Assessment plummets $5 million for former plant site
By Vic Monaco, Managing Editor
HIGHTSTOWN — Borough leaders will begin their budget season later this month having to deal with the loss of nearly $80,000 in revenue from one taxpayer — the owners of the Minute Maid property.
And the regional school district will be dealing with about $192,000 in lost tax revenue from that parcel as a result of a tax appeal settlement.
As a result, absent offsetting budget variables, other taxpayers will pick up the slack for an approximate 4-cent loss on the municipal tax rate and a 9-cent loss on the school tax.
Borough Attorney Fred Raffetto explained this week that the borough had very recently reached an “amicable resolution” over the Minute Maid owners’ tax appeal for the 16-acre borough portion of the land along Mercer Street.
”Pursuant to discussion with the borough tax assessor and myself they have voluntarily withdrawn their pending 2007 appeal and, in return, the tax assessor set the 2008 assessment at a reduced rate,” he said.
The new borough assessment for 2008, he said, is $3.28 million. That compares to a $8.79 million assessment in 2007.
With the larger assessment, the borough was garnering $126,508 in tax revenue in 2007, according to Borough Tax Assessor Ken Pacera. At $3.28 million, that figure would fall to $47,232 in 2008, based on the 2007 tax rate.
The loss of $79,276 is equal to 3.65 cents on the local tax rate, as each penny of the rate is equal to $21,685 this year.
The East Windsor Regional School District also will feel the pinch. Based on the 2007 tax rate, its share of annual tax revenue would fall almost $192,000 from $305,728 in 2007 to a little more than $114,000, Mr. Pacera said.
District Business Administrator Kurt Stumbaugh said that difference is equal to 8.85 cents on the school tax rate.
Two entities, Mercer Street Warehouse LLC and Bruckner Southern LLC, bought the property in May 2006 and last April filed tax appeals for the entire 37-acre tract, which also lies in East Windsor.
Mr. Raffetto explained that the borough felt the owners had a good chance of getting their 2007 assessment lowered in state Tax Court because an appraisal of the property when they bought it stood at only $8.6 million. That figure is substantially lower than the $19.76 million fair market value of the property implied by the county’s 2007 assessment ratio of 44.5 percent, he said.
”Our whole focus was to walk away from 2007,” Mr. Raffetto said.
”Now the borough doesn’t have to reach into its pocket for money it collected in the past. It’s a definite win for the municipality,” he added while giving credit to the owners for their willingness to negotiate.
But he did acknowledge: “The borough does take a bit of a hit going forward. But there was no way to avoid that. It is what it is.”
The fact that the plant is no longer in operation also plays into the reduced assessment, Mr. Raffetto said. And the fact that the new assessment is less than the $3.85 million figure sought by the owners for 2007 is a result of the county assessment ratio falling to 41.6 percent, he added.
While Mr. Raffetto accentuated the positive, Borough Council President Walter Sikorski indicated the settlement couldn’t have come at a worse time for the borough in light of state budget cuts and the town’s inability to redevelop the former rug mill.
”It’s going to be a difficult year,” he said. “In light of the governor publicly stating that $3 billion will be cut from the state budget, I can forecast that it will probably come from discretionary areas and that includes extraordinary aid to municipalities.”
”I’m not happy about it but it’s a better settlement than if we had pursued it,” he added.
But Borough Administrator Candace Gallagher said the loss of money from one taxpayer can’t be looked at in a vacuum. She said the borough has about $3 million in new annual ratables heading into budget season, including tax revenue from the Enchantment 55-plus development, which would work to offset the $79,000 loss along with any school district impact.
Paul Josephson, an attorney representing the owners, said they are “very pleased” with the outcome.
”The property owners had a clear right, in our opinion, to a tax reduction in 2007, given their purchase price when they bought in 2006,” he said. “We recognize our responsibility as a good citizen in the town that it would be more fair and equitable for everybody to reach this resolution.”
Mr. Josephson and other representatives of the owners presented a conceptual development plan for the borough portion of the property in the summer. It called for the demolition of the plant and the construction of 246 condominiums and townhouses and about 60,500 square feet of retail space.
The land in both towns would need to be rezoned for residential development. But Mr. Josephson shied away from the notion that the borough is in a position to make things difficult for the owners without such a tax settlement.
”We prefer to see ourselves as partners,” he said. “We understand that given the importance of this property in town and the importance of its future to the borough, we have to look beyond pure economics and work with the borough.”
The Minute Maid site is one of only two significant pieces of land left for development in the financially strapped borough, the other being the former rug mill on Bank Street.
Mr. Josephson said talks continue in attempts to reach a settlement over the tax appeal for the 21 acres of the land that lies in East Windsor.
That property is assessed at $948,000, with the township’s 2007 tax revenue being only $4,834. That’s because almost all of the former Minute Maid plant is situated on borough land.
With tax revaluations in the township and borough planned to be complete later this year, the firms contracted to do that work would recommend to the towns 2009 assessments for the property.