Sussex Borough looks at PILOT programs

SUSSEX — The Sussex Borough Council discussed a future ordinance that will establish a Payment in Lieu of Taxes plan for the newsly created Route 23 Rehabiliation Area at the council's meeting on Tuesday, Dec. 17.

Borough Attorney John Ursin told the council it will need to pass an ordinance for the tax abatement program to begin. He said he will draft the ordinance and the council will read, discuss, and comment before decideing whether to adopt the ordinance at its second meeting in January.

Councilwoman Linda Masson asked about what types of businesses the council would consider.

Ursin said the borough resolution would concern only commercial and industrial properties.

Masson asked what had been done in other communities and Ursin said there are two typical scenarios.

In the first, municipalities reduce taxes for five years in redevelopment and rehabilitation areas as an economic incentive. Examples from other towns have been the Red Tail Lodge in Vernon and Walmart in Franklin.

A common negotiation possibility is the developer would pay no taxes on improvements during the first year, 20 percent the second year, 40 percent the third year, 60 percent the fourth year, and 80 percent the fifth year. After the fifth year, the developer would pay 100 percent of applicable taxes.

The taxes onl would be paid to Sussex Borough and not to the school districts because the property will not be residential. Sussex County would receive a small amount in tax revenue.

The second scenario, Ursin said, a 30-year tax abatement for redevelopment areas, which is typically negotiated by municipalities. The 30-year tax reduction is usually reserved for game-changing companies in a town, such as Thorlabs was in Newton. These types of companies profoundly improve the entire town’s economy.