EGG HARBOR CITY — The Neighborhoods of Cedar Creek, which received a controversial property-tax abatement for its new homes in 2012, has generated $104,861 in property-tax payments in its first 15 months, according to City Tax Collector Bridget Hayes.
Developer Brad Haber said he has sold 27 homes, and 14 are occupied. Two children have been added to the Egg Harbor City School District and two students to Cedar Creek High School, he said in a recent presentation at a City Council meeting.
Hayes said the properties have been billed $177,277, but second-quarter tax bills aren’t due until May 1. All but about $17,000 billed is taxes due on the lots, which are not part of the abatement.
The biggest fiscal impact to the city, however, has come in the form of land aquisition and fees. Brad Haber Homes has so far paid the city $690,000 to buy the first 45 lots, $220,000 in approval, filing and professional fees, and $300,000 in development fees, said City Chief Financial Officer Jodi Kahn.
When the city approved the tax abatement program, many other residents in town objected, saying they get no help with their high taxes and the arrangement wasn’t fair. They feared they would be unable to sell their homes if they had to compete with Haber. They also objected to the clearing of all trees in the development zone.
Officials said at the time that bringing more homeowners into town would spread the cost of running the government among more taxpayers, lowering rates for all in the long run.
City residents pay the second highest tax rate in Atlantic County, at $4.13 per $100 valuation. When values are equalized among towns so economic differences are accounted for, Egg Harbor City pays the county's highest tax rate.
The buyers pay full tax rates on their lots, but make payments in lieu of taxes (PILOT) on the structures for five years. For the first full tax year after a Certificate of Occupancy is issued they get a full exemption, said Hayes. Then they pay taxes on 20 percent more of assessed value per year, until they are paying regular taxes after five years.
For the partial tax year after a home receives a CO until Dec. 31, the buyer pays taxes at the regular rate, Hayes said. That’s why $17,000 of the $177,277 billed to date is for both land and structures.
During the abatement time, all of the PILOT money goes to the township; none is shared with the county or schools, as is done with tax payments.
Haber said he expected most of his customers to be families with children, but they have made up only one-third of the buyers so far. Another one-third have been young couples, and one-third have been empty nesters.
If the same ratios hold, when the project is built out in six to eight years, with 400 homes, the city could expect a total of 57 children added to the K-8 schools, and 57 to the high school. Superintendent Adrienne Shulby of the Egg Harbor City School District said neither school is at capacity in her district, and there would be no problem absorbing the extra students.
“We are looking forward to it,” Shulby said. “Other families have looked at a property there and come and asked to take tours of our two buildings. We’re really hoping for the expansion.”
Greater Egg Harbor Regional School District Superintendent Steve Ciccariello said Cedar Creek High School also has plenty of room to absorb 60-90 new students from Haber.
Haber said he had planned on selling one home per month, but has been averaging 1.8 homes sold per month. He plans a total of 400 homes on more than 400 acres surrounding the Cedar Creek High School. He has final appoval for the first 100 and preliminary approval on the balance, he said, and is paying $30,000 per lot to the city — $15,000 each for the land upon settlement, and $15,000 each for development fees when construction starts.
The average sales price has been $225,000, Haber said, and each homeowner’s tax payments on the land have been $1,200 to $2,000, he said. The remainder of the tax payments on land have been made by Haber, he said.
An analysis by city Tax Assessor Bill Johnson predicted the 14 homes that applied for abatements by March 4 will bring in (based on the 2013 tax rate) about $44,000 in PILOT payments, just on the structures, in 2016; $65,000 in 2017; and $77,500 in 2018.
Councilman Robert Guerrieri said he had invited Haber to give an update to council after touring the development with family members.
Haber said his company has paid $100,800 in state sales tax to date, and has purchased $975,000 in materials within Atlantic County.
His company has invested $1.5 million in land improvements and $2.5 million in labor and materials, he said. He estimated he and his 15 regular construction workers spend about $1,000 a week in restaurants and stores in Egg Harbor City.
The next step is to open Neighborhood 3, he said. He plans to purchase 25 lots from the city in October and have the lots paved by January 2015.
“That is not happening in New Jersey right now,” he said of the brisk sales pace.
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