SID, tax would expand beyond downtown

City Council will consider a measure next week that would expand the Special Improvement District (SID) beyond the borders of he downtown district to include all commercial properties within the city.

(File photo)
(File photo)

Currently, the SID  covers almost 140 properties in the downtown Central Business District (CBD) but under the proposed changes, some 440 commercial and industrial properties as well as apartments/cooperatives (properties classified as 4A, 4B and 4C) would fall under the SID and its taxing authority.

The governing body introduced Ordinance 42-14 at its Nov. 10 meeting and the measure will come up for a public hearing and final approval at the Dec. 8 regular meeting. The city last week sent notifications to all property owners which I’m told raised a few questions and concerns.

Managed by the Rahway Arts District board, the SID generates $130,000 annually for activities, events, promotions and other items within the downtown district. Expanding the tax to almost four times as many properties (a list is included in the ordinance) would generate vastly more revenue, in the neighborhood of $600,000 or $700,000.

The current SID has a total assessed value of $37 million, with a tax rate of $0.351 per $100 of assessed value to generate the $130,000, according to the 2014 Union County abstract of ratables (.pdf). With so many more properties taxed in an expanded SID, City Administrator Cherron Rountree said it’s likely the tax rate would be lower. The SID typically has been about a 7 percent additional tax on a commercial property’s tax bill but it’s determined by how much to revenue to raise, and historically that’s always been $130,000.

Programs like last week’s downtown Winter Wonderland benefit all businesses and with an expanded SID, all businesses will not only share the costs — as well as the benefits, Rountree emphasized.

Agency gets fees for latest Sky View saleThe goal is to increase the SID budget and expand programs to benefit all businesses throughout the city, not just those downtown, and provide specialized services, she said. Spreading the word about the city will be a big part of the expanded SID so the initial focus will be on marketing, Rountree said in an interview after last night’s City Council pre-conference meeting.

Other services provided by the SID might include things like road maintenance and public safety improvements. Existing programs such as facade or signage improvements could be offered to businesses previously outside the SID that now would be eligible, she said.

The needs of downtown merchants might differ from those in other commercial corridors, like St. Georges Avenue or Routes 1&9, so services might vary depending on the area. For instance, one commercial district might warrant extra attention on public safety, said Rountree. The RAD board must determine its annual budget, which is typically approved in the spring along with the city’s budget. The first step is to include new businesses into the SID, she said. If approved on Monday, the new ordinance would take effect in 20 days.

Almost five years ago, City Council shifted the management of the SID – and accompanying tax revenue – from the Rahway Center Partnership, after it dissolved, to the Rahway Arts District.

9 thoughts on “SID, tax would expand beyond downtown”

  1. Thanks for the series of posts on this issue. I think that expanding the SID and the monies raised before having a plan (and rough numbers) on how the monies are to be spent is putting the cart before the horse.

    What sort of marketing is planned? What might this cost? The Redevelopment Agency had had previously contracted to create public relations materials; as of today, a 9-minute promo video titled HAMILTONhighlight, published on YouTube on 11/12/13, has garnered 3 views.

    And funding road maintenance through the SID? Isn’t that part of the regular municipal budget?

    I’d hope to see a somewhat detailed proposal of priorities that could be solved by an expanded SID and how the monies would be spent before approving something of this magnitude. Otherwise, you run the risk of creating the financial corollary to Parkinson’s law, with expenditures rising to fill the amount of money available.

  2. City Council did not expand the Special Improvement District (SID) to include all commercial properties in the city, because global tax dodger Merck was spared from the new ordinance.

    Tax revenue should be controlled by elected officials instead of a secretive appointed authority, board or commission and the biggest corporate land owner should not be exempt from paying its fair share of taxes.

  3. Merck is in its own research and development zone, according to the city administrator, which will be noted in the follow-up post.

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