Tax Base Trends and Strategies for Municipal Economic Stability

Redevelopment And Parking s Role in the Process

Municipal Economics Available Strategies Increase the Tax Base Increase Efficiency Redistribute Obligations Eliminate Services or Defer Maintenance

Tax Base History Nominal Tax Rate Equal. Ratio Equal. Tax Rate Total Equalized Municipal Total Muni. Valuation Tax Levy ('000's) ('000's) 1,143,441 1,162,211 1,131,876 1,114,440 1,074,905 1,026,083 1,000,937 1,064,905 1,111,963 1,089,487 1,160,886 Total Tax Levy ('000's) Year Spending ('000's) 12,463 12,170 11,913 11,067 12,007 11,953 13,014 11,829 11,972 12,472 13,167 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2.190 2.219 2.245 2.307 2.346 2.369 2.423 101.27% 2.587 2.712 2.662 2.717 90.53% 89.49% 91.92% 93.03% 95.61% 99.39% 1.983 1.986 2.064 2.146 2.243 2.355 2.454 2.459 2.438 2.534 2.416 6,860 7,060 7,144 6,773 7,271 7,292 7,282 7,354 7,506 7,770 7,923 22,546 22,961 23,229 23,795 23,982 24,026 24,423 26,060 26,987 27,472 27,933 95.05% 89.89% 95.18% 88.91% % Change from 2008 Nominal Tax Rate Equal. Ratio Equal. Tax Rate Total Equalized Municipal Total Muni. Valuation Tax Levy ('000's) ('000's) 1.64% -1.01% -2.54% -5.99% -10.26% -12.46% -6.87% -2.75% -4.72% 1.53% Total Tax Levy ('000's) Spending ('000's) -2.35% -4.42% -11.20% -3.66% -4.09% 4.42% -5.09% -3.94% 0.07% 5.65% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1.32% 2.51% 5.34% 7.12% 8.17% 10.64% 18.13% 23.84% 21.55% 24.06% -1.15% 1.54% 2.76% 5.61% 9.79% 11.86% 4.99% -0.71% 5.14% -1.79% 0.16% 4.09% 8.25% 13.13% 18.76% 23.76% 24.03% 22.96% 27.80% 21.84% 2.92% 4.14% -1.27% 5.99% 6.29% 6.15% 7.21% 9.42% 13.26% 15.49% 1.84% 3.03% 5.54% 6.37% 6.56% 8.32% 15.59% 19.70% 21.85% 23.89%

What A Flat Tax Base Means The market value of all taxable real estate in Caldwell in 2018 was only 1.53% more than it was worth in 2008 The increase in total property taxes during that period was 23.89%; (15.49% increase in municipal taxes) With no growth in the tax base, the increase in the tax levy came almost exclusively from higher tax rates, which increased by 21.84% during the same period

Efficiency Improvements Expanded use of shared services Health Borough Clerk Purchasing Agent Assessor Personnel Reductions Infrastructure Examination

Redistribution of Obligations Expansion of Borough Utilities Water Sewer Community Center Parking Concept calls for each business to be self-supporting Once achieved, cost of services is borne totally by those who are receiving the services Re-Negotiation of Sewer Treatment Plant Obligations Reconciliation of Actual Use of Services Cost recovery for all new capital investments

Service Eliminations/Deferred Maintenance Water Main Replacement Sewer Main Replacement Street Paving Municipal Roof Replacement Borough Hall Community Center Firehouse Library Parking Deck Maintenance Capital Equipment Replacement Sewer Plant Swimming Pool Emergency Generator

Conclusion Because of a stagnant tax base, Caldwell has been unable to keep real tax rates (i.e. the percentage of the market value of the property that the Borough asks its property owners to pay) from rising and has allowed many of its important assets to deteriorate to the point of failure. In order to minimize the likelihood that these problems will continue, it is critical that Caldwell make every effort to increase its tax base.

