Dear Edior:
An observer of the December 2 Town Council Meeting could be excused for wondering why every town in NJ has not dropped their current municipal tax structure in favor of PILOT programs (Payment in Lieu of Taxes). During the meeting, the audience was told that “anyone in their right mind, would look at this” and say PILOTS are a gain for the town as it receives 95% of the tax revenue. At best, that argument is one-sided. But there are good reasons why the vote scheduled for December 16 should be delayed.
• Since 1980, Parsippany has been a crown jewel in NJ for corporate development due to unparalleled highway access and a strong quality of life in town. Parsippany has been home to much of the Fortune 500.
• Residential PILOT’s come with new costs to educate the children who reside in those PILOTs, estimated in a demographic study to eventually be a total of 600 children. That does not include PARQ, which could add an additional 200 children based on the percentages provided by last year’s demographic study.
• Parsippany schools are near capacity and class size caps have been waived. The average cost to educate a student, assuming no unusual circumstances, is over $20,000 per year. It’s not clear the town fully considered the scale of potential added costs for the school district from the various residential PILOTs.
• PILOT proponents cite that PILOTs are a way for the school district to get funds above the 2% cap. Reasonable minds can be forgiven for being skeptical on this point as no shared revenue per pupil agreement exists between the town and the Board of Education (BOE) two years after a group of residential PILOT’s were passed.
The below schedule is a summary of projections provided by the town for 2 & 3 Campus Drive, which are PILOT Projects. The table, presented in thousands of dollars, shows two projections for the first stabilized year comparing a PILOT structure vs. Ad Valorem (traditional taxation). Under Ad Valorem, tax collections for the town and school district in the first year are projected to be $1,871K, with the school district receiving $1,297K and the town receiving $574K. Under the projected PILOT, the school district would receive $0 for building taxes. The school receives no taxes from the building, but the town receives $1,017K, $443 higher than it did under the ad valorem. One can understand why the town would like the PILOT and it may make sense for commercial properties, but only as a last resort.
There are good reasons to delay the vote on the PILOT’s currently up for consideration on 12/16. There is pending NJ legislation S3915, which would require municipalities to share certain payments in lieu of property taxes with school districts. Given the pending legislation, is it likely that the state will immediately act against the town for temporarily failing to achieve its low-income housing requirement? Residential PILOTs are a contentious issue that should be left to the incoming administration to resolve, especially since there is a mandate from last month’s election to stop residential PILOTs.
At the Dec. 2 Town Council meeting, no evidence was presented that other towns faced consequences from losing immunity, which is odd given that the Town Council portrays a disastrous outcome if the town loses immunity after the December 31 deadline. If so, why did the Council wait until now for the vote? Will the town and BOE reach an agreement that reflects actual cost per student? Please attend the December 15 Special Board of Education meeting and the December 16 Town Council where it is hoped answers will be forthcoming.
Jack S. Raia
