Mayor’s Message — Navigating the Future: PILOT Programs

Mayor Louis Manzo explains the process of PILOT programs and their benefit to Harrison Township

I am sure that you have been hearing the term PILOT program over the last couple of years, and I have discussed the benefits of PILOT’s at many public meetings, but I cannot personally speak with everyone, so I am providing a brief outline to further explain how we have (and will be) effectively implemented them to benefit Harrison.

The use of redevelopment designations and Payment In Lieu of Taxes programs are land use planning tools available in the approval process for municipalities. Some towns use redevelopment as a lure to developers and offer incentives for their projects. In Harrison, we have never used those tools to entice commercial development here, but rather to enhance projects already seeking approvals. Once a private landowner decides to sell their land to a developer for a commercial use, which is every citizen’s right, we have applied those tools to maximize the benefit to our community.

The prominent example of this is the Mullica Gardens Assisted Living facility, which is the first to be built using this redevelopment designation with a PILOT connected to it. The original landowner sold his property to that user before it was designated as a redevelopment area. We then sought and gained the designation to ensure the facility would be built in a manner that fits in with our community, which also allowed for a PILOT program to be established.

So, what’s the benefit? First, the designation allowed the town to require more buffering to surrounding properties and ensure a high level of aesthetic criteria for the project. From a fiscal perspective, Harrison benefits greater from a PILOT payment versus the traditional tax collection payment that would have been made. The simple math is the town keeps $128,250 of the Garden’s $135,000 annual tax payment. Under traditional collection process, we would only keep about $20,000.

The impact is tremendous, as you can see. That’s because the other entities that normally get 85 percent of your tax payment do not automatically take their piece of the pie, which includes our local schools. That’s also why we have only exercised these tools with commercial projects, not residential development, since no additional students are generated with commercial projects.

One misperception that exists is the schools never receive any portion of PILOT payments, ever. This is not the case. In fact, we have spent the last several years educating the school leadership teams on how the annual review of PILOT income will work for their “piece of the pie” as that revenue comes online. The partnership with Superintendents John Horchak and Dr. Missy Peretti is strong and rare, compared to most communities. We value the connection between town leadership and our schools considering what a vital role they play in our community.

Recently, there has been some public comments suggesting our schools would suffer financially because of these PILOT programs. That prompted Horchak to email me saying he appreciates our discussions and sees it “as an important variable to our funding in the future.” Peretti thanked us for the “continued communication” on the topic and she “appreciates our frequent discussions over the last four to five years regarding redevelopment and PILOTs.” They are clear this fiscal plan includes our schools and you should be too.