Bond proceeds to help town pay off property tax appeals

Staff Writer

 HOWELL HOWELL HOWELL — The Howell Township Council has unanimously adopted an ordinance that will permit the municipality to sell bonds and use the proceeds to pay off property owners’ successful tax appeals.

The council took the action at its Nov. 1 meeting.

According to Howell Chief Financial Officer Jeffrey Filiatreault, the ordinance is based on the New Jersey Division of Local Government Services’ (DLGS) new criteria for bonding for tax appeals.

The criteria allows a municipality to bond for 75 percent of property tax appeals, which in Howell’s case amounts to $1 million of the $1.41 million the township owes property owners who successfully appealed their most recent property assessment. The bonds will be paid off over three years by the municipality. In addition, the financing of the tax appeals can only occur one time. Municipal officials indicated they intend to authorize a revaluation of all properties in town in order to correct assessments that are not accurate. Doing so could limit the town’s exposure to successful tax appeals.

Filiatreault said the DLGS has the right to approve any additional hiring of staff by the township during the 2012 calendar year.

Prior to the ordinance’s introduction on Oct. 18, Mayor Robert Walsh asked Filiatreault if he found the conditions favorable and where the other 25 percent of paying off the tax appeals would come from.

Filiatreault said the remaining money to pay off the tax appeals would come from local property tax revenues.

“The way I look at it is that I would rather be able to finance 75 percent [of the $1.41 million owed] than none of it, and that is our choice at this time, to either absorb it all or absorb 25 percent. I find the 25 percent to be more acceptable,” Filiatreault told the members of the governing body.

Before the council voted to adopt the ordinance, Deputy Mayor William Gotto explained that the condition of allowing the DLGS to approve the hiring of new municipal employees was the result of other municipalities abusing the system.

“It’s not a punitive action, it’s a commonsense action,” Gotto said. “We have no intention of having new hires anyway.”

Walsh and Township Manager Helene Schlegel reiterated Gotto’s sentiment.

“This [condition] is not for Howell specifically,” Schlegel said. “There were some municipalities that were bonding for the money and taking money they had available and hiring all kinds of people and increasing their work force and things like that.”

The bonding is necessary to refund money to property owners who successfully challenged the assessed value of their property.

A property owner’s total property tax bill is determined by taking the assessed value of a property (land and improvements) and multiplying that value by tax rates set by various taxing entities (i.e., local municipality, school district, county, fire district).

If a property owner believes his property is incorrectly assessed, he may appeal that assessment. If the assessed value drops, so does the overall property tax bill.