The one thing you can count on when it comes to smart growth is that the ideas about how to achieve it are always evolving. The latest approach gaining some good traction among planners builders is the payment in lieu of taxes, or PILOT, approach.
If only the message could get through to municipal officials.
But people like Stephen Santola are working on it. Santola, executive vice president and general counsel at Woodmont Properties in Fairfield, is one of 11 planners, builders, attorneys, and mayors on the slate for the workshop “Tax Abatements: Friend or Foe” on Friday, July 27, from 8:30 a.m. to noon at the Mayo Performing Arts Center in Morristown. The event is sponsored by the New Jersey chapter of the American planning Association and by the New Jersey Builders Association.
Joining Santola will be mayors Dwayne Warren of Orange, Tim Dougherty of Morristown, and Sheena Collum of South Orange Village; planners Michele Delisfort of Nishuane Group and Brian Slaugh of Clark Caton Hintz; developers Josh Mann of Iron Ore Properties, Debra Tantleff of Tantum Real Estate; and attorneys Cecilia Lassiter of Sills Cumms & Gross, Steven Mienak of Greenbaum Rowe Smith & Davis, and Mike Bruno of Giordano Halleran & Ciesla. Cost: $25. Visit NJPlanning.org/events.
If Santola’s name sounds familiar from the political arena it’s because he was a three-term mayor in his hometown of Livingston a few years ago. His father was a vice president of sales in the plastic industry and his mother a professor.
Santola got his bachelor’s from Colgate in 1987 and his J.D. from Seton Hall University Law School in 1990. He has been a land use and real estate attorney since 1991, when he joined Gibbons, DelDeo, Dolan, Griffinger & Vecchione. Four years later he joined Lindabury McCormick and Estabrook, where he worked for about 10 years. He joined Woodmont in 2004 and has managed the development approval process several downtown redevelopment sites, including the Epstein’s Morristown Redevelopment Project, Woodmont Metro at Metuchen Station, the West Side Lofts in Red Bank, Lower Broadway in South Amboy and Cranford Station in Cranford.
PILOTs. Smart growth has gone through a lot of metamorphosis in the past 20 years, with ideas like the Council On Affordable Housing or downzoning occasionally getting the lion’s share of newspaper ink as the way to reach a well-oiled city. Today PILOTs are getting a lot of planners’ chins wagging because the term offers an alternative to the one word government officials dread saying — taxes.
Taxes, after all, can be a big issue when it comes to paying for basic smart growth infrastructure like road networks or utilities. They’re not a particularly stable source of revenue when economic times go bad, they can be a burden to the people who have to pay them, and they’re always a target for one group or another that’s looking for a political rallying cry.
But taxes need to be collected to help keep cities an regions running. And since they’re going nowhere, there’s a push to make taxes not so heavy for taxpayers. Enter the PILOT.
PILOTs, says Santola, can help significantly offset property taxes in smart growth projects — typically those projects looking to make communities more walkable and self-contained. They work when an entity, say a for-profit company, wants to build on public land without assuming ownership of that land, or when an entity wants to build on tax-exempt land, or when a tax-exempt entity wants to build.
In whatever scenario above, the underlying fact is that cities are not going to be able to collect taxes on the property because something about it is non-taxable. Some cities, in fact, lose tens of millions of dollars a year in what would be collectible taxes, if only those properties could generate tax income.
PILOTs are a way for these building entities to contribute to the costs of a project, say a sewer line or parking structure, that puts money in a government’s hands. With PILOTs, Santola says, 95 percent of the money goes to the municipality — as opposed to most of the income going to the company that built something on non-taxable ground — which then can decide how to dole it out.
Misconceptions about smart growth. While getting the word out about the potential benefits of PILOTs can be slow going, Santola says, it can also be tough to undo preconceptions people have when they hear about revitalization and urban growth.
Generally, smart growth refers to these kinds of projects, the reuse of an old network of long-defunct factories or the conversion of a brownfield into parking or apartment space. That, in turn, tends to give people the wrong ideas.
One of those wrong ideas, Santola says, is that higher density in areas built to be walkable and be served by mass transit will generate huge amounts of traffic or put big burdens on school districts. Those fears have never quite materialized, Santola says, but they go back a long way.
Another issue is of a far more sensitive variety — people worry “about the demographic that more high-density housing might attract,” he says. Yes, he means the same old prejudices that you think it means, which is why he says he is grateful for forums like the one scheduled for July 27. Such programs, he says, are a great chance to educate city officials, engineers, mayors, etc.
The programs are also a way to get through to people with fears of development, if not directly then at least through enlightened civic leaders who can bring the message to citizens that redevelopment is not the devil.
“We’re looking at what these rebuilds have brought to communities,” he says. “Higher rents, tax money, people on the streets looking for dinner.”
Redevelopment projects have upgraded infrastructure, remediated toxic ground, and put people to work as well.
“[Smart growth has] really rejuvenated a number of neighborhoods and town throughout New Jersey,” Santola says. “People used to ask, ‘Why us?’” when it came to redevelopment. “Now they’re asking ‘Why not us?’”