PILOT Project's Financial Impact On Parsippany Schools Discussed

PARSIPPANY, NJ — Discussions and disagreements were sparked after Mayor James Barberio and a council majority spoke in favor of financial arrangements known as PILOTs—short for Payments In Lieu Of Taxes — for the township.

PILOT agreements, also known as municipal tax abatements, are deals that enable a developer to switch their standard tax payments for a property to a fixed, yearly payment to the municipality.

Some municipal officials, such as Barberio, have described them as valuable tools for attracting development to underdeveloped or blighted parts of town.

However, their use has garnered criticism from opponents, who warn that the transactions could allow large developers to avoid paying their fair share of property taxes.

According to comments made by the mayor, without the use of PILOTs, the continued blight of vacant or demolished office buildings will significantly add to the tax burden for residents.

'Our future is pretty bleak when it comes to office space here in Parsippany. We're at a 30 percent vacancy rate and it is only going to get worse. If we don't do things like this, we're not going to collect any tax money going forward," Barberio said.

The trio of PILOT-related redevelopment plans passed the initial phase with a 4-1 vote from the council and will be debated and voted on for a final passage at a later date.

Several locals, including those from the Parsippany Board of Education, expressed their disapproval of the PILOT programs, claiming that they would underfund the school system even as new construction would unavoidably result in an increase in the number of students and associated expenses.

A key aspect of PILOTs is that, unlike traditional property taxes, which are split between the town, school system and county, in a PILOT, the city or town keeps nearly all the money.

One of the speakers on Nov. 21 was Alison Cogan, the president of the Parsippany Board of Education.

"PILOT agreements that do not include specific financial agreements that involve the board of education put undo pressure on current and future taxpayers. Residential development brings additional students to the schools. PILOT agreements that do not include clear revenue-sharing agreements with the board of education create a situation where the school district is obligated to educate those new students with no additional revenue to offset those expenses," Cogan said.

The potential result of an increase in student enrollment would be the school district increasing their taxes for all township residents to help balance out the costs.

"Local officials should take the opportunity during the negotiating process to ensure that if the new property directly affects the school district, accommodations should be made to include the school district with compensation or appropriate credit," an article by Robbi Acampora on the New Jersey School Boards Association website said.

Tim Berrios, a recently elected member of the Parsippany Board of Education, said that a district study predicts an enrollment increase of 1,000 students from all of the residential units currently either under construction or being proposed in town.

"I don't think that's going to change; if anything else, I think it's going to get a little worse," Berrios said.

Berrios argued that operating the school district within the constraints of the 2 percent tax cap would become increasingly difficult.

Former Parsippany Township Attorney John Inglesino previously stated that the three PILOT projects would not have an effect on the school district. "The school gets every dime. If the school board approves a budget, they are guaranteed every nickel that's been approved in their budget, whether there is a PILOT, whether there's not a PILOT... The school gets paid," Inglesino said.

"The board of education is not in favor of any additional PILOT agreement for residential development, especially without written, signed agreements that clearly define the fiscal compensation to the school district for the new student influx," Cogan said.

In response, councilman Michael dePierro argued that if the school district wanted a percentage of the PILOT revenue, then they would potentially have to give back their percentage of money from tax appeals.

"When properties file for a tax appeal and get settlements, the township has to give them back their money. The township gives it all back, the school board gives nothing back. To be fair, if you want a percentage of taxes from the PILOTs, then when we have tax appeals since you're 67 percent of the tax rate, are you willing to give back 67 percent of every tax appeal?" dePierro questioned.

Cogan said that the school board would be open to negotiations but has never been included in the conversation by the town.

Barberio promised to meet with the Parsippany school board to discuss their needs.