Collingswood and PILOTs Part II: Impact on Schools

The “biggest and longest” PILOT agreement in Collingswood, said Mayor James Maley, is that into which it entered with the Ingerman Group, the property management company that will complete Phases III and IV of the LumberYard project before moving its home offices the first floor of the new building.

Next is the 10-year agreement with Kitchen & Associates, and then there are 5-year PILOTS with new businesses, a standard offer “that anybody in town can get,” Maley said, including Dr. John B. Tedeschi of Advocare, who is building a new office in town.

But the idea that any PILOT agreement costs the Collingswood school district by keeping taxes off the books “is totally, completely wrong,” Maley said.

“The impact is that you don’t have a ratable that helps lessen the tax burden for residents on their school taxes,” he said. “So it does nothing to affect the schools whatsoever. It affects property owners.”

Collingswood Superintendent Scott Oswald agreed, citing the 2-percent cap law that constrains tightly any budget increase in a school district that is regarded as one of the most financially sound in the region, and enjoys a better credit rating than that of the borough.

“In a day gone by, there may have been an argument that PILOTS divert money from the school district by directing resources to the municipality,” Oswald wrote in an e-mail to Patch.

“If we collected $100 in taxes last year, we can collect a maximum of $102 this year,” he wrote. “If ten new properties come onto the tax rolls, we can still only collect that $102. The difference is that $102 is now divided between the old and new properties, resulting in a lower tax for each property.

“The PILOT does not impact the $102 collected by the district, but it does impact the check each property owner writes for his or her taxes,” Oswald wrote.

A statewide issue

The state and county are affected as well, noted New Jersey comptroller Matthew Boxer in a 2010 report on the impact of PILOT agreements in the state.

Among the potential pitfalls Boxer noted is that such agreements, if administered improperly, can “artificially depress the ratable property base and may increase the need for state aid, at least in the short term.”

In fact, Collingswood is mentioned by name in Boxer’s report as making “significant use of development abatements” along with its densely populated county neighbors, Camden City and Gloucester Township.

The same report also mentions as a potential pitfall of PILOT agreements that “municipalities often fail to use abatements to bring in the type of redevelopment that would address community needs or bring appropriate improvement.”

Gloucester Township, Boxer’s report notes, granted three separate, short-term abatements to a trio of Super Wawas built within 2 to 4 miles of one another in 2007-08. That’s especially a problem, it said, because those establishments only create low-wage jobs, which have a limited economic impact on the community.

Housing 80 architects and engineers in a historically renovated building that they themselves have had a hand in improving doesn’t seem to fit that bill.

Plus, as Oswald wrote, “the Old Zane School will likely not produce any students for the school district and, hence, should not impact the way we do business.

“I am not a PILOT expert,” Oswald wrote, “but it seems the short-term downside may come with a longer term upside. I think it is up to the residents of Collingswood to decide which side outweighs the other.”

'Maximizing dollars in'

Both Maley and Oswald point out that the $4 million influx of cash that came from the sale of the Parkview/Heights of Collingswood apartments—another project granted a long-term PILOT—funded a $500,000 donation of equipment to the school district. And a lot more of it was refunded directly to borough taxpayers in the form of a cash rebate.

The 25-year abatement given to the Ingerman Group as part of its purchase of the LumberYard is “taking the county portion out of what Ingerman would pay and devoting all of that into reducing the borough’s debt,” Maley said.

“That has a better overall effect for the [Collingswood] property owner,” he said.

“The dollar coming out of his pocket, 50 cents is going to the schools, 50 cents is going to the borough," Maley said. "If we can devise a way that’s going to pay down expenses for the schools, it’s going to the property owner.

“All of these PILOTs, the reasons we’re doing it is to maximize dollars in,” Maley said.

Click here to read Part I of our story, which looks at the details of the 'Old' Zane School sale to Kitchen & Associates.