Opinion
Earlier this month, the Livingston Township Council passed a resolution to establish policy for redevelopment projects seeking exemptions under the LTTE (long term tax exemption) law. Long term tax exemptions are more commonly known as PILOTs (payments in lieu of taxes). Specifically, the resolution states the township’s commitment to considering making appropriations from future revenue generated by PILOTs – based on a number of factors – to Livingston’s school district.
Under the new policy, the Township Council will only consider approving a PILOT if the redevelopment of the property is not economically feasible without granting the exemption (meaning that full taxes are required). Additionally, the total amount received for the benefit of Livingston taxpayers from the redevelopment must be greater than the taxes currently received from the property. However, PILOT agreements are a municipal payment, and do not pay counties or school districts, which would receive the bulk of standard taxes. Council members noted that the resolution puts a framework in place to make sure the school district is not being shortchanged by any PILOTs the township approves in the future.
“The town is committing to looking into all those circumstances as new redevelopment projects come on board, to the extent that those projects would generate an impact on the schools,” township manager Barry Lewis said. “Factoring in all those factors the town is committing to a fair and equitable assessment of that and potentially making an appropriation to the Board of Education to offset it.”
The resolution states, in part, that, “The Township Council is committed to evaluating each redevelopment project receiving an exemption under the LTTE and reviewing a number of factors in considering any appropriation of a portion of the annual service charges to the Board of Education, which factors may include, but are not limited to the nature of the development as non-residential, residential, or mixed use; the number of school aged children, if any, projected to be generated by any residential development; the total tax revenues received by the Board of Education from the existing condition of the property to be redeveloped; and the financial burden incurred solely by the township, but benefitting the schools and the county, in the assessment of properties, including revaluations, the defending of tax appeals, the billing and collection of taxes, the risk and impact of the non-payment of taxes, and the amount of tax appeal refunds paid by the township.”
According to the resolution, the Township Council commits that, after review of those factors, it will make an additional annual appropriation to the Board of Education of a portion of any annual service charge in an amount determined to be “fair and equitable.”
This is not something that the township was required to do. As was mentioned during the May 13 meeting and within the resolution, there are several ways in which the county and school district “make up” for tax money they lose due to PILOTs. Specifically, township officials noted that it is the municipality that foots the bill for any uncollected taxes; the township still pays the taxes due to the Livingston Public Schools and Essex County in those cases. The township is also responsible for the expenses incurred in assessing properties, defending tax appeals, collecting taxes, paying refunds, and additional administrative tasks. The resolution made note that these factors will be considered when determining if a service charge to the school district is warranted or not with a given PILOT.
No agreement will be perfect, as evidenced by the fact that the language of the resolution is – by design – quite broad so as not to lock the township into a specific financial commitment. But we do feel that this declaration shows a good faith effort to make this commonplace process as equitable as possible for all relevant parties. It should mean that, at minimum, when future PILOTs are approved in Livingston, there will be a formal discussion about potentially allocating a portion of the funds collected to the school district. That prospective conversation and subsequent possible payment was not a requirement until this resolution was passed earlier this month.
