Caldwell Debates Nixing Tax Breaks For Developers, Homeowners

CALDWELL, NJ — Should Caldwell roll back a local regulation that provides tax breaks for real estate developers and private homeowners? That’s the question that was raised at a recent borough council meeting.

Earlier this month, the council held a discussion about a 2021 resolution, which allows for five-year tax abatements to developers and private homes in areas designated as redevelopment zones.

Caldwell’s resolution allows a developer or homeowner who improves a property in the redevelopment zone to avoid paying a rolling amount of taxes on the additional assessed value for the first five years. For example, a property originally valued at $200,000 that has been turned into a $1 million property will not be taxed on the additional $800,000 for that first year. That amount decreases steadily over the five-year span, until it returns to zero.

Some Caldwell officials suggested the rules may not be working out for the township as a whole, however.

Business administrator Alex Palumbo said it would be in Caldwell’s best interest to repeal its resolution, which “does not benefit the township.”

“Especially in our town, which has had historical, monumental debt the past few years, anything we can do to take that burden off our taxpayers – we’re going to set the bar high,” Mayor Garrett Jones said.

Further discussion is planned for the next borough council meeting on Oct. 17. Watch a video of the Oct. 3 meeting online here (discussion on the tax resolution begins around the 16-minute mark).

Municipal payment in lieu of tax agreements – also known as PILOTs – have their supporters and critics. Some officials have called them useful tools to attract development to distressed or blighted areas of town. But their use has drawn criticism from opponents, some who caution that the deals can enable a big developer to skip out on paying their fair portion of property taxes. Others have argued that PILOTs unfairly distribute tax revenue between the township and the local public school district – with the town getting the vast bulk of the money.

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