Application Outside Of A “Redevelopment Zone” Proposal
Normal Application Outside Of A “Redevelopment Zone” Proposal
If you were to make a normal application, outside of a “redevelopment zone” proposal, to develop property in Flemington, you would incur the cost of your own consultant to present your plan and your arguments in favor of your proposal.
No Duty Of Loyalty To The Developer
The municipality would hire a consultant, who in its sole judgment is considered to be an expert, to perform an independent review and analysis of the plan. The developer would have no voice in the selection of the municipal expert and could not object to anyone hired for the purpose. The expert selected would have no duty of loyalty to the developer. The expert for the municipality would hear the presentation by the presenter working for the developer, and with the information presented would insist on being provided with independent information and that his assignment would be broad enough to allow an informed opinion.
The cost of the municipal expert would be paid by the municipality out of funds deposited by the developer with the municipality.
In connection with the redevelopment proposal in Flemington the Mayor gave the developer a voice in the selection of the only expert to review and analyze the financial part of the application, including the proposed PILOT aspect of the transaction. The agreed upon expert selected was Mr. Otteau Jr. of the Otteau group. His work was based entirely on the information submitted by the developer and on his assumptions. He concluded the project could not go forward — was not feasible— without the PILOT.
No Information About Local Schools Considered
When questioned, Mr. Otteau said there was no information about local schools submitted and considered. There was the assumption that there would be no, I repeat no, school children in the proposed 222 apartments with 356 bedrooms in the seven and a half story building. That is the same assumption offered many years ago when the garden apartments were approved and built at the foot of Thatcher’s Hill. When I drove into work at other than my usual time on days last spring I had to wait and watch three school busses load from that project.
Mr. Otteau reported the 17 properties that comprise the redevelopment area currently generate about $62,000 a year in revenue to the borough. According to public records the property owners pay taxes in the amount of $182,449.06. If the Borough property included in the list was returned to the tax records there would be another $32,343.14 for a total of $214,792.20. Of course much of that would go to our local schools which they will not get under the PILOT arrangement. We will have to make up that difference from tax payers other than the redeveloper.
According o the developer’s consultant, under the proposed PILOT, the borough would receive about $694,000 average annually under the 30-year agreement. That is, Flemington would receive $694,000 x 30, or $20,820,000.00 over 30 years during which the cost to the owner of the developed property for municipal services would not increase no matter how the costs of the Borough providing services might increase, or how inflation might increase costs. I heard no evidence in the presentation relating to the inevitable increases in costs caused by all the people, cars, parking, traffic, the burden of a college crowd, increased police, and increased traffic would bring to town.
Present Value Of Money
I heard a question asked by a young woman about the present value of money and the stream of payments anticipated in relation to the $20,000,000 plus dollars of benefit suggested. The consultant said the question was not relevant. He noted that he taught finance and future value at a small college as the basis for his authority for his answer. But her question was and is relevant in terms of a finance benefit in relation to the costs or benefit to the taxpayers. The suggested 20 million is more like 12 or 15 for which Flemington is asked to sell its soul. I have asked her to write her thoughts as a guest blogger and I hope she will do so. I note that she is a very bright woman with a masters degree in business administration from MIT. He should have listened to and answered her.
In a post to follow I will talk about the proposed college. Is it important to have this particular institution in our community? What is the expected benefit? And further, we should think about why this project was started in the first place and what costs, in money and in life style, are we, as a community, willing to trade for what in exchange? President Lincoln is reported to have thrown a man out of his office because he feared the man was coming to close to a price he might be tempted to accept. What is our price as a community in exchange for what is proposed here?