The school district expects to hold another bond referendum this November and as promised in my earlier piece on that subject, I am following the progress.
The most recent action, which may help reduce the HVRSD future referendum request, occurred on April 14 when Hopewell Township unanimously passed a resolution committing to pay $16.1 million for an addition to Bear Tavern Elementary contingent upon the boroughs dropping their lawsuit opposing the PILOT.
At the time of this writing, Pennington Borough Mayor Jim Davy had sent a letter to the taxpayers of Pennington Borough suggesting his continued support for the lawsuit.
Hopewell Borough Mayor Ryan Kennedy voiced his intention to withdraw Hopewell Borough from lawsuit. Kennedy told me that he believes the resolution is a good first step. However, he thinks that the township still needs to do more. He gave an example of a recently updated well, and claimed there are many other direct costs that exist after the township’s expansion “swallows up any excess capacity.”
He stated that the new addition provides extra space, but “new classrooms also need teachers and supplies, and new students need transportation.” He also pointed out that the Lennar PILOT is just one of many. Since PILOTs do not impact the school budget, Mayor Kennedy hopes to see the township step up and cover more expenses outside of the school’s formal budget as this resolution attempts.
Mayor Kennedy is optimistic that this action is not a one off and will prompt future discussions for a more holistic approach to addressing Valley wide needs. Hopewell Township Mayor Courtney Peters-Manning shares Kennedy’s desire to partner and has stated that she anticipates the township will contribute more to schools in the future.
I sat down with HVRSD finance chair Mark Peters to discuss both the April resolution as well as their progress on the HVRSD expected November referendum.
The referendum is still six months away, and Peters reported that the district is changing its approach from the direction employed from last September’s failed attempt.
“Whether we are talking about the referendum or the budget, we have been much more proactive (this time.) The whole board has kind of said that we need to do a better job of getting in front of our constituents.”
The rest of our hourlong conversation centered around Peters views about local municipal PILOTs. He is disturbed by perceived infighting among the municipalities. He stressed that the relations could change since it had only been a week since the township had issued its resolution, but that “the circumstances around the lawsuit have held the district hostage.” He lamented that PILOT communication “did not play favorably in the first referendum.”
I concurred that public confusion was rife. Taxpayers could find it difficult to vote to include a $16 million addition that had a separately committed funding source without feeling like they are paying for it twice. Peters replied: “Please share this with the world. We (the BOE) did not know what the township was or wasn’t going to provide us, at all (prior to introducing) referendum number 1.”
Under the leadership of Peters, the finance committee has been more involved with public and municipal engagement. They had many meetings with municipal officials to move from the township’s verbal commitment made when the PILOT was first inked to a formal resolution. He stressed it was a long, arduous process to get the details out and felt frustrated that the township maintained that the borough lawsuits held them back from providing funding.
“I will share with you what I shared with the township and township officials. Everyone knows that lawsuit was dead on arrival and everybody knows the appellate was dead on arrival and to me it is a bad excuse that it was something that was used for so long,” he said.
I asked township committee member Michael Ruger, liaison to the school district, to comment on the delay. He stressed that the township has always been supportive of the schools. The school district proposed $16.1 million and the township complied without negotiation and is amenable to help but needs to act prudently.
“The township committee was pleased to adopt the resolution committing to pay $16.1 million for construction at Bear Tavern Elementary School. We committed to give the district every dollar they requested. But our attorney confirmed there is no legal mechanism to provide the money when the outcome of the litigation is uncertain. So as long as there is active litigation, we cannot provide the funds.”
Fortunately, the resolution’s delay is now water under the bridge and follow up is out of their hands.
HVRSD finance chair Peters supports the Valleywide approach endorsed by Mayors Kennedy and Peters-Manning.
Confusion over the
PILOT continues
A long time ago, there was TV commercial with a customer in a dollar store asking the price of an item and the clerk responding, “a dollar.” The customer picks up another piece and says, “What about this?” to which the clerk grunts, “a dollar.” This continues with the customer requesting pricing on different items in the store as the clerk rolls his eyes and provides the same response.
Back in the day, I thought it was so funny. Even now, I’m a getting a visual and smiling over the absurdity.