Growing the Tax Base Methods Available New Construction on Available Land Extremely Limited Supply of Land Rehabilitation of Substandard Buildings Proposed Use of 5 Year Abatements to Encourage Investment Redevelopment of Existing Properties Highest Potential for Significant Impact Increased Demand for Existing Properties Improve Desirability of Caldwell to a Larger Audience

Redevelopment Impact (Example 1) Current Status Property Size (SF) Current Assessed Value 30,885 Land 1,335,800 Improve. 1,629,900 Total 2,965,700 2018 Equalization Ratio Implied 2018 Market Value Projected 2022 Value 2018 Equalized Tax Rate Projected 2022 Eq. Tax Rate Projected 2022 Taxes 88.91% 1,502,418 1,626,266 3.06% 3.06% 49,699 1,833,202 1,984,317 3,335,620 3,610,583 60,641 110,339 Development Potential Expected Lot Coverage Ratio Area per Floor # Stories Total Residential Area Total Retail Area Total Improvement Value Implied Land Value per GSF Total Land Value Total Projevct Value Projected 2022 Taxes Increase in Tax Levy 70.00% 21,620 Ave. Unit Size 800 5 Cost/GSF 86,478 21,620 Total Cost 17,295,600 3,242,925 20,538,525 # Units 200 150 108 30 3,242,925 23,781,450 726,761 616,422

Redevelopment Impact (Example 2) Current Status Property Size (SF) Current Assessed Value 20,100 Land 938,100 Improve. 560,100 Total 1,498,200 2018 Equalization Ratio Implied 2018 Market Value Projected 2022 Value 2018 Equalized Tax Rate Projected 2022 Eq. Tax Rate Projected 2022 Taxes 88.91% 1,055,112 1,142,087 3.06% 3.06% 34,902 629,963 681,892 1,685,075 1,823,979 20,839 55,741 Development Potential Expected Lot Coverage Ratio Area per Floor # Stories Total Residential Area Total Retail Area Total Improvement Value Implied Land Value per GSF Total Land Value Total Projevct Value Projected 2022 Taxes Increase in Tax Levy 70.00% 14,070 Ave. Unit Size 800 5 Cost/GSF 56,280 14,070 Total Cost 11,256,000 2,110,500 13,366,500 # Units 200 150 70 30 2,110,500 15,477,000 472,977 417,236

Redevelopment Impact (Example 3) Current Status Property Size (SF) Current Assessed Value 22,005 Land 1,059,000 Improve. 353,800 Total 1,412,800 2018 Equalization Ratio Implied 2018 Market Value Projected 2022 Value 2018 Equalized Tax Rate Projected 2022 Eq. Tax Rate Projected 2022 Taxes 88.91% 1,191,092 1,289,276 3.06% 3.06% 39,400 397,930 430,733 1,589,023 1,720,009 13,163 52,563 Development Potential Expected Lot Coverage Ratio Area per Floor # Stories Total Residential Area Total Retail Area Total Improvement Value Implied Land Value per GSF Total Land Value Total Projevct Value Projected 2022 Taxes Increase in Tax Levy 70.00% 15,404 Ave. Unit Size 800 5 Cost/GSF 61,614 15,404 Total Cost 12,322,800 2,310,525 14,633,325 # Units 200 150 77 30 2,310,525 16,943,850 517,804 465,241

Redevelopment Impact (Example 4) Current Status Property Size (SF) Current Assessed Value 17,787 Land 700,500 Improve. Total 795,600 95,100 2018 Equalization Ratio Implied 2018 Market Value Projected 2022 Value 2018 Equalized Tax Rate Projected 2022 Eq. Tax Rate Projected 2022 Taxes 88.91% 787,875 852,822 3.06% 3.06% 26,062 106,962 115,779 894,837 968,601 3,538 29,600 Development Potential Expected Lot Coverage Ratio Area per Floor # Stories Total Residential Area Total Retail Area Total Improvement Value Implied Land Value per GSF Total Land Value Total Projevct Value Projected 2022 Taxes Increase in Tax Levy 50.00% 8,894 Ave. Unit Size 880 4 Cost/GSF 26,681 4,447 Total Cost 5,336,100 667,013 6,003,113 # Units 200 150 30 30 933,818 6,936,930 211,993 182,392

