Letter to the editor: Future PILOT programs in Parsippany

parsippany focus

parsippany focusDear Editor:

This letter is a statement read at the Parsippany-Troy Hills Township Council Meeting of April 16, 2019.

As outlined in a recent presentation by Ed Snieckus, Parsippany now has a plan for meeting its affordable housing obligation. The first project in the 8,000 plus affordable and market unit plan was the recently approved project at 1515 Route 10. Before the remainder of the projects get underway, it is important for the council to take steps to protect the taxpayers of Parsippany by making sure that the mistakes that were made on the 1515 project are not repeated.

Townships are at a distinct disadvantage when negotiating a PILOT (Payment in lieu of taxes) agreement. Every clause in the PILOT is drafted by the developer for the benefit of the developer. If you have any doubt of that, recall the instance where Parsippany wanted to include wording that would provide financial protection if educational costs exceeded predicted levels. That proposal was dismissed immediately by the simple statement that developers are unwilling to take on risks.

It is also important to understand that projects governed by PILOTs do not contribute to the ratables of a township. This characteristic has significant drawbacks for the taxpayer. For example,
• A township receives far less in taxes under a PILOT than it would receive under the standard taxation method involving ratables. In the case of the 1515 PILOT, that tax reduction is in the neighborhood of $2 million annually.
• Ratables decrease the tax rate for everyone. In contrast, PILOTs do not decrease the tax rate because they don’t count as ratables.
• None of the PILOT revenue is allocated to schools, the Open Space Fund, or interest and principal payments on bonds issued by the township.
• The affordable housing units associated with a PILOT expire after 30 years, whereas if the apartment complex was a conventionally taxed ratable, the affordable units would be permanent.

By the end of the public discussion on the project at 1515 Route 10, pitfalls such as the ones listed above were uncovered, and it became apparent that the taxpayers of Parsippany would take a financial beating if the agreement was approved. When the vote came up, every member of the council expressed their dislike for the PILOT. However, because of the affordable housing component of the project and the threat of a lawsuit from the developer, four of the five members reluctantly voted in favor of the agreement.

I’m sure that other developers have taken note of the highly favorable PILOT that was awarded to Stanbery, and will look to procure the same type of arrangement for their projects. Parsippany taxpayers need to be protected from developers looking to use a PILOT agreement as a weapon to maximize their profits, so the council must take steps now to ensure that such tax giveaways are never granted again. I am proposing that this can be accomplished by passing an ordinance that would prohibit the township of Parsippany from entering into a PILOT agreement with any project that contains residential units.

Bob Venezia