Rahway votes to expand SID to include more than 400 properties

RAHWAY – Last week an ordinance expanding the Special Improvement District to almost four times the present size brought out a considerable number of residential and business property owners who had mixed feelings about the move.

In the end, though, council members felt expanding the SID was the only way for the city to keep up with nearby towns that are economic competitors.

The issue of expanding the SID from 138 downtown properties to over 400 first became an issue in late November when the city sent letters to property owners in the proposed expanded area. The letter explained the city was expanding the SID beyond the downtown and in some cases, into residential areas.

Although the letter explained the benefits that the city could reap from the expansion of the SID, including providing for extras above and beyond what usually is included in the annual budget, it did not adequately explain which property owners would be legally bound to pay the special tax. This appeared to cause some general confusion and, in some cases, rancor.

The Rahway SID itself was actually formed more than 20 years ago and like all SID’s in the state is governed by state statute. While towns are legally bound to follow the guidelines outlined in the state statute in order to form a SID, a municipality has the legal right to determine how small or large their SID will be or to increase the size.

The Rahway SID, currently managed by the Rahway Arts District, produces about $130,000 a year in revenue from this special tax. The city expects that by expanding the district that number will increase to more than $600,000 annually.

In turn, according to city administrator Cheron Roundtree, the additional money will be used to do what the SID could not do before: promote business development, provide micro-loans and marketing grants, help property owners with façade improvements and even larger capital improvements.

Once a SID is formed, municipalities have the right to charge property owners within that designated area a special tax over and above the normal property tax. Currently downtown property owners pay a SID tax of 35-cents for each $100 of assessed property value.

Many of those approaching the microphone last week during the public hearing portion of the meeting expressed confusion about the city expanding the SID, while others felt the move was a critical step in Rahway’s efforts to move in a more positive direction.

Residential speakers, though, seemed in the dark about why single dwelling residential property owners within the proposed expanded SID would be expected to pay the tax that usually is imposed on downtown property owners.

Adding to the frustration was the fact governing body members and other officials reserved their responses until the last person left the podium.

For well over an hour residents and business owners affected by the ordinance, as well as those within the present SID, stepped to the microphone to plead their case for and against the expansion.

Lawrence McCullough, executive director of the Rahway Performing Arts Center, was one of the first step to the podium to explain why he supported the city’s move.

“Bottom line, this is the best way to get people to come to our town,” he said, explaining an expanded SID gives the city more money to spend on advertising. He also pointed out the downside of not expanding.

“Believe me, our competitors will be out advertising us,” McCullough said, adding that expanding the SID “will give us the economic muscle to compete.”

Angelo Pryor, a resident of Campbell Street and business owner, also supported the expansion.
“I had a store space outside the SID and couldn’t get help, but when I moved inside the SID I got the help I needed,” he said, adding that while initially things were slow, the last two years “it is clicking.”

“The word is getting out about Rahway and to pass on this would be to stop short,” Pryor said.
Jacqueline Duboys, a homeowner who has an arts and entertainment, graphic arts and web design business on Main Street, explained why she moved her business to the city.

“I have lived here for 17 years, but seven years ago I moved my business here from Chelsea in New York,” she said, pointing out she had “unwavering support” for the SID because of the help they provided her. She also thought that others should share in the costs as well as benefits.

Jackie Ahmetaj explained that she owned three businesses in Rahway and could not have done this without the SID.
“The SID gave me the tools I needed to start my businesses,” she explained, adding that the city needed to progress in order to get more businesses to open.

Small business owner Amy Garcia Phillips explained that she left a thriving downtown in Metuchen ten years ago to move her business to Rahway and has not regretted that move.

“We have seen incredible improvements. The street fairs alone have brought people here to the city,” she said, adding “the more people come to Rahway, the better it is for everyone.”

Brian Remo, resident and owner of a theater company called Fearless Productions on Irving Street said he was an example of what a SID can do for business owners.

“I moved here a year ago. My little theater company has brought thousands of people here and I have personally brought 12 residents here,” he said, pointing out that his success is an example of why the city should expand the SID.

“I bought my home for $250,000 that anywhere else would have cost a three-quarters of a million dollars,” he added, noting that Rahway was a gem and the expansion of the SID was critical to its growth.

Those opposed to the SID expansion were just as resolute about the city taking time to look further into whether this was a good move or not.

Andy Baran, president of the Rahway Chamber of Commerce, felt the city was moving way too fast to make the right decision.
“I don’t oppose or approve of this because we just learned about this last week,” he said, requesting the city “give more time and thought to this.”

“You might want to split up the SID into three sections,” Baran said, requesting that the city council “table this for more study instead of putting a rushed proposal in place.”

