Rahway expands SID despite objections

RAHWAY, NJ  – Although City Council approved expanding the Special Improvement District to four times the original size in December, last week they slightly amended that ordinance while approving a $760,000 operation budget despite public objection.}

The amended ordinance deleted a business inadvertently included in the original ordinance, bringing the total number of newly included property owners in the SID to 390.

The public hearing for the ordinance brought out a number business and property owners who voiced strong objections to the SID expansion, despite the fact that the measure had already been approved in December.

When the ordinance was originally approved, council faced a barrage of criticism about the delayed notification to many of the 392 property owners being added to the original 138 members.

In December, property owners claimed the city failed to provide adequate legal notice of the move ,while expressing frustration about creating a “scattered” district, not one “contiguous” to the original 138 properties located in the immediate downtown.

Last week, however, as in December, after city administrator Cherron Rountree addressed a laundry list of the concerns voiced by property owners, there were eight votes in favor of the measure, with one abstention.Last week’s public comment portion of the meeting was a replay of many of the concerns expressed when the council initially approved the expansion.

Many who approached the microphone reiterated the frustration they felt about the city expanding the SID beyond the boundaries set up 20 years ago, when the district was initially formed.

Others, such as William Michaelson, the Fanwood attorney representing the Friends of Rahway, a group of business owners that filed a lawsuit in January to stop the expansion, made it clear the move would not hold up in court. That lawsuit is ongoing, with no date yet set for a court hearing.

“I think the council made a bad mistake when they expanded the SID,” Michaelson told the council, adding he found there were “a series of substantive issues” surrounding such an expansion.

Michaelson explained that, while a SID is a perfectly legal way of defining a certain district, a non-contiguous district scattered throughout the city was not acceptable.

“This is the first time I ever heard of a town expanding a SID citywide,” he said, pointing out that he found no less than 16 places where the city violated the law.

“A SID has to be a district, and it’s not plural,” Michaelson said, adding, “It’s against the law and that’s why we are in litigation.”

In December, city officials explained that, by expanding the SID citywide, it would enable hiring someone to look at the downtown area “holistically” and find out what would draw more businesses and foot traffic to the downtown. City officials also noted, by collecting the assessed tax from a larger number of property owners, it would be possible to offer “micro-loans” to businesses in need of facade and other improvements.

Michelson, however, felt this was unfair to business and property owners paying the special assessment tax that dropped from 35 cents to 25 cents for every $100 of assessed value, as a result of the expansion.

“Think about it; you are trying to rob Peter to pay Paul,” the attorney said, pointing out the city would be using the special assessment tax collected from property owners to fund these micro-loans. Michaelson also felt the idea of expanding the SID was “heavy in politics.”

“You don’t want to hear if this is wise or legal,” he told the council, who sat stony-faced throughout Michaelson’s comments and the public comment period.

Property owners such as Joanne Wakefield tried to persuade council members prior to voting that they were making a mistake in approving such a large budget for a SID.

“The purpose of a SID is to encourage the community to benefit from a downtown,” she said, asking where the $760,000 budget would be spent and who exactly sat on the Arts District board.

“I haven’t been able to find out this information,” she said, adding she had other concerns about the spending plan.
“How can you present a budget when it’s not completed? That’s like giving them a blank check and they can do whatever they want,” Wakefield said, explaining she did not understand why the city wanted to increase the size of the SID in the first place, because the stores downtown are empty.

“I had six tenants wanted to rent my space, but everyone I submitted to the city was turned down,” said the Cherry Street property owner, pressing for more information about how the SID and Arts district spent budget money in the past.
“Are there any budgets that can show what the SID has done?” Wakefield asked, suggesting something had to be done to make the process of renting easier for property owners, such a communicating with them more.

“A SID promotes economic growth, but we need to be included in the process,” the property owner stressed.
Business owner Robert Lamostra, a third-generation machinist and proud owner of a family-owned company that has operated in Rahway for 50 years, became emotional when he spoke of the hardships he is having as a city business owner.
“We have done everything we can to downsize, plus I’m working two jobs to maintain my taxes,” he said, explaining that, last month, he paid $1,000 toward this bill, but $335 of that amount went toward late penalties.

“Owning a business used to be a proud thing, but every week, the payroll is due, but sometimes the money doesn’t come in,” the business owner said, adding he is against the expansion that now includes his business.
“When is enough, enough? My company has been paying taxes for 50 years and now there is going to be a new tax on top of that,” Lamostra said, imploring the governing body to “slow down; let’s see what we have here.”

Bill Baker, a Church Street property owner, also was concerned about the empty stores downtown.
“I took a walk around the downtown and there are so many empty stores. I think we are building way too fast,” he said, telling the governing body to “slow down and let’s see what we have here. It’s a real mess we have in our town.”

Other residents expressed the same sentiment, many pointing out that, while they were among the original 138 SID members, they never received assistance or any communication from the district management corporation that ran the SID previously.
“If they’re having meetings, why aren’t they opening them up to us?” one downtown property owner asked.

Rountree tried to address each of the concerns property owners mentioned, explaining the Arts District board, which is now charged with overseeing the SID, has meetings open to property owners and the public and information about the dates could be obtained from the city Clerk’s Office. As for how budget money is allocated, the business administrator said that certainly is not hidden from the public.

“Every year, the Arts District provides the city with an annual report and this district also is audited annually,” she explained, noting a copy of this report was available to the public. However, she balked at sending minutes from these meetings to every SID member as requested earlier during the public comment portion of the meeting, noting this would not be cost-effective.
Rountree also explained how the $760,000 SID budget would be spent this year, pointing out that, with this additional funding, it would be able to focus on marketing and, for instance, providing micro-loans to business owners for facade improvements.

“The city has been trying to do that, but the funding dried up,” she added, also noting budget dollars would be used for capital improvements in the SID area, as well as public safety initiatives throughout the city.

“We have numerous studies on SID’s and that is what this budget is supposed to do,” Rountree said.
While the majority of council declined commenting on what took place prior to their approving the two measures, Councilman James Baker had no problem explaining why he voted in favor of the SID expansion and the $760,000 spending plan.

“Are there vacant properties? Absolutely,” he said, but added he thought the city was making an effort to address this issue.

“There are forces beyond our control,” Baker said, explaining that, years ago, large manufacturing companies such as Purolator, Wheatena and Regina all provided a strong tax base for the city, but since they left or closed, that was a financial loss for Rahway.

“Over the years, we have had to revisit Rahway, because these companies provided a lot of revenue and a stable tax base,” the councilman said, adding the city had to create other revenue streams.
“I have lived here over 50 years. The short of it is we have our issues and challenges,” Baker said, noting the city has “an open, proactive administration.”

“Rome wasn’t built in a day, but Rahway is on its way,” he added.
Councilman David Brown cut to the chase with his comments, pointing out that Rahway “is a town where you have to pay your way.” He also left the downtown property owners involved in the lawsuit against the city some food for thought.

“The Friends of Rahway need to go to the Chamber of Commerce and work with them to better the downtown,” Brown said.