station) units were built, the township granted the school district $200,000 annually to cover the expenses from the handful of students residing in the new development. At the time, arguments were made the school district was entitled to its fair share of revenue but at least the township didn’t create a hardship for the schools. The new developments specifically call for family housing. The township did not fully weigh the financial burden or educational impact on the schools nor offer any grants from the PILOT money to offset the costs of the additional students.

“The town has only two imperfect tools to incentivize a developer to take down an abandoned factory or clean up an environmental mess: PILOTS and Abatements.”

Not true. How ironic to hear the Democratic leadership argue the only way to promote economic activity is through tax cuts to the wealthy.

As discussed above, there are numerous ways to entice development. Church St. development went from age-restricted housing to age-restricted and familly housing.

Manhattan has some of the highest taxes, restrictions, and burdens in the country yet there’s development throughout the city because the land is valuable. Aberdeen has a beautiful shoreline, parks, highway access, a train station, and boundless opportunity for improvement. Raise property values and developers will come begging.

To argue that taxes are the only way to entice development, suggesting it was the only thing negotiated between the developers and the township, says two things:
1) Cover up
2) The town council likes dropping their pants

“We made a deal with RPM Development whereby they would clean it up on their dime, help us clean up the adjacent lot, and in return, they got the property (which had negative value) for $1 and a PILOT agreement for the same term as the repayment of the money RPM borrowed to clean up the property.”

If true, that means RPM got the land for free plus a virtual tax credit equal to the cost of the cleanup. In other words, they got the land at no cost. Somebody made lots of money on that deal.

“[T]he PILOT payment goes directly into the municipal general budget and directly, dollar-for-dollar, lowers the residents' property tax levy - just like any other miscellaneous revenue. Now, you can say this is unfair to the schools, but it literally makes no monetary difference to a resident. Their four quarterly payments are going to be reduced by the PILOT revenue - the only difference is whether their municipal taxes are lower or their school taxes are lower. It's a zero-sum game regardless.”

Pure propaganda.

The notion that the township gets to pocket the revenue while the school district bears the cost “makes no difference” is shameful. It means the township does not recognize nor cares about the burden it places on the school district. And it assumes Aberdeen is a town of idiots.

Of course it matters whether money goes to the township or the school district. The township has far fewer restraints on increasing spending and far greater incentives to encourage development than the school district. This PILOT money will go towards municipal spending, not tax relief. The school district will get another influx of students without sufficient funding for them. The township will debate how to spend more money while parents and students fight over scarce resources.

And the school district is called Matawan-Aberdeen for a reason. A third of the school won’t be benefiting from the township’s munificence. Cardinal rule of getting along – Don’t piss upstream from your neighbors.

“Finally, people ask: why everything at the same time?”

Not exactly. People are asking why so much over development at the same time.

We know the answer to that question. With all due deference to Jessie J (Price Tag), it is all about the money, money, money. 
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