Resident Eric Rickes also voiced opposition to the expansion of the SID, noting that he knew exactly what was going on.
“It sounds like the Arts District is trying to hijack the rest of the businesses downtown,” he said, adding “unless you are going to make the whole city a business district, this doesn’t meet the restrictions for a SID. I suggest you consider this very carefully because many of the people that received this letter are not in the business district.”

Main Street business owner Bob Markey was also against the expansion, explaining that 20 years before he stood before the governing body about forming the first SID.

“I support the SID but the last four or five days people have come up to me with a lot of questions. They are asking how much the tax will be, what about Merck, will they have to pay the SID tax?” he said. “I would encourage council to pause and build a consensus with downtown businesses and the Chamber of Commerce.”

Larry Morse, West Grand Avenue, was confused about what the city was going to do with the money raised from the expanded SID.
“You say you hope to raise a bunch of money that we don’t know what you are going to do with yet. You are taking money out of homeowners’ pockets to help business owners and that’s wrong,” he said.

Carl Reggie stepped to the podium to explain he was there representing a business on St. George Avenue, but his position was “to try and understand the goal of the city.”

“One word that came out of everything that has been said is ‘transparency,’” Reggie said, adding that his only request is that the city put more information out and allow citizens and business owners to have input.
“One facet should not be the driving force here,” he added.

Deborah Bridges came to the meeting trying to obtain information. A small business owner downtown, she also wanted to know why her mother, a resident of Monroe Street, received a letter informing her of the SID expansion.
“This letter said the expansion of the SID is to encourage the development of the city. Don’t you think we should have been able to sit down at the table instead of you having a closed door meeting?” she asked the governing body.

“We have a business on Main Street so we are in the SID there but I’ve been excluded from getting information. What is the plan,” she said, adding “for 25 years I’ve been trying to figure that out. What is the plan?”

Resident Raffio Giacobbe said he was born on Main Street and spent 85 years supporting Rahway, but did not support the expansion of the SID.

“I think you are overextending your boundary,” he said, adding “you can’t have a SID this big. It’s against the law.”
“I’d rather see you raise taxes than do this,” Giacobbe said, pointing out there are 11 empty stores on Cherry Street.

“The SID program has done nothing for this town. Go up and down Main and Irving streets. It’s all empty stores,” he said.
After all property owners had said their piece, city Attorney Lou Rainone explained that while some felt the expansion of the SID was not legal, it was within the scope of the law.

“”There is nothing illegal about this. There is state statute that lets us include part or all of the city in the SID,” he said, explaining what could happen if the city delayed passing the ordinance.

“It’s not as simple as putting this off a few months,” Rainone said, adding “it would set us back a year.”
Rainone explained the way the city budget is set up, certain steps had to be taken by the time the annual spending plan was set, or the SID tax could not be included in SID property owner’s tax bills in 2015.

Rainone also cleared up which property owners in the expanded district would be responsible for paying the SID tax, explaining that only those with businesses or owners of buildings with four apartments or more would bear that responsibility. Single dwelling homeowners, the city attorney stressed, were exempt.

City Administrator Cheron Roundtree then addressed many of the concerns speakers had, explaining that there were SID’s throughout every state except Wyoming.

“SID’s and BID’S, which are business improvement districts, can do a lot for towns, including reducing crime by as much as 12 percent,” she said, adding that SID’s, though, can do significantly more for a municipality.

“A SID does what a city can’t provide for in their regular budget,“ Roundtree said, explaining most recently the city held Winter Wonderland, which drew thousands of people to Rahway.

The city administrator also mentioned that while the Rahway Arts District had been managing the SID, city officials recommended the name be changed to “Rahway Development Company.”

Roundtree explained that they expect the SID tax to go down from .35 to 30 cents per $100 of assessed value as a result of expanding the borders.

“What that means is the average property owner in the SID will pay $981 a year, or $75 a month,” she added, but noted the SID tax rate is not set until the 2015 budget is approved.

The city administrator also explained the expanded SID would provide improvements and benefits for everyone in Rahway, but delaying it would set things back and change the budget process for 2015.

Roundtree said by moving forward with the expansion of the SID now, the city can hire a commercial broker to look at Rahway overall, which would help fill vacancies in the downtown.

“This could help bring businesses to Rahway,” she added.
Third Ward Councilman Robert Bresenhan also spoke about the importance of the expanded SID and his hopes for what it could do for the city.

“I see this as a lynchpin to take us into the next decade,” he said.
Council President James Baker noted he had been a resident for 50 years and he has seen the SID make sidewalk improvements on Cherry and Main streets.

“Overall there has been a positive improvement,” he said right before six council members voted in favor of the measure, with two members absent and one abstaining.