In this first State of the City address, Mayor Rick Proctor pledged to continue redevelopment focused on the arts, remove barriers to stimulate revitalization and recruit new business and redevelopment projects while beginning to actively market the city.
Category Archives: taxes
Breakdown of SID taxes
Catching up on some older items during this slow week, the City Council last month approved a 2010 budget of about $130,000 for the Special Improvement District (SID).
No tax abatement for The Savoy, Dornoch
News that the Plainfield City Council last month was asked by the administration for a five-year, 40-percent tax abatement for a Dornoch project in that city has prompte
d questions from readers in recent weeks about whether the Hillside-based developer will seek the same for The Savoy on Main Street. (The Plainfield governing body was scheduled to entertain the measure at its meeting last night.)
City Administrator and Redevelopment Director Peter Pelissier said Dornoch had requested abatements in negotiations this past summer, but he said he rejected it, with no plans to entertain the idea.
The only recent tax abatement awarded by the City Council was about five or six years ago when Park Square was still just on the drawing board. Landmark Developors will pay 20 percent of the assessed value of the property in the first year it’s on the tax rolls (2009), and 20 percent more each year until 100 percent is reached. Pelissier said the city tax assessor is in the process of compiling the first assessment for the property, which would mean it would be paying 100 percent property taxes by 2013. The project broke ground in 2007 after several years of land acquisition and other work for the development.
Also, this interactive map from P and F Management (a subsidiary or parent entity of some kind for Dornoch and its projects) is another indication that The Savoy may become rentals, something with which the city probably would not have a problem considering the real estate market and other projects going rental.
Hotel tax revenue spikes
The city realized about $22,000 more than originally budgeted for hotel tax revenues in the $42-million municipal budget that was passed last month.
The city collected $58,000 in hotel tax revenue, about 61 percent more than the $36,000 originally planned in the 2009 budget, which ends June 30. Sixth Ward Councilman Samson Steinman confirmed the increase with the city administration during last month’s public hearing on the budget. He attributed the boost in revenue from about three months of operation by Hotel Indigo at SkyView, as well as the new Best Western on Paterson Street, off Routes 1&9.
The state imposes a 5-percent hotel tax and municipalities are allowed to impose an additional levy of their own of as much as 3 percent. The hotel tax was created during the McGreevey administration in 2003 and Rahway enacted the local tax effective Nov. 1, 2003.
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Tax appeal settlement approved
City Council approved a tax appeal settlement Monday night with Carriage City Properties. Details on the settlement can be found in this earlier post.
Property taxes would be paid whether units are occupied or not, and the developer would be responsible for taxes on any units it owns, said City Administrator/Redevelopment Director Peter Pelissier.
During the Feb. 3 pre-meeting conference of City Council, Third Ward Councilman Jerry Scaturo raised the issue of Carriage City Properties leasing its unsold units. Sky View began marketing a lease-to-buy option, starting at $1,250 a month for one-bedroom units.
Pelissier said it’s not a concern from the standpoint of wanting to see people moving into the community. “It’s better than having…units sitting empty,” he said. If the units are occupied, the $10,000 fee owed to the Redevelopment Agency should be paid, said Pelissier, adding that the agency is seeking is a formal request from the developer to clarify the redevelopment agreement. Originally the developer, Elizabeth-based Silcon Group., was to pay the $10,000 fee upon closing of each unit.
About 57 units have closed at Sky View, according to the Parking Authority records, while the Redevelopment Agency has been paid for 46 units and 78 temporary certificates of occupancy (TCO) have been issued by the city, Pelissier said. It’s unclear how many units are rented, he said. The 16-story complex has more than 200 units in all.
By my count, about 48 units have sold (less than a quarter) at an average of almost $292,000, a high of $444,000 and a low of $216,350 (which happens to be the most recent sale I’m aware of).
Settlement near on tax appeal
Carriage City Plaza will pay almost $1 million annually in property taxes under a tax appeal settlement reached with the city.
The settlement, which is expected to gain City Council approval Monday night, calls for Carriage City to pay $350,000 in taxes for its partial assessment for 2008. In addition, it will pay $100,000 toward the approximately $350,000 that’s owed to the city as part of intersection improvements and signalization, among other things.
Starting with 2009, property taxes for the site will be about $978,000 at full assessment, City Administrator/Redevelopment Director Peter Pelissier after Tuesday night’s conference council meeting. The total assessment for the property is about $59 million, with $2 million for the retail space, $6 million for the hotel and the remainder for the 220 residential units. By comparison, Pelissier said, Merck & Co.’s property is assessed at about $277 million.
The reduced assessments primarily came in the residential components of the project, Pelissier said, adding that once the retail portions are fully developed, those parts will see increased assessments. The original assessment was about $60 million, which would have generated $1.2 million in property tax revenue.
Spreading the tax burden
I’ve been meaning to post about this for a few weeks but it’s gone through a number of drafts trying to avoid getting bogged down in a lot of numbers. There haven’t been many meetings the last couple of weeks, so now is as good a time as any.
During the budget process this year, city officials boasted about the increase in “net valuation taxable.” That’s basically the value of the entire city when it comes to taxing property and it rose $10 million, or about 0.67 percent, to $1.517 billion. The bulk of the $10-million hike was attributed to several projects. City officials provided this breakdown of main additions to the tax rolls for 2007, with the following improvement values added to existing land assessments:
Riverwalk [32 units] $4,930,800
Best Western Motel (Route 1), $2,149,600
Mini-U-Storage [partial assessment], $1,223,600
Quick Chek (Route 1), $523,000
Sterling Place [three homes] $477,100
Luciano’s [14 apts, partial assessment], $199,300
Subtotal $9,503,400
Those figures are strictly for building improvements and don’t include the separate land assessments. The partial assessments are just that, as they weren’t completely done at the time assessments were made. What’s it all mean for taxpayers? Well, the idea is to keep the valuation going up so there’s more places from which to collect taxes.
For instance, when completed, Riverwalk is expected to be assessed at more than $14 million. Under the 2008 budget, with a municipal tax rate of $1.713 per $100 of assessed value, that would have equaled about $250,000 in municipal property taxes. [Don’t forget, there’s also the county tax rate (about a 1/4) and school board tax rate (1/2) that make up the total property taxes.]
Does that mean taxes go down for everyone else? Ideally perhaps, but this year’s increase was eaten up within the municipal budget. Tax Assessor Bill Marbach estimated that without the $10-million rise in the assessed values, the tax rate might have gone up about 3 cents rather than remaining the same this year. For an average assessed home in Rahway ($133,000), a 3-cent hike in the tax rate would have meant $40 [$0.03 x ($133,000/100) = $39.9 — got that?]. For a home assessed at $500,000, the effect would be closer to $150 [$0.03 x ($500,000/100) = $150].
New developments and properties will add to the tax rolls but won’t they also in theory put more pressure on services, like the Police Department? When I posed that question to City Administrator/Redevelopment Director Peter Pelissier earlier this year, he said he doesn’t expect to hire more cops, but instead use the existing squad more efficiently.
Four new police officers were sworn in earlier this year, replacing retiring officers, with another expected this summer that will bring the police force to its full complement of 80. The city last summer approved a new seven-year contract (through June 2013) with PBA Local 31, which represents Rahway police officers.
Under the agreement, officers are scheduled to receive 4-percent annual pay hikes, but new hires also will begin to contribute to health benefits, be enrolled in a Point Of Service health plan, and no longer receive longevity pay. The clothing allowance was raised to $1,000. The starting salary as of July 2007 was $33,280 and by 2012 will be $40,490.