The Millburn SID: What Is It, And Why Are So Many Arguing About It?

MILLBURN, NJ — For the last year and a half, Millburn residents may have seen the dozens of social media posts or heard complaints at community meetings about the reinstatement of the Special Improvement District that was passed by the Township Committee in August of 2020. Business owners and residents alike have weighed in about the new ordinance.

But many may be wondering how the conflict originated, and what a SID actually means for the community and business district. Here is a brief explainer.

What is a SID?

According to the state, an SID is a defined area — usually in the downtown or central business area of a city — that can collect a sort of tax from businesses in the area, authorized by state and local law.

Within a SID, the idea is that the business community becomes its own self-governing entity.

The Department of Community Affairs uses the example of an outdoor mall as an analogy. There are a variety of commercial businesses and property owners within the mall that pool their resources in order to improve the overall economic, physical, and social values of the mall — or in Millburn’s case, the business district.

A District Management Corporation — or DMC — is a group of people selected by the municipality who are responsible for collecting the special assessment and determining the annual budget for the SID.

In summary, the SID allows the businesses in Millburn to operate more like businesses in a mall managed by a single group — the DMC — rather than functioning individually.

The SID can use its funds to improve the overall appearance of the businesses, as well as plan marketing and events.

Millburn Township’s SID was created to “promote, grow and support local businesses, property owners, residents and visitors.”

Many neighboring towns have a kind of SID in place: Summit, Maplewood, Livingston, Montclair, Morristown, Westfield, Cranford and South Orange.

Some History

Millburn did have an SID until 2018.

Back in 1992, the Downtown Millburn Development Alliance — or DMDA — was formed. The DMDA was a nonprofit organization managed by volunteers in the town to improve the economic vitality and visual appearance of the SID. This was created shortly after the SID was established, but only covered the businesses in downtown Millburn, including the central part of Millburn Avenue and Main Street.

The DMDA sponsored events like the annual Snowflake Parade and farmer’s market.

The funding came from a special assessment on the businesses in the downtown.

But in December of 2018, the DMDA voted to dissolve itself, which in turn dissolved the SID. According to Jeffrey Feld — a resident and local attorney who opposes the current SID — business owners in the SID believed most of the money going toward the SID was only benefitting the town's administration.

After this, the township, Chamber of Commerce, and volunteer groups had to take over responsibilities previously allocated to the DMDA.

The Reinstatement of the SID in 2020

It wasn’t until June of 2020 — during the height of the COVID-19 pandemic — that the town began discussing the reinstatement of the SID.

Many business owners spoke out against creating the SID at this time, as their profits were suffering due to the pandemic, they said, and paying an additional tax toward the SID would take away from those already-slim profits.

Where The Money Comes From

However, an amended ordinance mandated that "no special assessment shall be imposed until the year 2022."

This means the businesses will not be taxed until 2022. But the town also stated that the SID would be fully paid by the township — i.e. taxpayers — through the end of 2021.

In 2022, Millburn taxpayers will continue to pay overhead expenses, as well as half of the SID's executive director's salary.

The township estimated that the total budget for the SID would be approximately $206,000 in 2022.

The township argued at the time that business vacancy rates were expected to rise because of the pandemic and that action needed to be taken to support the business community and property owners.

Extends To Five Districts

In the new ordinance, the township proposed extending the SID to all five business districts in Millburn. This includes downtown Millburn, Upper Millburn Avenue, Wyoming Business Center, Short Hills Station and Morris Turnpike at Short Hills.

Another difference with the new SID is that it can only be dissolved for “sound reason” with approval from the Township Committee, whereas the previous SID was able to dissolve itself.

After holding two public information sessions in June and July of 2020, the Township Committee passed the new SID ordinance in a virtual meeting on Aug. 11, 2020.

Mayor Tara Prupis, along with committee members Richard Wasserman and Jackie Lieberberg voted to pass the SID, whereas members Dianne Eglow and Cheryl Burstein voted against the ordinance.

In December of 2020, the Township Committee created Explore Millburn — a new non-profit organization that supports the businesses in the SID. Explore Millburn is essentially the new DMDA. It is operated by a board of trustees, consisting of seven voting members and two non-voting members.

Township committee member Wasserman holds a seat on this board, as well as two real estate owners in the district, two business operators, and two residents.

This board was selected by the Township Committee, who were selected by voters.

