SOMERVILLE, NJ - The Borough Council will introduce the 2018 municipal budget at Monday night’s meeting.
The spending plan reflects a 1.88 percent increase over the 2017 budget, and translates to a $45.88 annual increase in local property taxes, based on the average assessed value of $271,000 for a home in the borough, according to Granville Brady, council president.
That equates to an increase of less than $4 per month; the increase does not include the school and Somerset County portion of the annual tax bill to be paid by homeowners.
“The increase is two-thirds less than the 2017 budget, largely due to continued revenue from our PILOT programs and stabilization efforts by the Finance Committee to reduce debt service by reallocating funds for operational expenses”, Brady said.
The Finance Committee includes Councilwoman Jane Kobuta, the borough’s chief financial officer, Paige Elster and Clerk Administrator Kevin Sluka all of whom began the budget process in October. State law requires local budgets to be introduced by the end of March.
“Of course, the dollar amount depends on the value of your property but the increase is less than the two percent cap placed on local governing boards,” Brady said. “I am pleased with the result of our efforts. The Finance Committee did a terrific job and I hope that the residents of Somerville will understand that increased revenue from PILOT contributions will continue to help keep the Borough portion of our taxes stable.”
The New Jersey PILOT program – Payment in lieu of Taxes - enables municipalities to exempt developers from property taxes for a set period of time when making improvements to existing buildings or creating new projects in areas in need of redevelopment, according to Sluka.
It is a tool that municipalities use to to encourage commercial, residential, and industrial development. Developers pay an annual service charge to the municipality for a set period of time in lieu of regular real estate taxes.
Payments from two PILOT projects – the Edge luxury apartments on West Main Street, and the Cobalt Apartments on Veterans Memorial Drive were applied to the 2018 budget, according to Sluka: $395,000 from the Edge, and $121,000 from Cobalt.
There are several more PILOT projects in varying stages of construction and planning, none of which are expected to contribute to the 2018 budget, accordng to Sluka.
Each developer has a PILOT agreement in place with the borough, which requires a set percentage of payments based on occupancy, Sluka explained. The percentages increase from 10 to 12 to 15 percent over the course of the 25-year agreement, at which time the developers pay their respective assessed real estate taxes to the borough.
The Edge is 100 percent occupied, and includes commercial tenants on the ground floor; the 117-unit Cobalt is 38 percent occupied, according to Sluka.
Monday’s meeting begins at 6 p.m. with an executive session closed to the public, followed by the public portion of the meeting.