Township Hopes New Businesses Help Offset Revenue Loss from Tax Appeals
South Brunswick added 173 new businesses thus far in 2012, but problems persist from an overwhelming number of residential and commercial tax appeals.
While an influx of new businesses relocating to South Brunswick is positive news for the municipal budget, the township is still burdened by lost revenue from an increase in residential and commercial tax appeals.
In the month of August, 16 new companies moved into the township, bringing the total number of new businesses added in 2012 to 173. The businesses moved into pre-existing buildings throughout town, with five of the companies moving into space in excess of 30,000-square feet.
Preferred Freezer Services moved into a location on Tower Road occupying 167,812-square feet and Cherryman Industries, Inc. moved into a 103,881-square foot facility located on Thatcher Road.
"We added a nice mix of small businesses and large warehouses," said Mayor Frank Gambatese. "A lot of these companies are high tech, and the nice thing about those companies is that they expand quickly. So we're really pleased with what we're seeing. Some of the warehouses are gigantic and we have an awful lot of small businesses, which is important to the vitality of the township.
"Not too many towns in Middlesex County or the state are as busy as we are."
Gambatese said in the last few years the township went from about 10 million square feet of unoccupied warehouse space down to less than 2 million square feet of unoccupied space.
"We had to make some changes in town with respect to the business community and have made an effort to work with businesses and treat them with respect," he said. "Word is out that if you want to locate to South Brunswick we'll sit down with you, go over what you need to do to get the application through, sit with the building inspector, engineer, water and sewer people, and go over what needs to be done. If you do these things the process goes smoother. Plus we're located in a perfect spot right off (NJ Turnpike) Exit 8A and near major state roads."
While the added businesses are a positive sign, as budget season approaches a major concern remains the impact of commercial and residential tax appeals on South Brunswick's ratable base.
In 2012, 391 tax appeals were filed in the township, up from about 180 appeals in 2011. In 2011, approximately 100 companies successfully sued the township for a tax reduction, which resulted in the loss of over $100 million in ratables. Of that total, $98.5 million came from commercial and industrial tax appeals.
"When you lose millions of dollars in tax appeals, some small companies coming in is not going to offset that loss much," Gambatese said. "We have lawyers going throughout town encouraging residents to file appeals and we're just getting more and more, which is not a good thing. Businesses also normally win their tax appeals, so when you lose millions in ratables it's hard to make that up."
The township ratable base dropped 4.3 percent to approximately $3.6 billion in 2010. South Brunswick experienced another decline in ratables of about $5.4 million (2.3 percent) last year.
The loss of ratables has continued to impact both the school and municipal tax rates. The drop in ratables alone would have amounted to a 7-cent school tax increase for 2012-13, according to district Business Administrator Anthony Tonzini. In March, the South Brunswick Board of Education adopted a $138 million spending plan that increased by 1.15 percent over last year and lowered the general fund tax levy by about $630,000 to $96.2 million. But the tax rate increased by about 5-cents to $2.85 per $100 of assessed valuation due to the ratable drop.
The Township Council approved a budget earlier this year that held the tax rate at 72 cents per $100 of assessed valuation. The council was able to offset the drop in ratables mainly through the use of money from the Affordable Housing Trust Fund for prior work by township employees, and by getting money back from the state for the cleanup of a landfill on New Road.
The Township Council has taken steps to try and reduce the impact by lowering the threshold for settlements on tax appeals. Previously, any settlement that was greater than $50,000 had to be brought by the South Brunswick Tax Assessor to the Township Council for approval. At a meeting in April, the council lowered the settlement limit from $50,000 to $25,000.
Despite the continued impact of appeals on the ratable base, Gambatese said the surge in new businesses is a positive sign that the recession may slowly be turning around.
"I think things are getting better, this coming year might be better than last year, but how much I'm not sure," he said. "We've added some small companies and large warehouses, we're in discussions with some major companies about moving here, so these are major signs that the economy is getting better."
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