Why The Opposition To The New SID?

The complaints that have been made against the SID can be broken down into three main issues:

• The usage of taxpayer money to fund the SID
• What some say is Mayor Prupis’ conflict of interest and
• The selection of the SID's board by the township committee

Given these complaints, Short Hills Attorney Kenneth Gerard filed a lawsuit on behalf of his client Bear Properties Management, LLC on the validity of the SID, and and a local attorney, Jeffrey Feld, has filed certifications in support of this lawsuit. Bear Properties owns several business properties along Upper Millburn Avenue.

Jean Pasternak — an outspoken Millburn resident — and Feld recently outlined, for Patch, their grievances about the new ordinance:

1. Using taxpayer money

Feld said that in June of 2020, the township had a meeting where Wasserman announced that the first year and a half of the SID would be funded by taxpayers, instead of collecting a special assessment on the businesses.

Feld argued that many people had no idea they were holding this meeting, as it was during the lockdown period of the pandemic. He says the township discretely slipped in that they would be using taxpayer money without receiving feedback from the township on this.

“What we’ve been saying is they didn’t follow the right steps because … they used taxpayer’s monies to fund the first year and a half without telling them," Feld said.

Feld also said that under the state constitution, there is a prohibition on using public assets for private interest purposes. The SID, in this case, would be a “private interest purpose,” and Feld argues that using public taxpayer money to fund the SID is illegal.

Pasternak and Feld both criticized Prupis for saying at a meeting that residents would not have to pay taxes toward the SID in 2022. Pasternak said this was inaccurate information because the township had previously agreed that taxpayers would continue to pay for half of the Executive Director Steve Grillo’s salary.

2. The mayor’s supposed conflict of interest

Mayor Tara Prupis is the owner of Green Nectar Juicery in downtown Millburn. Some, including Feld and Pasternak, have argued that she should not be allowed to vote on creating a SID that could benefit her own business.

Feld pointed out that Prupis was the deciding vote in reinstating the SID, and if she was unable to vote due to conflict of interest, the ordinance may not have been passed.

However, according to a letter the township posted from attorney Christopher Falcon, he wrote that Prupis could vote on the SID ordinance because “her interest is diffused among a large number of persons and businesses with which she is similarly situated."

Falcon is essentially saying that because Prupis would not benefit, or even suffer, any differently from other business owners in the SID, there is no conflict of interest.

But on the other side of the coin, Pasternak and Feld argue that not all of the businesses in the SID are receiving the same benefits. Prupis’ juicery happens to be in the downtown area of the SID, and Pasternak said it is mainly the downtown businesses — not the other four districts — that are benefiting from Explore Millburn’s funding and programming.

“We’ve looked at all of [Explore Millburn’s] activities in the last year of their existence,” Pasternak said. “90 percent of what they do is downtown.”

Pasternak cited that the Main Street closure that often has live music and various events is located downtown, and she said other businesses do not experience as much attention as the downtown stores.

Explore Millburn has created events recently, however, like the Sidewalk Stroll and the Short Hills Plaza block party, that were aimed to help businesses outside of the downtown.

They have also helped in the recovery from Hurricane Ida.

3. The Township Committee selecting the SID’s Board

At the Aug. 11 township meeting, not only did the committee approve the SID ordinance, but they also appointed people to the board. Feld said it isn’t typical for a SID to be chosen by the township committee, and when the DMDA was previously created, it was voted on by the business owners in the town.

When Republican candidates Nicolas Volpicelli and Dr. Sujoy Menon ran for Township Committee in 2020, they wrote in a Tapinto Millburn/Short Hills article that towns like Summit select its SID board via direct elections and that the township committee selecting the board appears to be a form of “nepotism and favoritism.”

Feld said that there isn’t enough representation on the board from businesses outside the downtown area, and they should have been allowed to vote on the SID’s board of trustees.

Residents like Feld and Pasternak also believe a feasibility study should have been conducted to determine if the SID was really needed in the town, and they argue that the town rushed into making this decision.

With the lawsuit that was filed, there is still mediation to be done. In an email, Feld wrote that he represented Perri Urso — the owner of Bear Properties Management — pro bono in “her ethics violations complaint against Mayor Prupis which the Local Finance Board declined to exercise jurisdiction pending adjudication of the validity of the SID under state law … the matter will be sent to mediation.”

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