I hope everyone has enjoyed a safe, healthy, and fun-filled summer!
In an effort to clear up some common misconceptions about PILOTs—or payment in lieu of taxes—and how we utilize them throughout Robbinsville Township, I put together some information for the sake of clarity.
So, what is a PILOT?
From time to time, we use payment in lieu of taxes—implemented by the State in 1971—as a tool when negotiating the terms of redevelopment projects such as Amazon.
Some see PILOTs as a way for developers and companies to avoid paying taxes and, thus, taking money away from our schools. That is a complete falsehood.
The key letter in the acronym PILOT is “P”—payment—and the choice is very simple. Either allow that land to remain as only dirt with a bare minimum of revenue or entice a developer/corporation with a PILOT.
Since 2014, the five PILOTs currently operating in town—Amazon, DeLonghi America Inc., H&M Distribution, La Z Boy and Falken Tire—have generated millions of dollars in redevelopment revenue that otherwise would not exist. In most cases, these were plots of dirt that had been undeveloped for decades.
By law, PILOT payments escalate over time and must always generate more revenue for the township than would the current, underdeveloped, and under-utilized properties.
Once a PILOT expires, the property owner pays traditional property taxes based upon the value of the land and improvements, which have likely grown substantially due to the redevelopment of the property.
McKesson is a great example of that. That PILOT expired in 2019, and the Forbes 500 mainstay now pays the full value of the land it occupies.
Based on the tax rate as of May 1, 2023, for every $1,000 in taxes from the assessed land value the Robbinsville School District receives about $560. Once the parcel is developed and the land value increases, so do the taxes.
If the assessed land value increases to $10,000 because of the redevelopment, the district would receive approximately $5,600—a significant increase.
The PILOT deal we signed with Amazon in 2013 resulted in a $22.1 million payment in lieu of taxes over 20 years. The school district revenue portion adds up to $193,052 per year. Amazon is in fact our single largest taxpayer and they draw no services.
Back in 2013, prior to its major New Jersey expansion, Amazon could have picked any one of 30 towns to be in. They chose Robbinsville because we made PILOT an option.
The misconception that because a big corporation/developer is given a PILOT it means they make no financial contribution to the town, to its schools, or to the County is patently false. It comes down to this: Do we want the ratable or not?
By comparison, CJ TMI, the world’s largest dumpling manufacturer located at 2 Applegate Dr., contributes over $151,000 to the school district per year—and CJ TMI is not a PILOT
Other points to ponder about PILOTs:
• Every parcel of land in the municipality (Lot and Block) has two separate taxes; the tax on the land and the tax on the improvements (i.e., building or house) that when combined create the tax bill for that parcel.
• When a PILOT is given to a company/developer, the municipality taxes the land as it would any parcel in the municipality. Mercer County, our school district, and all other agencies get their normal share of that payment. As I mentioned, in the case of the Amazon PILOT, the District gets $193,052 a year via the land tax for that parcel.
• The PILOT benefits the company/developer because there is no tax on the physical building.
• Using Vintage Holding (the incoming Subaru Dealership on Route 130) as an example, as of this printing they pay $750 annually on the farm assessed land, of which the school district gets 56 percent.
Once the dealership is fully built out, the land value will be assessed at approximately $30,000, of which the school district will get 56 percent. That means the school district tax portion will increase by approximately $16,380.
I hope this goes a long way toward explaining our approach to PILOTs and how they do, in fact, benefit not only the Township, but also the School District and Mercer County.
Dave Fried is the Mayor of Robbinsville Township.
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