Roselle Park abolishes SID with little notice

ROSELLE PARK, NJ – Although there was a silent majority that felt the downtown Special Improvement District was moving in the right direction, the borough council decided to abolish it because it was “too little, too late.”

Unfortunately the SID board and businesses paying the tax were never notified that this was being considered until the last minute and by then it was too late.

The SID, established in 2005, was an organization in name only for years. That changed two years ago when several business owners in town decided to get the program off the ground and began assessing a special tax on business and commercial property owners within the SID.

But, after 24 months under their belt and several promising programs in place, the board heard through the grapevine that the council was about to get rid of the district entirely.

Mayor Carl Hokanson, though, who just stepped into the elected position, did not hesitate to explain why the decision was made.

“It’s a matter of too little, too late,” he said in an interview with LocalSource Friday, stressing it was business owners who came to him and said they “wanted out” because they were not getting anything for their SID tax dollars.
“When 26 percent of business owners did not pay their SID tax and faced having a lien placed on their property, something is wrong,” the mayor said, mentioning that when these businesses joined the SID they were told they could back out later if they wanted.

However, according to state statute, a SID is not an organization you can arbitrarily leave but rather a model for management of a municipality’s commercial business corridor. It is actually authorized by state law and formed locally by ordinance and abolished in the same manner.

The borough council did abolish the SID in the proper legal manner, but at issue is why they did not inform the SID board or members of their intentions.

While a SID does legally provide a mechanism for businesses and property owners to organize as a single entity in order to raise funds for activities that enhance or expand municipal services, the mayor claimed business owners should not have to pay an additional tax when they were not seeing any benefit for their money.

“It was a joke,” he said, mentioning he was working with business owners to start a chamber of commerce, which he felt would benefit the downtown more than a SID.

To say the abolishment of the SID caught board members and supporting businesses by surprise would be an understatement. Certainly the board was aware that not all business and commercial property owners felt the SID was beneficial for them. In fact, 26 percent of those property owners objected so strongly to the SID tax, they refused to pay the assessment. Because of this, the mayor said, they could be slapped with a lien and possibly lose their property.

According to an email sent by First Ward Councilman Andrew Casais to the board of directors Nov. 5, which was shortly before the borough council abolished the SID, there were more members in favor of getting rid of the special improvement district than keeping it going.

Casais claimed that out of the 147 SID members being levied with the special tax, only 20 of them, or 13.6 percent, were in favor of keeping the district going.
“At the end of the day there are undoubtedly those entities in favor of the SID, those that are against it and those that are genuinely apathetic,” Casais said in his memo to the SID board, adding “my opinion on this matter is that compelling any group to pay an added tax is altogether different than inviting members of the group to take part in something voluntarily.”

According to other emails Casais sent to the management team and Pasqua, they were first notified about the SID being abolished on Sept. 29. In this email Casais explained that an ordinance had been drafted and introduced that would dissolve the special improvement district.

“To be clear this ordinance has been drafted and introduced for several reasons. It appears that at least the majority of the borough council has not seen enough measurable progress within the currently established borders of the SID,” said the council member, who was liaison to the SID board.

“Several items that have been viewed as critical to the success of the SID have not come to pass, or have taken an incredible amount of time to begin. Generally, the governing body feels that continuing to rely and hope for progress is simply not a viable option for renewal and progress in our downtown,” said Casais in his email to the SID board, adding “There also is a feeling that without measurable progress the 3 percent added tax on local assessments in the district is simply an investment with no return.”

“To the governing body this depicts a fundamental rejection of the SID as a viable improvement entity,” the councilman added, noting the ordinance was scheduled for public hearing Oct. 2. This would later be delayed and adopted in November.
SID board members who worked to bring the improvement district up to speed, though, felt the move by the governing body was underhanded.

“They just shut us down, closed us without any warning. No email, nothing,” said perplexed former SID president Michael Pasqua, owner of an advertising business downtown.

He said by the time they heard council was abolishing the SID, it was too late. He also questioned why Casais was the designated governing body member liaison to the SID board and yet only attended one meeting in the two years it was active.
Another member of the board was equally confused by the council’s move.

“We heard they were abolishing the SID through the grapevine,” said SID former vice-president Scott Stanford, who also operates a business downtown, adding that the borough council never let them know that they would be moving forward and abolishing the SID altogether.

In response to rumors the SID would be abolished, the board of directors presented the borough council with a petition signed by more than 20 supporters. The board also asked the borough council to consider several requests prior to abolishing the SID. Included was that businesses participating in SID programs be considered as evidence of actual positive progress.

