I have now been on Council for one and half years and this is my third status report. In this update, I would like to focus upon taxes. We are all keenly aware that New Jersey residents pay the highest property taxes in the nation, and each year they goes up. In the early 1990s, approximately 75% of property taxes in Summit were paid by residential property owners—today the proportion is 82% and climbing. Thus, even if expenses had remained static, residents would feel an increased burden.
Part of the reason that residential construction comprises a greater percentage is the investment in our housing stock. As the City Administrator pointed out in a recent meeting, in the first quarter of 2017, construction inspections are up 6%, and construction valuation has increased 28.5% over 2016 numbers. The other part of the reason is the decrease in valuation for commercial/industrial property. For example, when Celgene purchased the former Merck site, which comprises in excess of 80 acres, it had a market value in excess of $350 Million. However, with a purchase price of $90 Million, Celgene will be paying significantly less in taxes than Merck once a settlement is structured. This decrease in commercial and industrial ratables comes at a particularly sensitive time. In the short term, the City confronts, among other things, deferred capital projects; increased personnel and benefits costs due to, in part, the seniority of our staff; and rising debt servicing costs.
As I have noted in prior status updates, increasing ratables is one method to reduce homeowners’ property taxes. Now that the Master Plan has been completed, a number of prospective development projects are being floated. Development, however, is a two-edged sword. On the one hand, there are increased tax receipts and potentially increased foot traffic in the downtown. Development can also lead to different housing options that may be more suitable for seniors and young couples. On the other hand, there are real concerns about traffic and changes in the character of the town. As these projects are presented to Council or Planning Board, I will keep you informed.
We also need to think of development in the context of mega trends. As we all know, online retail is undermining downtowns and malls across the country. To encourage foot traffic, we need to create experiences that are not simply transactional — experiences that cannot be duplicated online. I would argue that we need entertainment options and/or a supermarket in or near the downtown. I also think there would be benefit to expanding the incorporation of art and artistic endeavors into the downtown experience. We already have a strong effort to beautify our town through artistic pieces, but there is more that can be done through private or public-private efforts.
Taxes can only be contained if expenses are addressed. This year, the City’s share of taxes increased by 0.84%, which was less than either the school or County tax increases. Nonetheless, I have been opposing spending monies on what I describe as “things we want” versus “things we need.” The most recent incarnation of this issue is the proposed $300,000 on “cobblestones” on Beechwood Avenue. Initially, this was represented as something that would assist downtown businesses. However, based on my subsequent conversations with downtown business owners and tenants, as well as hearing more about what this project would entail, I am increasingly convinced that monies can be spent better or not spent at all. One area, however, where I do think we should invest is preventative maintenance. Last year, Council spent $1.9 million on “emergency repairs” for the tiered garage; this year, it was $300,000 on repairs to the Cornhog Field House. In both instances, if preventive maintenance measures had been taken, such expenses may not have been necessary. This is something that Council needs to address in next year’s budgeting process in order to save monies in the future.
As always, I want to hear from you about what think we should do. Feel free to reach out to me.
David Naidu, Summit Common Council Member, Ward I