JUST SAY NO TO PILOTs, CRONYISM & CORRUPTION
In an ideal world, but more importantly as a matter of fairness, property tax distribution should occur at the regular rate for all property owners, not just a handful of commercial owners and developers. In NJ real estate and development, “urban” is a synonym for PILOT; Payment In Lieu of Taxes. And in recent years in Morristown, more than a handful of properties have been given significant tax breaks. Market St., Bank St., DeHart St., CVS, Modera 44 and Modera 55, just to name a few.
According a report of the NJ State Comptroller on the abuses arising from PILOTs and tax abatement programs, “In practice, there is no state oversight or monitoring of the granting of individual tax abatements in New Jersey ... These circumstances have resulted in a lack of transparency and accountability regarding the awarding of abatements….” “For school districts, the impact is more direct. School districts often receive a large portion of traditional property tax collections” — in Morristown approximately 60%. “As a result, abatements have a large impact on school funding and the tax burden of other taxpayers in the municipality ... When a property tax abatement occurs, the school district receives no portion of the new PILOT revenue and thus loses out on the new wealth of the municipality…” And in some cases, “The new development may also add new, unfunded service burdens on the schools. The cost of these burdens must either be absorbed by raising rates on other taxpayers or by paring back services.“
It’s now in the hands of the governing body.It will be up to them to decide wether to approve an ordinance for introduction that could grant more unnecessary and significant tax breaks to developers. This time it’s for M-Station, East and West.
So, let’s examine a few of the many problems with PILOTs and the tax abatement programs that have been set in motion in Morristown. It is an examination that we would have expected our Mayor and Council to openly undertake with input from all residents. Unfortunately, the path chosen lacks in transparency and public participation.
PILOTs are intended to draw a developer to an area they otherwise wouldn’t want to develop. Under these PILOT programs, municipalities are authorized to grant developers exemptions from traditional property taxes for a set period of time to encourage them to make improvements to property, or to locate a project in a distressed or “blighted” area. This allows developers to make an annual PILOT payment to the municipality. The PILOT payment is substantially less than traditional taxes and in some cases, negotiated terms and conditions can require a developer to also fulfill other public improvement obligations. Not only do these exemptions save a developer a tremendous amount in real estate taxes, but they provide an increase in the fair market value of the property as a result of higher net operating income, ultimately killing affordability.
Indeed, attracting development to areas most in need of redevelopment can be difficult, Morristown leadership has always held how desirable our quaint little town is. According to Real Estate NJ, the developer thinks so too. “This is arguably one of New Jersey’s best towns,” said Peter Bronsnick, president of SJP Properties’ New Jersey region. “And these opportunities are few and far between over the lifecycle of any real estate...”
In fact, while pitching M-Station to the people during the Town Council approval process, Scotto/SJP Properties “hung their hat” on the notion by confidently declaring that a PILOT agreement would not be necessary or sought and went as far as promising to privately fund the construction of a new roadway roundabout and public promenade as a “bonus” if the project got the green light.
“It’s a very well thought-through plan, and I’m very proud of it,” municipal Town Planner, Phil Abramson proclaimed, before the Town Council gave the go-ahead for M-Station at a public hearing last September. During the public comment portion of that meeting, a resident questioned the allegiance of Abramson, whose “urban” planning firm has a professional service contract with the town, “You seem to be, meeting after meeting after meeting, advocating for the developer…are you a Morristown employee, or an agent of the developer?”
A closer look at Topology’s contract provides a monthly payment of $12,500 for General Professional Planning. In addition, compensation for services falling outside the defined scope of General Planning Services shall be billed at an hourly rate of Two Hundred Dollars ($200) as Redevelopment Planning funded by Redeveloper escrow deposits and at an hourly rate of One Hundred Fifty ($150) as Redevelopment Planning funded by the municipality.