Pasqua pointed out that the governing body was off base on exactly how many business and commercial property owners were not paying their assessed SID tax. The SID board director said the district actually had a 97-percent collection rate during the two years it had been operating, and other figures circulating were inflated.

The SID director also argued that there was not a single instance in the 30-year history of special improvement districts operating in the state where a business was foreclosed on for not paying the assessed SID tax.

“We suggest,” he said in his missive to the council, “that the few SID taxpayers who may be delinquent in their payments may have other issues with their overall municipal property tax payments rather than solely blaming the Roselle Park Special Improvement District.”

Both board members explained in interviews with LocalSource Friday that the town council doing away with the SID came as a shock because several excellent programs were put in place that could have benefited not only business owners but also residents.

Some of these programs included improvement to the signage downtown, relocation of benches, trimming of the trees that were obstructing a number of businesses on Westfield Avenue, six seasons of plantings to beautify Chestnut Street and Westfield Avenue, the awarding of trophies at downtown car shows, banners for the Summerfest program and sponsoring the “bouncy house” for the police department’s National Night Out.

The firm also came up with the idea for a Roselle Park events calendar mailed to all 5,000 residences in late fall. Also in the works was a discount purchase card for residents of the apartment buildings included in the SID, specifically to be redeemed at businesses located within the SID.

“What we really were excited about was the ‘Spruce Up Program’ which allowed us to directly fund businesses in the SID who want to make façade or other improvements to their properties,” explained Pasqua, mentioning that the first grant was awarded this past summer and the SID received inquiries from other interested business owners about the program.

“To be sure, any SID is a slow building process. There are no magic wands that are going to turn the downtown into Disney World overnight,” the former SID president said, adding the entire process was hampered by a “largely apathetic business community that isn’t interested in attending meetings, offering suggestions and working with us to achieve a common objective.”

At a council meeting prior to the SID being abolished, Pasqua asked governing body members to reconsider abolishing the SID and give it more time.

“Given all of these obvious positive developments, we sincerely believe that a council vote now to abolish the SID in only its second year of funding is not motivated by the best interests for the central business district,” he said at the podium.
He suggested that instead of terminating the SID the borough council should “take this opportunity to strengthen its partnership with the SID so all expectations may be understood and achieved in the future.”

The council, however, voted unanimously to abolish the SID, ending the program and hope of improving the downtown, Pasqua said.

Left hanging, though, was how the money remaining in the SID account would be handled, along with other legally binding duties required annually. Although the borough council felt the SID board should wrap up these financial loose ends, the president and vice president scoffed at this idea.

According to Pasqua, while financial issues have not been addressed, that is not his problem.
“To this day no one has come to us and said where are the funds you have remaining in the SID account or hand over the checkbook,” the former SID president said, pointing out there is approximately $12,000 left in the bank account from SID assessments. In addition, he said, although the state requires that a SID audit be completed every year by February, he has no intention of doing the job.

“We were volunteers. They abolished the SID. Why should we do an audit if you don’t need us anymore?” Pasqua said, explaining he has called numerous people about the money in the SID account, explaining that they want to turn it over to the borough, to no avail.

In late December Casais explained in an email to the former SID board members that he was well aware how much time and effort Pasqua and Stanford put into revitalizing the SID.

“No one, and I truly mean no one, including myself, has ever questioned your intent to make Roselle Park and the borough downtown a better place,” he said, but added that making an issue of who was going to pick up the SID checkbook was “unacceptable and petty.”

“This is only made worse by the potential that a quasi-government organization who has responsibilities to not only the municipality, but to the state and federal government, IRS, refused to conduct an audit of finances and transactions,” Casais said.

Pasqua and Stanford were not threatened by this in the least, mentioning that since it was the township council that closed the SID down, and they were merely volunteers, there was no legal obligation on their part to honor any financial obligations.
Kenneth Blum, finance director for the borough, though, sent an email to Pasqua, pointing out the former board members had to complete the year end audit, make sure all outstanding bills are paid and determine if any funds are left.

If there were funds in the SID account, then the money had to be returned to the former SID members who paid the tax in the first place. Blum said once those steps were completed, there were others that had to be addressed to close the books.

Pasqua again stressed that because the borough council abolished the SID, that meant the SID board was also “abolished” and therefore it fell to the town council “to properly handle the formal closure they voted in favor of.”

“This SID was set up in 2005 by the borough and abolished by it in 2014 so it would appear to be incumbent upon the sitting town government to handle these final details in laying it to rest,” Pasqua said.