Boro will seek to offset nonprofit tax burden
McKenna: Change in state law needed to help host towns
BY LAYLI WHYTE
Staff Writer

"I'm going to bring the payroll tax up again. I think Gov. Corzine is creative and might be interested." - Edward McKenna Jr. mayor Red Bank

By year's end, borough officials are expected to ask the state for a change in the laws that govern tax-exempt properties to provide relief to towns like Red Bank that host a high number of nonprofits.

Mayor Edward J. McKenna Jr. said in an interview this week that the borough has a disproportionate number of tax-exempt properties that serve the region. Tax- exempt properties make up 16 percent of properties in the 1.7-square-mile borough.

McKenna said he would like to see the state broaden the legal definition of host communities. These communities receive additional funding for the services the nonprofits provide within their borders.

Tinton Falls has a Host Community Agreement because it is host to the Monmouth County landfill, which is tax-exempt. The borough receives funds from the county to help defray the burden on taxpayers, according to McKenna.

"I don't begrudge Tinton Falls that," he said. "It's a recognition of the high intensity of use the landfill brings. We need the state law to say that as a host to a major medical center, we also supply a service to the area."

McKenna said that during the administration of former Gov. Christine Todd Whitman, the borough did approach the state with a request to allow it to have a Host Community Agreement with the county.

"[The state] said they felt that the request for host community status would open too many doors," he said. "The tragedy is that the current state legislation does not give us the opportunity for recognition as far as being a regional center. Red Bank is designated as a regional center."

McKenna said that he hoped Gov. Jon Corzine would be more open to the idea, and that he would bring the request to the state before his term as mayor ends on Dec. 31.

The issue of tax-exempt properties was discussed at the Sept. 25 meeting of the Borough Council, at which more than 100 residents were in attendance. Many spoke about the ever increasing tax burden placed on them.

According to Borough Chief Financial Officer Frank Mason, the average home in the borough is assessed at $179,211, which means an average annual tax bill of $6,143 to be paid in four payments of about $1,536.

The tax bill residents receive includes taxes that fund not only municipal government, but the public schools, the county and open space projects.

Of the total average tax bill, about $1,498 goes to fund municipal government, according to Mason.

Mason said at the meeting that one of the reasons tax bills in the borough are so high is because of the large number of tax-exempt properties in the borough, for which residents and other taxpayers must compensate.

The borough is home to 22 houses of worship, four school systems, a public library, the Visiting Nurse Association of Central Jersey (VNACJ), two nonprofit theaters and a major medical center.

"More often than not," said McKenna, "the types of properties that are tax exempt are classified as providing a beneficial use to the community, and they have greater latitude when it comes to planning and zoning board decisions."

According to Mason, the 12 borough properties under the ownership of Riverview Medical Center are assessed for a total at $48.9 million.

With a tax rate of $3.428 per $100 of assessed property value, if the property was not tax exempt, Riverview would be paying the borough more than $1.6 million in property taxes, according to Mason.

The actual payment in lieu of taxes (PILOT) paid to the borough by Riverview amounts to $66,000 annually, McKenna said at the council meeting.

According to Councilman John P. Curley, that amount is paid on auxiliary buildings, not the main campus of the medical center.

"They don't pay a dime for the actual hospital," said Curley, the GOP mayoral candidate. "They make an awful lot of money."

The Community YMCA of Red Bank owns two properties in the borough, on Maple Avenue and Drs. James Parker Blvd.

According to Mason, the total assessed values for the properties is $4,377,700, and at the current tax rate, the YMCA would pay the borough about $150,000 in property taxes, if it were not exempt.

McKenna said that the borough's hands are tied concerning the tax-exempt properties in town.

"It's a mixed blessing," he said. "Tax-exempt properties are certainly a burden on any municipality."

McKenna said that limiting the number of new tax-exempt properties in a municipality would b e in direct violation of state law and that other municipalities have tried and have lost that battle.

Hospitals are exempt from paying property taxes under New Jersey state statute 54:4-3.6 which states, "The following property shall be exempt from taxation under this chapter ... all buildings actually used in the work of associations and corporations organized exclusively for hospital purposes."

According to the statute, "hospital purposes" includes "health care facilities for the elderly, such as nursing homes; residential health care facilities; assisted living residences."

Organizations such as the YMCA are also tax exempt under this chapter, which also exempts religious organizations, libraries and buildings used for the purposes of historical societies.

According to Mason, neighboring towns like Fair Haven, Little Silver and Rumson have between four and five percent of their property tax exempt.

"Only Tinton Falls and Eatontown have a higher percentage of tax-exempt property," Mason said at last week's council meeting, "and that includes Fort Monmouth in both towns and the Monmouth County landfill in Tinton Falls."

Curley has spoken out about the high number of tax-exempt properties in the past, and he said this week that he would like to see PILOT payments made by all tax-exempt properties in the borough.

"It's a shame that Red Bank has opened its doors to so many tax-exempt properties," he said, "especially the theaters. They're still utilizing our police, fire and first aid."

Curley said that he understands there will always be some properties that will be exempt from paying property taxes.

"There are going to be churches," he said. "There are going to be schools. There are going to be synagogues. They are going to be tax exempt, and they should be. But being a Mecca for entertainment is too much of a burden. I would not open my arms up to any more nonprofits in this town. We have more than our fair share."

McKenna said that since Riverview employs about 2,000 people, only 500 of which are Red Bank residents, a payroll tax would be helpful, not only pertaining to tax- exempt organizations, but all employers in the borough.

The payroll tax would be a set a tax for all employers in town, and McKenna said that he worked out the numbers for his own law firm and found the amount he would have to pay would be nominal.

"We have so many people who work in town," he said. "This would be an alternate way of funding things."

McKenna said that idea was also brought to the Whitman Administration, whose officials said they were not interested in imposing a new tax.

"I'm going to bring the payroll tax up again," he said. "I think Gov. Corzine is creative and might be interested. I'm going to bring it up again before the year's out."