BERKELEY HEIGHTS, NJ -- Residents learned the tax impact of the Municipal Complex is less than the $3 predicted in June 2018 -- $14 less to be specific -- or minus $11. The owner of a home assessed at the average value will see the municipal portion of their tax bill drop.
Township Bond Counsel Matt Jessup presented a slideshow on the tax impact of the $32 million Municipal Complex to owners of township homes with the average assessed value of $313,125, on Tuesday, Feb. 18.
The presentation with links to charts can be found on the township website here.
Jessup said the difference between 2018 and today is “projected vs. reality … A lot has happened in the last 18-20 months and, as a result, the revenue understanding, the debt service understanding and the tax impact understanding is coming into a sharper focus, as you would expect, once you have a better sense of these numbers.”
In 2018, the CFO was estimating what the interest rates on notes would be and sales prices would be, Jessup said.
Several key points in the presentation revolved around the Payment in Lieu of Taxes (PILOT) payments which will be used to offset the cost of the Municipal Complex. The PILOT money will come from Stratton House (the former Kings site), Berkeley Terrace, (the theater property), Woodcrest at Berkeley Heights (100 Locust) and Mill Creek (91 Lone Pine, near Chemtrade). In addition, municipal taxes from the Hamilton Avenue property, which will not have a PILOT, will be used to offset debt service on the Municipal Complex project.
PILOT money from Elite Berkeley Florist and the Mondelli redevelopment projects will not be used offset debt service on Municipal Complex bonds.
The timetable for receipt of the PILOTS and taxes was incorrect when the first estimates of the impact of the Municipal Complex on the municipal taxes were made. That said, the full impact could be seen in the 2018 and 2019 budget, according to the presentation and “based on current expectations, the Municipal Complex will not cause any additional tax impact from this year forward if all PILOT funds are realized,” according to the document.
The municipality will begin paying debt service on the bonds in about a year -- before any money from those PILOTs or taxes from Hamilton Avenue are being paid. It is estimated that PILOT payments from Berkeley Terrace will begin in about a year; Mill Creek and Woodcrest at Berkeley Heights are estimated to begin in 18 months. Stratton House and Hamilton Avenue are estimated to be 18-24 months away from beginning payments to the township.
According to the presentation, the tax impact figure has dropped because of four “key changes to the project financials:
The bond anticipation notes (BANs) issued in 2019 had an interest rate of 1.35 percent, as opposed to the projected rates of 1.80%. The rate on future BANs went from 1.80% to 2.50%.
The interest rate on the first bonds issued was 2.53%, as opposed to the projected interest rate of 3.75%.
The term of the Municipal Complex financing has increased eight years, from 27 to 35 years.
Revenues are up $8.48 million since June 2018:
A. “Over $951,000 of the original issue premium on the Series 2019 Bonds” and BANs paid to the township;
B. $1.073 million to the township, for Union County’s share of the cost of the township’s salt dome;
C. The aggregate amount of PILOT revenue to the township to match the extended term of financing for the Municipal Complex.
While debt service jumped $5.76 million from 2018 to 2019, total project revenue increased by $8.48 million during the same period.
Some Related Articles: