To the Editor:
Below is a preliminary analysis of the fiscal dimension of the Post Office Plaza
Redevelopment initiative. I have outlined two arguments. Others are also plausible.
Reaction from the public concerning the Post Office Plaza Redevelopment initiative appears to range from highly supportive to less than supportive. I am in the latter camp.
- Time is of the essence to get involved in the process. The target date for execution of Redevelopment Agreement between Chatham Borough and developer is Jan 8, 2020 (per Chat Courier 11/14/19).
Space constraints prevent including related assumptions. Please contact me via email at firstname.lastname@example.org and I will provide. Happy to be challenged on any aspect of analysis in order to more accurately frame the discussion and parameters. .
Argument #1 – Chatham Borough Council currently considering the following to generate annual tax relief and other benefits to preserve and enhance the quality of life in Chatham Borough:
- No figures yet provided to public by CBC so I assume annual property tax relief of approximately $540 (for median $700K home, with my related simplistic assumptions referenced above; I think figure is conservatively high but happy to be corrected);
- wider choice of bistros;
- more housing options (w the approx. 216 units to include the approx. 30 AH units identified as being provided by developer at no cost to taxpayers, which 30 units presumably going toward the post-2025 AH requirement as current AH requirement is met through CY 2025);
- 4-5 story buildings, which riders will be able to look up at (literally) when on top deck of double-decker NJT trains;
- Approx. 400 potential new automobiles in residences
- increased public parking in POP footprint paid for by “someone else” (i.e. developer) (from current 123 surface to approx. 180-200 via parking deck)
- two “Feature Walls” to somehow facilitate integration between POP and Main Street merchants
- “increased vibrancy in sleepy town”; and
- “more modern and cosmopolitan venue”.
Please note that there may also be separate financial benefits associated with Argument #1 that I have not incorporated (e.g. new fire truck(s), infrastructure improvements to be funded by developer etc). Such benefits would further support Argument #1.
Argument #2 – Chatham Borough Council could also consider the following to preserve and enhance the quality of life in Chatham Borough:
- raise annual property tax by $300 to finance tax-exempt borrowing of $13.5MM
- $300 annual figure is for median $700K assessed val and is based on assumed approx. $1MM annual debt service (I think figure is conservatively high but happy to be corrected)
- primary uses of funds to be $4MM for property acquisition to expand parking lot footprint, $3.5MM for substantive and aesthetic improvements to new footprint and $6MM for financing of AH at separate site (30 units otherwise provided by developer per above x $200K assumed net cost per unit = $6MM) o parcel(s) acquisition (e.g. 1-2 additional parcels totaling 0.5-0.8 acres purchased from current owner(s) to complement the approx. 2-acres currently owned by CB
- more surface level parking spaces (e.g., approx. 160 or more vs the current 123 given the expanded CB-owned footprint) more efficient parking configuration and flow improved visuals and greenery;
- avoid higher population (e.g. additional 216 units x assumed 2/unit = 432; representing approx. 4% increase to current population of approx. 9K); and
- avoid higher physical density (e.g. see Green Village Road complex in Madison on 4.99 acres vs the 5.5 acres at POP; GVR has approx. 135 units vs the 210+ units contemplated at POP; approx. 50% more units on only 10% larger footprint) (210/140=1.50; 5.5/4.99= 1.10).
If Argument #1 is preferred, then no need for further discussion and no need to continue reading (so long as citizenry truly agreeable with Argument #1). Take the $, bring on the backhoes and enjoy the increased “vibrancy” and “trendy cosmopolitan venue” etc etc.
If Argument #2 is of interest and worth consideration, then here is simplistic financial assessment. Per above, assumptions are of course subject to debate and recalibration.
The difference in my example below is $840 per year for median assessed home of approx. $700K (in percentage terms, approx. 6% opportunity cost assuming that the annual RE ad valorem is approx. $15K for a $700K assessed property or approx. $30K for a $1.4MM assessed property):
- receive approx $540 of tax relief annually with POP as currently proposed; or
- pay approx. $300 additional property taxes annually for next 20 yrs for new surface parking lot and expanded green space area within current POP footprint as well as financing of 30 AH units as voluntary deposit to post-2025 AH requirement.
To put the composite $840 in more general context, and other things being equal (and using cash-on-cash for simplicity of analysis vs pv of money etc), questions should be:
- Assuming hypothetical 10-yr time horizon, would I have been willing to spend $9K more for my house ($709K vs $700K (i.e. 840x10yrs=$8400 additional; $700K + $9K = $709K))?
- Assuming hypothetical 20-yr time horizon, would I have been willing to spend $17K more for my house ($717K vs $700K (i.e. 840x20yrs=16,800 additional; $700K + $17K = $717K))?
If use $1.4MM assumed valuation for house, numbers generally linear with annual
difference of $1,680:
If answers to above are no, then bring on the aforementioned backhoes.
If answers to above are yes, then start making voices heard as train is about to leave the station (see above re 1/8/2020).
Two other items related to above:
- if focus strictly on the actual prospective increased annual tax burden of $300 (and ignore the prospective “tax relief” dimension of $540), then the increase would be approx. 2% (15,300/15,000 = 1.02) rather than the aforementioned approx. 6% (15,840/15,000 = 1.056).
- Further, if focus only on property acquisition and parking lot reconfiguration/expansion (i.e. choose not to also fund the $6MM of AH), then the increased annual property tax burden would be approx. $180 instead of $300 (as annual debt service drops from $993K above to approx. $550K due to $7.5MM borrowing rather than $13.5MM). The annual increase in ad valorem taxes would then be approx 1.2% (15,180/15,000 = 1.012).
Post Office Plaza is in contrast to River Road, where the time unfortunately has passed for meaningful public input courtesy of 2013 Land Use Element Amendment (in CY 2013). With passage of that amendment, CBC essentially let cat out of bag re multi-family res development in RR area (under guise of “wider range of land uses”).
One result of aforementioned ordinance is imminent construction of 250+ residential rental units at RR. Great for legacy landowners, real estate developers, real estate brokers, building contractors and (hopefully) downtown merchants.
Perhaps RR is also great financially for the 9K current residents (although no $ estimates yet disclosed even at this late stage of the process). On the other hand, perhaps not so great from other perspectives (e.g. lifestyle, population density, additional students etc etc).
If you like RR, then no need to pay attention to what is going on at POP. If you are less than enthusiastic about RR then highly advisable to start paying attention re POP.
Although a resident of Chatham Township, I maintain a general interest in this initiative for a variety of reasons (e.g., SDOC, joint rec activities, Library of the Chathams, Sr. Center of the Chathams, family residence geographically closer to 54 Fairmount Ave than to 58 Meyersville Rd, family residence geographically closer to Kings than to Shop Rite, other).
Finally, in the words of the late radio commentator Bob Grant: “YOUR INFLUENCE COUNTS – USE IT!!!”
3 Crestwood Drive