Flemington is not getting its fair share out of being the Hunterdon County seat, one borough resident says.
To the editor:
A generally accepted definition of a PILOT, that is a payment in lieu of taxes, is a voluntary payment made to compensate a local government for some or all of the tax revenue that it loses because of the nature of the ownership or use of a particular piece of real property.
Usually it relates to the foregone property tax revenue, as when a superior governmental entity own land in a subservient governmental jurisdiction.
For example, land owned by the federal government is generally not subject to taxation by state or local governments. Under Public Law 94-565, enacted in 1976, the federal government began a program of making payments in lieu of taxation to local governments affected by this reduction in their tax bases.
As an incentive for investment in taxable infrastructure, or other facilities that create a public benefit, a PILOT may be negotiated to limit or defer the property taxes on a developer, striking a balance between public and private economic needs.
In effect, the local taxpayers are subsidizing the development, which might otherwise have gone elsewhere. This has occurred in poor rural areas where large wind energy systems are often placed, providing cost relief to the owner and a limited tax payment to the locals.
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It was approximately six years ago when Hunterdon County proposed to sell, at auction, the parking lot next to the Hawk House (that is just south of the Red Vanilla building) and the Choir School just off Main Street.
They scheduled a public hearing on the proposed sale for Aug. 2. It was brought to their attention that in advertising the sale they had set no minimum price for the property. They then realized that they wanted a minimum. Without a minimum set they feared that they could essentially end up giving the property away to private interests if a very low bid was submitted.
They deemed the 46 space parking lot surplus, and the Choir School as well, since the Cultural and Heritage Commission had moved out earlier that year. Also, with so many of their employees having moved out of town to the county's Route 12 facility, they thought they no longer needed the parking lot, or the Choir School, for county purposes.
I was one of the group of people who appeared at the scheduled public hearing to object to the sale. Two trustees of the Hunterdon County Historical Society, an owner of a new business on Main Street, a real estate broker, and a retired lawyer all came to voice objection to the sale.
As the retired lawyer pointed out, selling either the lot or school building would not bring in a lot of money.
The views expressed in opposition to selling were recognized by the freeholder director, according to a newspaper story, as having shown merit. He expressed the thought that there should be more discussion. That was the last we heard of the possible sale of either of those two properties.
I understand that the borough then entered into discussions with the freeholders about keeping the parking lot as an important part of the local infrastructure. And with the borough in the process of a revitalization program, certainly more public parking would be needed if that effort had any success.
It was at that time that I suggested to borough representatives that the borough approach the county and ask for a payment in lieu of taxes, an arrangement that we understood existed between the Borough of Somerville and the Somerset County freeholders.
The subject of such payments has now risen again in the course of the discussions of tearing down buildings in the middle of town and replacing them with city size structures. I have not been able to follow closely, nor do I fully understand the arrangements being proposed, because I hear so many conflicting possibilities. No draft of a proposed agreement has been published.
What I do know, by reviewing public tax records in the borough of Flemington, is that there are at least 13 separate properties in the borough owned by the county, properties that do not pay any taxes to the Borough.
Each of these properties receives the same services by way of police protection, street maintenance, snow removal, and other municipal services as are received by the owners of private property that do pay taxes.
The total value of all of these properties, according to the Flemington tax assessor records that I reviewed last year, are almost $23.7 million.
Approximately $600,000 worth of that property are the two pieces of property considered surplus and proposed for sale six years ago. With a tax rate of .0314 the total property would generate just less than $750,000 of tax income. Of that amount approximately 25-percent would go to the borough with the rest paying for schools and county services.
In the 10 years that passed since the subject was raised, the borough share of taxes would be enough to buy both the Choir School and the parking lot, and have roughly $1 million left over.
It seems to me that payment for services provided by the borough to the county should be part of the discussions relating to payments in lieu of taxes.
It's time that the borough leaders get together with the county leaders and talk about making an arrangement to compensate the borough for all of the services that the county enjoys, services provided to the county by the borough tax payers, to benefit various county properties throughout the borough.
The discussion should be separate and apart from any discussion of incentives being paid to a private developer above and beyond what the Borough already offers to people who improve their property.
The present arrangement, for those not in an area designated as a redevelopment zone, provides that the increased value of property, as a result of improvements to the property, are phased into the assessment process over a five or six year period.
I gather some substantially greater incentive is being offered to the borough designated redeveloper of the Union Hotel and surrounding properties.
It will be interesting to see what that amounts to in real dollars when projected as part of any development agreement.
I do hope that such an agreement will be published far enough in advance of any ordinance adopting it so that we will all have an opportunity to see what kind of precedent the Borough is setting by way of incentive to people who improve or develop property in the borough.
In the meantime the borough should make arrangements with the county to be paid for the services it provides to the county, at the cost of borough tax payers, services that benefit the county property in the borough.
Lee Roth
Flemington
