Large percentage of PILOT to go to schools

CRANFORD, NJ — The Township Committee unanimously approved the introduction of an ordinance that would allocate a portion of the annual service charge received from Birchwood Developers Urban Renewal Associates LLC to the Cranford Public School District.

The buildings on Birchwood Avenue, which will have 225 apartments, are currently under construction; the town anticipates that the first building may be ready for occupancy in January or February. According to the township, the total Payment in Lieu of Taxes, which will include five yearly payments, will be between $588,000 and $675,000; the final amount has not yet been decided. Of the total amount, 5 percent will go to the county.

The ordinance introduced Nov. 26 would allocate 70 percent of the money to the school district for the first two years, then 55 percent of money for the concluding three years.
“What this ordinance puts in place is a structure to give a portion of the money that we received from the Birchwood development to the schools, so to make sure that they’re accommodated through the PILOT,” Commissioner Mary O’Connor said at the meeting.

Commissioner Thomas Hannen addressed his two primary concerns with the project at the meeting: first, that the original 360 units planned for the development were too much for that particular space, and second, how best to mitigate the impact of the project on the town’s school system.

In order to solve the first concern, the township purchased the property from the original developer, then sold it to another developer, reducing the apartment count and fulfilling the affordable housing obligation. The solution to the second concern is by sharing the PILOT with the school district.

“The most cost-effective way to accomplish this and keep the taxpayers’ whole was to establish a PILOT, which would reduce the conventional taxes paid on the development, but still provide an ample revenue stream to the municipality,” Hannen said at the meeting.
“The primary reduction comes from the reduction in county taxes paid by the developer.

“In the case of the PILOT, the revenue stream comes to the municipality.”
According to Hannen, there is no statutory obligation for the revenue received from the PILOT to be shared with the Board of Education.
He said the project is expected to add up to 90 students to the Cranford public schools; with a per-student cost of $14,500, the project could cost the school district approximately $1.3 million.

“Cranford is being very unusual here, I think we’re only the third municipality to award a percentage of our PILOT payment to the board of education,” Deputy Mayor Ann Dooley said at the meeting, adding that only time will tell what the ultimate impact of the project will be on the school district.

“My personal opinion is I don’t think this allocates enough funding in the beginning. But it represents compromise between the members of the Township Committee,” Hannen said. “We’re very cognizant of how these plans affect the community as a whole … and our education system specifically.”

The ordinance is scheduled to be considered for final passage at the Dec. 17 Cranford Township Committee meeting.

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