Dear Editor:
Mayor Barberio and certain Council members in their justification of allowing rich-developers PILOT deals in that Parsippany needs to compete in the market for revenue to maintain its status of expense. However, this competition with rich corporate developers may leave Parsippany on the short end of the deal. The competition here will be between the fiduciary functions of accountants, transparency, and vigilance of inaccurate accounting practices for the next 30 years. Is Parsippany’s present and future administrations prepared for this complex due diligence? How much will this aspect of monitoring PILOT deals cost taxpayers in addition?
So we have now a competition of two opposed or in cahoots fiduciary obligations, one by the developers, and one hopefully by the municipality.
Note: A fiduciary is someone who manages money or property for someone else. When you’re named a fiduciary and accept the role, you must – by law – manage the person’s money and property for their benefit, not yours.
The key here is “for their benefit, not yours”.
With this definition of “fiduciary” how do we insure the municipality’s fiduciary obligation against a rich developer’s ability to employ expert tax accountants who apply all the tax evasions and loopholes?
With this administration’s fast-track and final blighted council actions in passing six additional PILOT deals, they based their contentions of approval on a developer presentation material posted on the official website on December 28, 2023, after the already done deal, set into motion by the Mayor and his returning partner Attorney Inglesino; “The Truth about the Proposed Parsippany PILOTS by the Numbers”. This developer’s publication substituted for any due diligence by the approving Council and shows pros, not cons.
We must ask the following questions. How exactly will Parsippany guarantee oversight obligations in review of the annual audits, that are required by state statute, local ordinance, and the financial agreement? Will this be performed by the Town, or will the Town need to hire additional accountant enforcements, and at what costs; considering the various PILOTs and LLC entities involved in the redevelopment projects and possible loopholes over the 30 years?
Known Historical Performance and Oversight of PILOTS the report: Keith S. Balla accountants and advisers’ insights to be considered below are also truths and realities.
Municipalities do not ensure that all required documents are received for construction projects and costs and support.
No consistent audit standards relative to what the municipality requires to consider an audit complete
Limited cursory review of audits by the municipality administration, Reasonable doubt as to whether this review is adequate because of in-depth professional accountants and auditors who are experienced and trained.
No outside or third-party reviews were conducted to ensure the appropriateness of submitted entity audits.
PILOTS require an extra level of oversight and scrutiny to avoid cheating. PILOTS are not straightforward for computing property taxes as the assessment process, which leaves room for developers and property owners to cheat. Examples:
Structure a master lease with an affiliated entity to artificially lower the revenue of the PILOT entity. The master lease affiliated entity then collects the higher rents from all the actual tenants and the developer builds up additional profits in its affiliate by underpaying the percentage of the PILOT based on the artificially lower revenue paid by the affiliate.
Structure the operations with a lower base rent and separately invoice tenants for reimbursed expenses. The developer, then based on the definition in the agreement for rent, excludes the reimbursed expenses from revenue to underpay the city.
Further Questions:
Q: Why was not the UPS PILOT deal initiated in 2016, or the 1515 Route 10 already agreed to, used as a model for comparison as to the benefits? Has the town assured payments from these PILOTS have been accurate?
Q: How many corporate tax rateables have put in for tax reductions; and how many if any have been approved?
Q: If the rateable chase has benefited Parsippany, and is now allowing PILOT deals, why is the water/sewer surplus still being used for other purposes?
Q: At the last public meeting no details of the PILOTS were as yet revealed, and Councilman Musella brought this to public knowledge. Is Parsippany again following Attorney Inglesino blindly? He has not served Parsippany well in the past, and why would be suddenly change?
Our former President bragged about how he used the system and considered himself “smart” for beating the system, with his law firm allies.
Parsippany did itself no favors by its recent actions, that smell of corruption in campaign finance kickbacks from these developers. Will municipal cursory review expose these possibilities to the public?
Nick Homyak
