Vernon needs an indoor water park
There has been much debate both pro and con over the proposal by developer Andy Mulvihill to build a new indoor water park in Vernon’s Town Center. I would like to make a few points regarding the pros and cons of this proposal.
Most of the negative commentary I have heard revolves around the proposed property tax abatement associated with the PILOT program. Putting it in perspective, New Jersey has the highest property tax rates in the U.S.. They are triple those of California, 75 percent higher than Massachusettes, triple that of Delaware and are on average about 40 percent higher than the rest of the U.S. Therefore to offset the competitive disadvantage states like New Jersey have in attracting new development, they have been routinely and for decades been offering abatement incentives. Similar abatements also are offerred all over the world in countries like Japan, Germany and Canada. New York, five miles away now offers up to a 10-year abatement, of zero property taxes for qualified development. What the Vernon PILOT program will do is place Vernon in a more competitive place to attract this type of development against competition.
A second concern is that Vernon’s taxpayers are then in effect “financing” this development at taxpayers’s expense. This is completely untrue. Not one penny of Vernon’s cash will be disbursed into this development. Its taxpayers will simply be collecting an annuity of more than $1.5 million per year for doing essentially nothing and taking almost no risk. I have likened Vernon’s role here as almost “honorary” and “ceremonial” in nature. It is standard procedure in ventures like this for the host municipality to have some stake in the deal or the real players, the bond and equity holders will not be confident in it. The state of New Jersey also will presumably be taking a big role here and as a prerequisite, requires such local participation. Vernon’s role here will in monetary terms be less than 1 percent of the total deal size of about $140.0 million amounting to less than $100 per taxpayer per year. In most businesses, we call that “petty cash." The result of insisting on a full property tax collection is that the deal might not get done at all. We would then keep our “pride” and walk away from a windfall in actual cash.
The impact on the quality of life here I feel is almost a non-issue. This is not that big a project. Mr. Mulvihill is not erecting a new Yankee Stadium. Traffic may increase but not massively. Given the very high quality this developer has demonstrated, he is capable of building in Crystal Springs, I think we can reasonably expect a first-class landmark caliber building to replace what is now essentially a low paying “quasi eyesore” of an existing lot.
Finally what has not been discussed much is the impact this development will have on the finances of Vernon’s somewhat infamous Sewer Authority of which I am a commissioner. For the VTMUA this deal could be a financial game changer. Without going into detail, the VTMUA is not now, or is it likely to be in the forseeable future, a truly financially healthy enterprise. It has already borrowed millions of dollars from all of Vernon’s taxpayers, most of whom don’t even use the sewers. This deal within a few years might actually enable the VTMUA to begin paying that money back and stop borrowing more. If at some point, the town decides it wants to get out of the sewer business (as our neighbors in Sussex are now close to doing) it could do so in 5-7 years, possibly at a profit, as Sussex is now anticipating. Without this water park, exiting Vernon’s sewer business would almost certainly be at a loss. For this reason every taxpayer in Vernon should be in favor of this project. The town has very little risk in doing this deal but enormous risk in not doing it. I therefore encourage the Township Council to enact this PILOT program and allow the developer to lock in historically low interest rates which may not be here much longer.
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