For the updated version of this comedy routine, attend public comment sessions at a Hopewell Township Committee meeting and watch as the hilarity ensues.
For a quick backgrounder, Hopewell Township employed a PILOT (Payment In Lieu Of Taxes) agreement as part of meeting its state mandated affordable housing obligation. A PILOT is a negotiated deal with developers that redistributes how taxes are paid. It’s above my pay grade to assess taxpayer impact, but I’d agree that taxpayers in both boroughs may have cause for concern regarding funding reallocations.
That said, a PILOT is a financial vehicle that has no impact on the school budget. Affordable housing demographics may impact the schools; however, that is separate from the PILOT. The school budget may be complex, but the budgeting process itself is quite straightforward. The school board passes its budget, the municipalities use property taxes to pay the exact amount the board approved.
Yes, but how much money will the schools lose if Hopewell Township approves a PILOT? None. The school board passes its budget, the municipalities pay the exact amount the board approved.
OK, but what would have happened if Hopewell Township brought in the new housing and didn’t approve a PILOT? No difference to the schools. The school board passes its budget, the municipalities pay the exact amount the board approved.
Ya, but what happens when both Hopewell and Pennington Borough pass PILOTS to meet their affordable housing obligation, how will that impact school budgets? It doesn’t. The school board passes its budget, the municipalities pay the exact amount the board approved.
OK, but will the school board change how much they budget based on how much revenue is available in PILOT funding? I would hope not. The schools should be asking for exactly what they need — no more or no less. Then the school board passes its budget, and the municipalities pay the exact amount the board approved.
I learned this lesson over a decade ago, as HVRSD board president, when I called then mayor, Vanessa Sandom regarding a much smaller PILOT.
Me: “Congratulations on attracting Capital Health Systems to Hopewell Township. I heard you employed a PILOT, and I wanted to know how much of that the schools are entitled to?”
Sandom: “None. Nada. Nothing.”
Me: “How can that be? CHS won’t pay taxes under the regular formula that allocates a portion to the schools. We’re losing money!”
Sandom: “OK, how much did you lose? The schools have received every dollar that they are entitled to. The school board passes its budget, the municipalities paid the exact amount the board approved.”
Me: “That makes sense, but since they are advancing you some tax dollars, can you please use a portion of that to help out the schools outside of our regular budget?”
Sandom: “Of course. I’ll discuss it with the rest of the committee and see what we can do.”
Coincidentally, right after that discussion, the Recreation Foundation of Hopewell Valley offered to donate a million-dollar turf field to the schools and some neighbors on Pennington-Harbourton threatened to sue the district over the proposed location of the field.
When our friends on the township committee learned of the dispute, they offered to fund a new baseball field behind Timberlane Middle School to facilitate moving the turf field to its current location. Neighbors and schools lauded the offer. The HVRSD estimate for the new field came out to $650,000 and the township funded our request from its Capital Health pilot revenues.
Similarly, on April 14, the Hopewell Township Committee passed a resolution to provide $16.1 million in PILOT revenues to fund an addition at Bear Tavern Elementary School. The resolution documented the committee’s commitment to appropriate school funding which they made in the originally negotiated Lennar PILOT.
And now we return to my favorite dollar store commercial. During public comment, Former Mayor Jon Edwards stepped up to the podium to criticize Township Committee members by accusing them of lying and other nastiness. He asked about other money due and claimed that the $16.1 million dollars is “a drop in the bucket compared to the amount that the school would have gotten if you hadn’t passed the PILOT.”
Mayor Peters-Manning responded by politely explaining the school district budgeting process and subtly corrected his inaccuracy that the schools would have received additional revenue had no PILOT been passed.
When a second public comment opened, Edwards returned to the podium to say: “Your answer to me on the establishment of budgets was the same answer that I’ve gotten from you again and again and again, and it is not very helpful.” He then continued by suggesting that school quality would suffer from schools not receiving additional money from the new developments.
Like the “one dollar” to the customer at the Dollar Store, the budget process answer will not change regardless of how many times it is asked. The district will continue to receive exactly what it budgets whether a PILOT exists or not. There is no vehicle to receive additional taxpayer funds outside of a referendum vote or special arrangement with the municipality.
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