Redevelopment Impact (Example 5) Current Status Property Size (SF) Current Assessed Value 21,237 Land 1,453,600 Improve. 2,596,900 Total 4,050,500 2018 Equalization Ratio Implied 2018 Market Value Projected 2022 Value 2018 Equalized Tax Rate Projected 2022 Eq. Tax Rate Projected 2022 Taxes 88.91% 1,634,912 1,769,681 3.06% 3.06% 54,081 2,920,819 3,161,588 4,555,731 4,931,269 96,618 150,700 Development Potential Expected Lot Coverage Ratio Area per Floor # Stories Total Residential Area Total Retail Area Total Improvement Value Implied Land Value per GSF Total Land Value Total Projevct Value Projected 2022 Taxes Increase in Tax Levy 80.00% 16,990 Ave. Unit Size 800 5 Cost/GSF 67,958 16,990 Total Cost 13,591,680 2,548,440 16,140,120 # Units 200 150 85 30 2,548,440 18,688,560 571,122 420,423

Summary of Case Studies Summary of Case Studies Current Taxes ('22) Projected Taxes ('22) Increased Levy Retail SF # Units Case 1 Case 2 Case 3 Case 4 Case 5 110,339 55,741 52,563 29,600 150,700 726,761 472,977 517,804 211,993 571,122 616,422 417,236 465,241 182,392 420,423 21,620 14,070 15,404 4,447 16,990 108 70 77 30 85 Total 398,944 2,500,657 2,101,714 72,529 371

Increasing Demand for Caldwell Property Real Estate Values are Directly Related to Supply and Demand Redevelopment Will Not Increase Supply of 1 & 2 Family Homes Improved Downtown Will Increase Demand (e.g. Red Bank) More and Better Stores Activated Streets and Sidewalks Safe, Convenient and Sufficient Parking Increased Demand Will Increase Property Values for Resi & Retail Increased Value/Equity Far Greater than Any Resulting Tax Increase

Parking Current Supply Summary of Current Supply Location # Spaces Municipal Lots Bloomfield Avenue Meters Other Meters Total Publicly Available Potential Public Acquisitions Maximum Public Supply 323 117 92 532 162 694 Accessory to Specific Uses 548 Total Downtown Parking 1,242

Garage Numbers Garage Capital Cost Impact of Interest Rate Changes Number of Spaces 540 # Spaces 540 Land Acquisition (Non-Municipal) Site Work Hard Costs Soft Costs & Contingency Total Cost Cost per Space 1,000,000 765,000 10,499,070 2,750,686 15,014,756 27,805 Interest Rates at 2% Principal Term Rate Annual Payment 15,014,756.00 30 0.0200 670,407.69 Capital Recovery per Space 1,241.50 Interest Rates at 5% Principal Term Rate Annual Payment Garage Operating Costs 15,014,756.00 30 0.0500 976,731.43 Interest Rate: 2% Interest Rate: 5% Capital Recovery per Space 1,808.76 # Spaces Capital Recovery Cost per Space Operating Expense per Space Total Cost per Year Total Operating Cost 540 1,241 400 1,641 886,408 540 1,809 400 2,209 1,192,731 # Operating Days B/E Revenue per Day 300 5.47 300 7.36

Other Parking Revenue Projection of Other Revenue Customer Category Bloomfield Meters Other Meters Lots Lots Rear Total Preferred Retail Comm. Off-Peak Reatil/Comm. Peak Reatial Comm. Empl. Residential Full Time Residential Overnight Commuter 117 46 92 46 0 92 0 175 175 0 0 338 267 128 0 0 0 0 0 0 0 0 0 82 0 50 50 0 142 50 Total 117 276 350 182 925 # Workdays 300 300 300 300 300 Average Hours of Use Average Rate per Hour Projected Revenue Less: Current Revenue Net Available for Deck 6.00 1.00 4.00 0.40 7.00 0.70 10.00 0.25 210,600.00 132,480.00 514,500.00 136,500.00 994,080.00 153,000.00 841,080.00

Rationale for Deck Construction Preserving Downtown Character Precludes On-Site Parking for New Projects Higher Density Redevelopment Requires Off-Site Parking to be Feasible New Residential Will Generate Significant Demand Increased Retail Will Require More Parking Redevelopers Will Not Consider Investment with Parking Uncertain Availability of Safe and Sufficient Parking Permits Regional Marketing of Caldwell as West Essex Downtown Better Parking Increases Likelihood of Repeat Customers Most Favorable Interest Rate Market in History