Open Space Taxes: The Tax-smart Strategy
August 10, 2002 • (0) Comments
Taking building lots off-market through strategic Open Space spending turns out to be “tax smart” municipal thinking.
Peapack-Gladstone voters will have a chance this fall to approve an advisory referendum authorizing an increase in the Borough’s Open Space Tax rate from two cents per hundred dollars of assessed valuation to three cents. The increase, if approved, would contribute approximately $60K per year to the Borough’s Open Space Trust Fund while adding just one cent to our current municipal property tax rate.
Open Space taxes, authorized by local voters in 1998, are specifically earmarked to acquire local properties for recreation, conservation or farmland preservation and to offset additional development that would alter our community’s distinctly rural village character.
By matching local Open Space Trust Funds with grants from Somerset County or NJ State resources or by using their Trusts to secure bonds, local municipalities are able to offer competitive market prices for farmland or other parcels that would otherwise be subdivided for housing. Last year, for instance, Peapack-Gladstone Borough acquired 17 acres along Route 206 at Pottersville Road, preserving a green belt of public parkland around a busy intersection.
Tax increases are never easy to swallow, but voters should understand that Open Space initiatives represent a significant bargain for taxpayers concerned about rising school- and other municipal taxes. That’s because, used effectively, Open Space acquisitions actually reduce demand for tuition and other borough services that comprise the fastest-growing components of our property tax bills.
Building is Booming
It doesn’t take much more than a ride along Mosle, Mendham or Old Chester Roads to understand that, in our region, new housing construction is booming. In Peapack-Gladstone, for instance, 30 new permits have been issued since voters authorized Open Space preservation in 1998. In a borough of just 5.8 square miles, even that much housing growth has measurable impact. Take schools, for instance. Regional averages suggest that each new residential unit adds 1.5 school-age children to a community’s public school student population. In 2003, Peapack-Gladstone taxpayers will pay the Somerset Hills School District $12,393 per student in tuition, roughly 44 percent of our municipal taxes.
At that rate, every new house constructed on today’s open spaces will cost taxpayers $18,589 each year in school taxes alone. When you understand that residential property taxes on a typical $500,000 home recover just $8,200, and that the portion allocated to schools is only $3,630 leaving taxpayers to pick up the difference, it becomes clear that new residential construction is expensive in more than quality-of-life or merely scenic terms. On the basis of tuition alone, just 10 new houses in our Borough will add the equivalent of 2.5 cents to our municipal tax rate, an amount that will be collected every year while those residences shelter school-aged children. By contrast, protected farm and recreational lands support higher property values and add to the attractive character of our community.
Region-wide, municipalities are buying up real estate to escape the tax consequences of swelling demand for school- and other services. Rather than broadly higher taxes, citizens are getting stable municipal tax rates, new park, conservation and recreational grounds, and less traffic. Taking building lots off-market through strategic Open Space spending turns out to be “tax smart” municipal thinking.
How do the Twin Boroughs stack up? Compared to neighboring communities with tax-smart Open Space programs, we’re currently at the back of the class. Our 2¢ Open Space tax generates about $100,000 yearly into the Borough Open Space Trust Fund, an amount that leaves Borough officials with few options in the present market. Alarmingly, we have one of the highest land valuations in Somerset County, yet rank lowest in Open Space Trust funding. By contrast, Bernards Township taxpayers dedicate 4¢ to Open Space acquisitions, setting aside $1.8 million yearly to preserve undeveloped land. Nearby, Bedminster and Bernardsville taxpayers raise an additional $325,620 and $332,798, respectively. These are communities that have seen what happens when large open parcels are converted to housing tracts.
Ahead of further development in our own unprotected open spaces, Peapack-Gladstone’s Open Space Advisory Committee—a panel of your neighbors and fellow taxpayers—recommends a “YES” vote on the Open Space referendum question. It’s the tax-smart thing to do.
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