Ref: “PILOT” Failure, an egregious example

This indictment of “high-density residential PILOT* financial agreements” uses the Union County Scotch Plains-Fanwood School District’s $115 million referendum as the perfect example of ‘PILOT failure.” All municipalities MUST take note of this example, since all towns are giving out these PILOTS like candy at Halloween.

The SP-F school district had a zoom meeting to discuss their referendum. Two questions from residents exposed this PILOT failure. One question was about these high-density complexes, how much are they paying toward this referendum if it passes. The district responded that they are not involved in funding it. The second question was, how many district students are being generated by these complexes. The district responded that they know of 53 students coming from the 200 residential unit complex built on the “Bowcraft property” which was given the PILOT. The PILOT also reveals that this property does not pay any school taxes for these students, nor will any of these type complexes in town pay toward the purchase and renovation for a new school building that the referendum includes.

The residents are incredulous on their Facebook pages. This total financial burden of a new school along with large renovations to the other existing schools in the district will be dumped on the existing taxpaying homeowners which also includes those renters of the older rental properties that are normal property tax assessed. The final slaps are- although the school district budget must maintain a 2% tax cap, such large debt service is outside that cap. And the influx of student costs could hamstring that 2% cap to create diminished programs. Plus, the question posed about these high-density PILOT complexes: how does one think those residents will vote, given a free school they don’t have to pay into?

Scotch Plains-Fanwood is only one example, nearly every single town is doing this same thing giving developers PILOT agreements on their huge luxury complexes as we recognize. Something needs to be drastically changed, whether it’s the scrapping or revising of PILOTS, or imposing statutes by the legislature to capture school student costs from the free-ride complexes. “Round four” of affordable housing is coming up in October forcing towns to come up with more plans by January 2025. Several towns are joining together to sue the state on the “un-constitutionality” of this program. This state has failed us citizens. Roselle Park is another PILOT failure example, but based on the town’s end and should be covered in another letter.

*Postscript: The PILOT: payment in lieu of taxes, is a Stated endorsed program, where-as the municipality allows all these new high-density residential complexes to pay a portion of rental revenue instead of normal property taxes on the large buildings. This much lesser revenue, approximately 40-50% less, is only distributed 95% to the town and 5% to county, none to school district.

Very Truly yours,
Bruce Paterson