EGG HARBOR TOWNSHIP — For almost two decades, the township’s tax-abatement program has encouraged commercial property owners to build and expand their businesses here in exchange for a break on property taxes.
Since the program’s inception in 1999, the township has entered 170 abatement agreements, adding $183 million worth of ratables to the tax rolls.
But not everyone sees the benefit.
“It is like whipped cream for the municipality — it doesn’t last, but sure tasted good while you have it,” said Janis Hetrick, a 45-year resident of the township.
Mayor James “Sonny” McCullough said if there was no tax-abatement program, businesses would go somewhere else where they would get a tax break.
“Commercial development is a benefit because it doesn’t need a lot of municipal services,” McCullough said. “We don’t pick up their trash, we don’t plow their parking lots and they don’t put children in the school system. It’s an absolute benefit to the homeowners, taxpayers.”
Still, some residents, as well as the township’s school board, don’t see how the program passes along the positive impact to their bottom lines.
Brandon McKoy, director of government and public affairs for New Jersey Policy Perspective, said in some municipalities, abatement agreements can stretch for more than a decade, and the main concerns are that the tenant holds up its side of the agreement and that municipalities invest tax dollars in things that will grow their economy.
“There’s always concerns that residents and community members have that abatements aren’t going out of control,” McKoy said. “It’s a fine line of attracting activity, while not allowing people to take advantage of your community.”
The Township Committee adopted the tax-abatement program in 1999, after a state law enacted in 1991 allowed municipalities to offer a phasing-in of property taxes on the improved value of commercial properties.
In an Egg Harbor Township commercial tax abatement, the amount of taxes a commercial property owner pays on the improvement value of the property is phased in over five years. Only the improvement value on the property is eligible for the phase-in, with any existing land value and structures not eligible for the break. Property owners pay none of the improvement value in property taxes the first year, but that increases 20 percent each year, with 100 percent due the sixth year.
Hetrick doesn’t believe the program benefits residents in the long run.
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“At the end of five years, when the business is paying its 100 percent, none of us get lower taxes,” she said. “It is all just piled on the residents. We make up the difference for the entire five years and then keep paying forever.”
For commercial property owners, the program is a sweet incentive that can help them grow their business.
Matt Blatt Kia, a car dealership on the Black Horse Pike, is in the first year of its second tax-abatement agreement with the township for an expansion of the business. The first agreement was granted when it was built in 2009.
Owner Roy Greenblatt said he didn’t know whether they would have expanded without the program.
“For saving money, it’s a benefit to us,” Greenblatt said. “We’ve added eight employees already.”
Meanwhile, the township’s school board recently complained about not receiving any benefit from the abatement program.
“Currently, the township keeps all of these funds and shares nothing with the schools, making our difficult financial situation that much worse,” school board President Pete Castellano said at a recent Township Committee meeting.
The Economic Development Commission recommended adopting a tax-abatement program to the Township Committee as a way to stop losing commercial properties to other municipalities, township Administrator Peter Miller said.
“Pleasantville was designated a UEZ (Urban Enterprise Zone), and towns such as Millville and Winslow, among others, had tax-abatement programs already in place,” Miller said. “These programs in other municipalities resulted in over 100,000 square feet of commercial property owners/lessors leaving Egg Harbor Township for those municipalities who had tax-abatement programs.”
Miller cited Kramer Beverage, a business that moved to Winslow Township, Camden County, to take advantage of its tax breaks a year before the township adopted its abatement program.
In the past nine years, the township has collected $3.59 million in tax-abatement payments, which was used as revenue to reduce the tax levy, Miller said.
“We’re using whatever money we get on the tax abatement for property-tax reduction, which benefits the people who pay school taxes, too,” he said.
Residents face another round of municipal tax increases this year. The $40.9 million budget, which was adopted at the April 4 Township Committee meeting, sets the local-purpose tax rate at 56.54 cents per $100 of assessed value, up a penny and a half from the year before. That does not include school or county taxes.
“My taxes have not decreased on a municipal level, not ever,” Hetrick said when she was told how the municipality uses the money.
School board members and administrators have asked the mayor and Township Committee to share revenue from tax abatements, most recently at the committee’s Feb. 21 meeting.
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“Specifically, we are asking that the payments received from developers of affordable housing, and the payments received from commercial abatements, be split in the same proportion as all other tax revenues received,” Castellano said.
The school board contends the funds are needed to compensate for a shortage of state funding. Even though the district has received more aid this year, they still fall $23.5 million short of where the state funding formula would place them, Castellano said.
McCullough said the township would share the revenue if the school district “would be willing to share in the tax appeals that we get every year that we pay on behalf of the Board of Education.”
Castellano said the district is “prohibited by law from spending school funds on tax appeals, and even if we could, we simply don’t have any funds to spare at this time.”
Overall, in the 19 years the township has had a tax-abatement program, businesses that have taken advantage of the incentive have increased the number of permanent commercial ratables in the township and brought in jobs, Miller said.
“New Jersey as a whole is not a business-friendly state,” said Kevin Mayer, 28, who was born and grew up in the township but now lives in Mays Landing. “EHT is being proactive and doing what it can to bring business and jobs to the town.”