ROBBINSVILLE – Mayor Dave Fried said he is proposing a $21.9 million municipal budget for 2013 that would cut the municipal tax rate by 2 cents resulting in an average annual savings of $76 per home.
The mayor said the proposed tax cut is possible because of two major projects being built in the redevelopment zone off Old York Road: pharmaceutical distributor McKesson Corporation’s 350,000-square-foot office/warehouse building that will open later this year and online retailer Amazon’s 1-million-square-foot fulfillment/distribution center that is expected to be ready in 2014.
“We in government often talk about how new ratables can stabilize taxes, and in this case residents are actually going to see a reduction in taxes that is the direct result of these new rateables,” Fried said Feb. 11.
A 2-cent reduction in the municipal tax rate, if approved by the Township Council, means a $76 savings for a home assessed at the township-wide average of $381,000. Homeowners whose property assessments are higher than $381,000 would see greater savings, while those assessed at a lower figure would realize less.
The municipal tax rate, which is now 54.2 cents per $100 in assessed valuation, represents about 20 percent of a resident’s total property tax bill. County, school, library and open space taxes, which are collected by the municipality and distributed to these other taxing entities, account for the rest of the total $2.665 rate. The average assessed home paid $10,153 in total property taxes in 2012.
Both the McKesson and Amazon projects are located in the Southeast Industrial Redevelopment Zone, which is 176 acres of mostly vacant land within the 434-acre Matrix Business Park. Under state law, municipalities can offer tax abatement programs in redevelopment zones to attract economic development.
The township recently approved a 20-year Payment in Lieu of Taxes (PILOT) agreement with KTR NJ Urban Renewal, the property owner that is building Amazon’s $200 million fulfillment center. The PILOT, which will generate $22.1 million in new revenue for the town, school district and county over the next two decades, will begin in 2014 when the building receives its certificate of occupancy.
Fried said it’s possible to provide the tax cut this year before the PILOT kicks in because $650,000 in farmland rollback taxes, which are separate from the PILOT, are due in 2013 to reflect a change in the use of the property.
State law triggers rollback taxes whenever land assessed as farmland, and consequently taxed at a much lower rate, is sold and changes to another use. The tax assessor imposes a one-time rollback tax on the property equal to the difference between the amount of taxes paid under the farmland assessment and what the taxes would have otherwise been for both the current year and two previous years.
“Normally, we wouldn’t do a tax cut because of a rollback, since a rollback is a one-time thing, but this is sustainable over the long haul because there will be PILOT revenue coming in for the next 20 years,” Fried said.
The PILOT approved for McKesson is for five years, and is expected to generate a total $1.24 million, Township Economic Development Director Tim McGough said. The first PILOT payment will come in April or May when the McKesson building receives its certificate of occupancy, McGough said.
McKesson paid the one-time $252,000 farmland rollback tax associated with the development project last fall, McGough said.
Fried said he would present his 2013 municipal budget for introduction at the next Township Council meeting, which was scheduled for Feb. 14 at 7:30 p.m. in the courtroom trailer.