As the lengthy land use agreement rounds into its homestretch, Haddonfield government is revisiting the deal amid concerns that the local school district would be cut out of tax revenues from the project.
By Matt Skoufalos | March 15, 2019
Just as local leaders were preparing to put the final touches on the long-in-coming Bancroft redevelopment deal in Haddonfield last month, the deal has been postponed once more.
Amid detailed objections from the borough school board over the revenue structure of the deal, which included a 30-year Payment in Lieu of Taxes (PILOT) incentive for developer J. Brian O’Neill, Haddonfield commissioners this week announced that they’d table the vote until their April 30 meeting.
The borough government has always maintained its intention to share PILOT revenues with the school district, and given that context, Haddonfield Commissioner John Moscatelli described the district’s current position as “a little surprising.
“The whole time we’ve been saying very clearly we’re going to share revenue as fully as we can with the school board after we recover the debt service,” Moscatelli said.
“They have decided now to go after every penny.”
The commissioner said he found it “a little disappointing” that the district’s take seemingly discounts a proposed land-swap that would carve off a 5-acre parcel adjacent to the local high school in exchange for the municipal government preserving the district-owned Radnor Field as open space.
“It’s taking a liability off their hands that they don’t have to maintain,” Moscatelli said. “They want the land and they want every dollar of tax revenue that they would have gotten.”
The borough government also isn’t in a hurry to go back to the negotiating table with O’Neill, with whom an agreement has already been brokered.
Revisiting those talks could throw the mechanics of a long-running project into greater confusion, possibly exposing all parties to an expensive and protracted legal battle.
“We certainly hope [O’Neill] continues to move forward with the project,” Moscatelli said.
“We do not think he would have any success suing us for breach of the sales agreement [but] he could find any other basis to sue us.”
Despite the risks, Moscatelli said the borough government has tabled its vote on the financial component of the deal until a more satisfactory agreement can be brokered.
“We still feel we can move forward with it anyway, [but] given the reaction to the community, it seems prudent to make the change,” he said.
“The downside is that we continue to eat this debt service, and at some point we’re going to pass that onto the taxpayers.”
Moscatelli also said the terms of the proposed PILOT agreement are much more favorable to the borough than typical agreements brokered for similar projects.
“Around the state, 2 percent of the cost is average,” he said; “in this case, 2 percent would be about 30 percent of the actual taxes.
“We were always thinking it was going to be 80, 85, 90 percent of the taxes,” Moscatelli said.
“The developer was quite alarmed when he heard numbers like that.
“When we started at 70 percent and graduated it up to 93 percent, it gave him some benefit up front to help sell those units and get them occupied,” the commissioner said. “We thought it worked out.”
“We also heard very clearly from the community, ‘What do you mean you’re giving them any sort of tax break?’” he said. “We are going to put forward something different.”
Haddonfield Mayor Neal Rochford said residents should be reminded that multiple stakeholders are invested in the project, and each has different goals in mind.
“Obviously, we thought moving forward that as far as the borough government and school board were concerned, we were closer in tune,” Rochford said. “A lot of times, people become more focused on the details.
“We want to get this thing right,” he said. “It is a 30-year commitment to whatever funding source we finally sign off on.
“We’ll talk with the O’Neill group, we’ll talk with the school board, and try to come up with a funding agreement that works for everybody,” Rochford said, adding that the commissioners “have bent over backwards looking over different scenarios.
“We all eat it, sleep it, walk it.” he said.
Rochford and Moscatelli both believe that public pressure around the PILOT terms could motivate some flexibility from O’Neill once all parties come to the negotiating table.
They also agree that formalizing the terms of the land swap with the school district is beneficial to the borough as well.
“If they wanted to put up a for-sale sign on Radnor, they could,” Rochford said. “There is no protection for open space even though it’s used as open space. There is no guarantee that a future board might say, ‘We need the money.’”
Above all, the mayor said local leadership is committed to finalizing a deal that works as well for the district as it does for the borough taxpayers.
“I’m third-generation Haddonfield,” Rochford said. “I graduated from HMHS. We’re vested into the school system and understand the importance of what it brings to the town. There is not one bone in our body that wants to see the school board hurt.
“We’ll come up with something that’s even better than we were ready to introduce the other day,” he said. “I’m confident we’re going to get there.”
Haddonfield School Board President Adam Sangillo said the borough government may have noble intentions, but that without a formal agreement in place, there are no guarantees.
“Fundamentally, the PILOT cuts the school district out completely,” Sangillo said.
“Yes, they’ve always said, ‘We’ll take care of you,’ but without any meat on the bones.”
Sangillo likewise views the Radnor Field land-swap deal as separate from any PILOT stemming from the Bancroft property redevelopment.
He said the acquisition of the land by the municipality benefits it as much as it does the district by giving it acreage to preserve as open space.
“Everyone always agreed that that land next to the high school, its best use is going to be for the education system down the road,” Sangillo said.
“This was a win-win all the way around that has nothing to do with the Bancroft deal.”
Like the borough commissioners, the board president said he’s encouraged by the prospect of finding a collaborative solution to their shared concerns.
Emphasizing the continually increasing operating costs of the district and the real likelihood of additional capital referenda in the next few years, securing additional revenues for the district is a top priority.
“It’s not tax-neutral if we’re not getting our funding,” Sangillo said.
“We’re encouraged that they were willing to go back and look at their end of the deal and being very public about wanting to come together with us,” he said.
“We try to be mindful and as efficient as possible, but the true [annual] inflation rate of having employees is greater than three percent” amid the strictures of an annual increase capped at 2 percent, he said.
“Benefits went up 10 percent last year,” Sangillo said. “Seventy-eight percent of our expenses go to people, and those costs are rising greater than three percent.”
“We voiced our opinions to the commissioners; we just want an agreement,” he said. “What we’re looking for is something formal, something binding so it’s not a push and pull down the road.”
Asked for comment on any potential changes to the agreement, O’Neill was succinct in his response.
“We have a deal in writing,” he said.