Vendor history reports obtained by an OPRA request reveal that Morristown has paid Topology almost $2.9M since 2015. Town Council does not vote on bills, so who is approving these payments and what value has Morristown’s residents received in exchange for such an exorbitant amount of the people’s money?
This is a clear indication that our officials appear to be part of a system run through with malfeasance; and should cause all Morristown residents serious concern.
The findings of the Town Planner and Topology’s conclusions in connection with their entanglement of duties have far-reaching implications for Morristown and the future of its redevelopment.
Topology provides guidance and consulting, not only to the Town Council and Planning Board but also to the developers looking to reap the benefits of PILOTs. They developed the new master plan and determine what areas should be put into redevelopment. Once a property is deemed “blighted” or in need of redevelopment, an “urban” renewal redevelopment entity becomes eligible to be rewarded with a 30 year tax abatement.
Civil court records suggest that through Topology, our Mayor, a voting member of the Planning Board, has the ability and opportunity to exert influence over Topology that could support any finding he wishes.
Can we trust Topology to provide objective advice and guidance on these issues? Or will it continue to promote only one agenda: the sole vision of how the Mayor wants to see Morristown grow.
While selling residents on the idea of more control over the project the governing body effectively has less control from the PILOT imposition. PILOTs take properties off tax rolls, leaving homeowners to compensate for the loss in revenue. We must not be duped by the false promises of PILOTs. PILOTs turn over financial control of taxation to the developer, taking control away from the hands of those we elected to be our neighborhood voice.
Tax abatements for high-density residential and commercial property owners do not guarantee any benefit to the average homeowner. Commercial property owners and developers highly favored with our administrations’ openhanded tax breaks are under no obligation to pass the savings along in the form of lower rents to their tenants, many of whom are small businesses. Doing so might actually help fill some of the many empty storefronts in our downtown.
A lack of transparency, accountability and oversight is an open invitation to abuse. Mismanagement, impropriety, conflicts of interest and egregious spending has overtaken the municipality. While contractors are getting richer, taxpayers are getting the squeeze. Developers should be paying the town more money, not less.
Beyond paying sums, which most might consider excessive, I have questions over the extent of Topology’s involvement with Morristown. While Morristown has been paying Topology under these planning contracts, Topology has sponsored events held by the American Planning Association. The job of American Planning Association involves planning and promoting large scale development conferences which are sponsored by national building chains, along with firms like Inglesino Webster Wyciskala & Taylor, Genova Burns, Woodmont Properties, Fox Rothschild and Maser Consulting, P.A.. All firms with service contracts or redeveloper agreements in Morristown. From a review of the APA-NJ website, this year Mayor Dougherty spoke at a conference lecture titled, The Politics of Place. Morristown’s Assistant Municipal and Planning Board attorney, John Inglesino, also spoke about PILOTs, in a lecture titled “The Tax Abatement Kerfuffle: Development Tool or Giveaway?”
Given these facts, we need to take a closer look at what Topology is doing for us. We need to restore transparency to Morristown Government. I think the time has come to shed light on some issues and question what is really going on behind the scenes at 200 South Street.
What pros and cons did the Town Council or the Planning Board meaningfully debate before rubber-stamping the Mayor’s Plan? When was the last time a council vote was not unanimous? How many of these serious problems with PILOTs have council members raised or discussed with their constituency before more of our downtown is declared blighted? Do you want tax revenues diverted from our schools primarily for the benefit of developers, with homeowners picking up the tab? Do you prefer that critical decisions about the future of Morristown’s precious downtown be made during a global pandemic with minimal public participation because residents are battling an invisible enemy? Do you want to “share services” with surrounding municipalities because our current administration has been questionably liberal in supplying tax abatements to developers demanding to build here? Will the Town Council now approve PILOT agreements for the M-Station developer? Is this really how our elected officials govern? Shouldn’t we be concerned about significantly obvious cronyism, lost revenue, waste and abuse, and most paramount, “corruption”? I care, why don’t you?