Businesses and property owners that were to be included in an expanded, citywide Special Improvement District (SID) will get a reprieve on the additional tax this year given the novel coronavirus (COVID-19) pandemic.
During its regular monthly meeting last week — streamed live via Facebook due to the social distancing efforts to slow the spread of the pandemic — City Council approved a resolution (AR-115-20) for a 2020 SID budget. The 2020 municipal budget also was adopted that night.
The $130,000 budget is roughly the same as it has been historically despite plans to expand the SID citywide after overcoming a legal challenge that was resolved last summer. A proposed budget of $214,000 was submitted to City Council in March, before COVID-19 was declared a pandemic. “We were going to go in a completely different direction. This is all a result of the current situation,” City Administrator Robert Landolfi said in a telephone interview last week.
The SID is managed by the Rahway Arts & Business Partnership (RABP) and originally had been managed by the Rahway Center Partnership before it folded about a decade ago. The SID levies an additional roughly 7 percent property tax on about 140 properties downtown, generating about $130,000 annually. It was established in the early 1990s.
A citywide SID would likely raise about $750,000 in revenue from commercial properties beyond downtown. Based on tax assessments at the time (2014), the average property within an expanded, citywide SID could expect to pay about $1,437 in additional taxes.
Existing members of the SID have been paying an additional SID tax and already had paid or are paying for the first two quarters. The city had planned to start collecting the citywide tax this year but since it would be the first year the tax is implemented on properties new to the SID. Landolfi described it as a “double whammy” in the third and fourth quarter tax bills, when people are likely least able to afford to pay it. The first and second quarter SID bills would be included in the third and fourth quarter, essentially collecting all four quarters of SID taxes in the last two quarters of the year.
“It’s not a real big deal for the average taxpayer. That phenomenon has negligible impact on one who’s been paying taxes,” Landolfi said. In this case, however, it’s a newly implemented tax for almost 400 properties that are now within an expanded, citywide SID.
“It would have been a real impact on those businesses. It didn’t make any sense to implement that tax,” Landolfi said. “It made absolutely no sense to reinstitute that for 2020, especially given that it’d be doubled up for the last two quarters,” Landolfi said.
“What we’re going to try to do is have a conversation with the county and see if we can’t initiate that bill in January, consistently to implement in 2021,” Landolfi said.
In Jersey City, the mayor has proposed that the City Council withdraw an arts and culture trust fund tax referendum for November.
UPDATED 4/22: Landolfi later clarified that the originally proposed $214,000 SID budget was an inaccurate figure. The city originally had planned to ask the county tax board to split the tax year rather than assess and tax the additional $610,000 in the third and fourth quarters. That would have collected about $305,000 in an expanded SID, plus the usual $130,000 from downtown SID members, for a 2020 budget of about $435,000 before instituting the full $740,000 next year.
