PILOT Agreements

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Author Message   doublea Citizen Username: Doublea Post Number: 105 Registered: 3-2003 Posted on Friday, May 16, 2003 - 7:59 am:        There has been considerable discussion of PILOTs in other threads and I thought it would be helpful to start a separate thread. Set forth below is my understanding of how any project should be analyzed to determine if it is more financially beneficial to the South Orange taxpayers as a PILOT or as a non-pilot. PILOT Agreemnts 1. The value of the PILOT property is not included in the tax base for county or school tax purposes. 2. The PILOT pays only municipal taxes. It does not pay county or school taxes. The amount of municipal taxes paid by the PILOT is a negotiated amount, based on the construction cost, which is higher than the municipal taxes that would have been paid had it not been a PILOT. The municipal taxes paid by the PILOT are subject to escalation based upon the percentage increase in municipal taxes for the life of the PILOT. The value of the PILOT property is not subject to any reassessment arising from a revaluation. Non-PILOT CASE 1. The assessed value of the property is included in South Orange's tax base for county and school tax purposes. The assessed value is not necessarily the construction cost as used in a PILOT, but the rental value of the property, and subject to reassessment. 2. The project in question then pays municipal, county and school taxes the same as any other property. When doing a financial analysis, the three taxes would be escalated at what are thought to be reasonable factors. After these two cases are run, it should show pretty clearly the effect on South Orange taxpayers.   woodstock Citizen Username: Woodstock Post Number: 136 Registered: 9-2002 Posted on Friday, May 16, 2003 - 12:31 pm:        One additional item that should be considered is what kind of construction can take place in either scenario. For example, a builder may say they cannot build as planned without a PILOT. Construction without a PILOT may not be equivalent (from a tax/payment standpoint) to what would be built with the PILOT. Unfortunately, I think it's more than a simple financial calculation, otherwise even our politicians could handle it!   doublea Citizen Username: Doublea Post Number: 108 Registered: 3-2003 Posted on Friday, May 16, 2003 - 1:25 pm:        Woodstock: This is a good point and might well have been a factor in Gaslight Commons. I'm not sure whether it is a factor with Beifus or New Market, since the site plans have already been approved by the Planning Board and we have been told that the PILOT question is left to the developer's agreements, which have not yet been finalized. At this point, I'm more interested in Beifus and New Market, since Gaslight Commons is a done deal. For posterity's sake, it may be helpful to have some public meeting as suggested to go over the Gaslight Commons numbers, but I'm more interested in future projects. In another thread, Mr. Matthews said that not much interest was shown by the public in a discussion of the Gaslight Commons PILOT project at the time and I suspect that this was the case, either because people weren't aware of it,didn't realize the significance of it or just didn't care. I think this has changed.   doublea Citizen Username: Doublea Post Number: 109 Registered: 3-2003 Posted on Friday, May 16, 2003 - 7:14 pm:        Dave: How do I correct the spelling of "agreements" in the title? Otherwise I'll be hearing from Crazy Guggenheim.