ANALYSIS: Vincentsen Associates presented several options for renovating or moving borough hall to the council Monday. But what would they mean to taxpayers?
By: T.J. Furman
HIGHTSTOWN The long-awaited study of the feasibility of moving the borough’s Municipal Building to the GPU site on Mercer Street was released this week, but several residents were left with unanswered questions.
Bill Slack of Vincentsen Associates presented his firm’s findings at Monday’s Borough Council meeting. Those findings indicate the move to GPU could cost at least between $3.3 million and $4.9 million, depending on the status of the Fire Department. He said it would cost $1.8 million to stay at borough hall with improvements that would be comparable to the GPU site.
However, several residents contended a full evaluation of whether the borough should move to the GPU site must include a comparison of what ratables could possibly move into borough hall or GPU and how much tax money they could generate.
Vincentsen Associates was not commissioned to create such a report.
Mr. Slack did advise against the most expensive option, which includes moving the Fire Department to the new municipal complex. Mayor Amy Aughenbaugh has said at previous meetings the borough has no intentions on moving the Fire Department although it was studied.
If the borough decided to purchase the GPU building and move there without the Fire Department, it would cost Hightstown $1.1 million to purchase the property and another $2.2 million to renovate it for borough use. In addition, the borough can expect to incur some costs for moving, and purchasing new furniture and police communications equipment.
That would leave the borough with at least $3.3 million it would have to raise to complete the project. Acting Borough Administrator Jack Doherty said a bond issue for a possible GPU purchase would likely be paid back over a period of 40 years, possibly 30, though that number would actually be determined by a bond counsel. Mr. Doherty said the interest rate would likely be 3 or 4 percent.
"That would be a safe number at this point of the game," he said.
Mr. Doherty said the payments on the loan would be similar to a mortgage. Using mortgage calculators, a $3.3 million loan paid off over a period of 40 years at 3 percent yields an annual payment of $141,761. Based on numbers provided by borough officials, it would take a tax rate increase of 6.6 cents to raise that amount of money with Hightstown’s assessed value.
A 30-year loan for the same amount at the same rate would cost $166,944 annually, which would require a 7.8-cent tax rate hike to cover the cost.
The borough would receive money from the sale of borough hall. It was recently appraised at $750,000. Any money from that sale could be used as a balloon payment on the loan or as a way to reduce taxes. A balloon payment on the loan would cut the amount of time it takes to pay off the loan by several years.
Many of the residents speaking against the plan or inquiring about it have wanted to know what the impact would be on their wallets.
In order to collect $141,761 to offset the loan payments on the project with new tax ratables and no tax increase, the borough hall site would need to be assessed at $15.8 million (the municipal tax rate is 90 cents per $100 of assessed value). To cover the loan costs over a 30-year period would require a property valued at $18.5 million. Of course, Hightstown officials have said they may lease part of the GPU building to a business, which would become another source of income.
By comparison, the Court Jester on Main Street is assessed at $567,500, the Cunningham Building (which houses the Hightstown Pharmacy) at the corner of Main and Stockton streets is assessed at $250,500 and the Allen and Stults Insurance Co. building at the same intersection is assessed at $524,700.
Additionally, the GPU property, assessed at just under $1.4 million, would be taken off the tax rolls because it would become a tax-exempt property. It would take a 0.6-cent tax rate increase to recover that money. Therefore, in order to trim 1 penny off the tax rate in that scenario, a new property would need to be valued at $3.8 million or the borough would need to collect $33,923 annually in rent. Each additional penny trimmed after that would require another $2.4 million in assessed value or $21,500 in rent.
The borough had the Municipal Building appraised in October 2000, Borough Clerk Candace Gallagher said. The report said the value of the building was $750,000 the price the borough could expect to fetch for it on the open market. The tax assessment on the property is $1.6 million, but includes the neighboring firehouse, which would not be sold.
A property assessed at $750,000 would contribute $6,750 to the borough and adding it to the tax rolls could reduce the tax rate by 0.3 cents, but would hardly offset the $1.4 million loss of the GPU site.
Should the borough look to renovate its existing Municipal Building rather than move to Mercer Street, Mr. Slack said, the cost for construction would be $1.8 million. A 40-year, 3 percent loan for that amount would cost $77,324 annually; a corresponding tax rate increase could be about 3.6 cents for the life of that loan. A 30-year loan would cost $91,066 annually a figure that would take 4.2 cents on the tax rate to raise.
Under this scenario, the GPU property would remain a commercial ratable as it is now.
However, several residents feel the East Windsor Regional School District, which is considering an expansion project, may look to purchase the GPU site if the borough passes on the option. The GPU property borders the district’s school bus yard and Hightstown High School. Should that happen, the borough would not collect any taxes on that property.
Of course, the borough could seek grants from the state government for this work, but they would likely be applicable under either scenario. Also, the tax rate is certain to rise at some point over the next 40 years due to inflation, meaning the percentage 1 cent on the tax rate represents will be much smaller than it is now, and property assessments will likely change, meaning the amount of money 1 cent on the tax rate raises will shift.

