Why didn’t residents know about potential warehousing projects sooner?

There are state statutes (laws) in place that dictate the notification requirements for land-use applications. These rules pertain to an official application by a developer to present a proposal to build something on a particular piece of land. This application must be made to the town’s Joint Land Use Board at a Public Hearing. Once a developer files their official application in good order, they must be heard by the township within 45 days. Upon receiving a Hearing Date, the notification requirements call for the developer to send Certified Letters to all property owners within 200 feet of property being developed 10 days prior to the Hearing Date. The statute also requires the Hearing Date to be published in a local newspaper and the application must be noted on the Joint Land Use Board’s Agenda for that date. The township is required to be consistent in its notification process with every application that comes before the Joint Land Use Board, whether it be for a housing application or a major commercial project. There is no autonomy to publicly broadcast information about a project that is being discussed or has the potential to come before the township’s Joint Land Use Board at some point in the future, until a formal application is filed.

Why does the town have areas zoned to allow warehousing and when were they established?

All municipalities have Zoning Maps that identify the zoning of every property in the community. This is how a town dictates where the residential housing, commercial/retail, open & recreational space areas exist in their community. This is especially important for undeveloped areas, so everyone can see “what” potentially can be built in that area if the landowner decides to sell the land. In our case, we have followed a Smart Growth philosophy for many years that includes limiting the amount of housing development, retaining open space, and segregating the most intense commercial uses to areas on the fringes/edges of our township and in close proximity to major roads or interchanges. That is the case for the two areas in town where the zoning allows warehousing: our western border in the Tomlin Station Road area approaching the NJ Turnpike and our eastern border in the Richwood area at the Routes 322 & 55 interchange. These areas were designated as commercial areas allowing for all uses, including warehousing in the 1960’s (Tomlin) and 1990’s (Richwood).

Are these areas in our town suitable for warehouse zoning?

The industry and planning standards related to the ideal locations for warehouse complexes include:

• Within 75 miles (or 90 minutes) from a port
• Close proximity to highway networks, preferably state systems
• Near the borders/edges of the host community

The Tomlin Station and Richwood areas are suitable based on our proximity to the growing South Jersey port system (Salem, Paulsboro, Camden) and the Philadelphia port. Both areas are located close to major highway access, and both are near the geographic borders of our community.

Can any other type of commercial development occur in the locations that are zoned for warehousing?

Yes, all types of commercial uses are permitted in these areas, up to and including warehousing. Other, less intensive uses have been sought in these locations for years, but that has not occurred.

There were changes made in the zoning of the Tomlin Station Road area in the last few years. What was that about?

There were a series of zoning steps taken since 2018 to protect that area from an undesirable “by right” warehouse project being developed there. A “by right” application is one that meets all the zoning requirements of the property the developer is seeking to build on. If they meet all the standards of the zoning, with no variances requested, they can expect to receive an approval from the Joint Land Use Board. As noted above, the Tomlin Station Road area has been zoned to allow warehousing since the 1960’s. If a “by right” warehouse application was to be submitted, it would likely be approved with the zoning standards that traditionally exist in a commercial zone.

To avoid such a “by right” application, the first step we took was to designate the entire area a Redevelopment Area in 2018. This was an attempt to help the Tomlin Station Commerce Center owner market that property for the desired, mid-size commercial use he had been seeking for the prior decade. That was unsuccessful. Recognizing the upswing in the warehousing market in the region, we took additional defensive steps to ensure that we did not end up with the “worst version/by right” warehouses we now see being built on Route 322 approaching the Commodore Barry Bridge. To accomplish this, we had our Planners and Engineers design a Redevelopment Plan that contained more stringent guidelines if a warehousing developer sought to build in that area. These more stringent guidelines required intense buffering, berming and landscape packages, stricter light and sound protocols, building design feature requirements that softened the look of the building, as well as project size limitations that are lower than the traditional zoning would allow.

We went even further to prevent the “worst version” warehouse application with the underlying zoning changes we made in 2020 and 2021. These steps were not intended to eliminate warehousing from these areas zoned for it. The intent was to reduce the possibility of a warehouse project advancing under traditional zoning. The township still needed the commercial tax revenue from this area and warehousing had become the dominant suitor, considering traditional commercial development had not materialized. This left the Redevelopment path as the only option for a warehouse developer seeking to make an application in that area. This would give the town the controls it sought on behalf of its residents, especially those in close proximity to any project.

Does a community’s crime rate increase related to a warehouse project being built there?

Most of the data related to crime rates going up in conjunction with a warehouse being built in a community pertains to urban areas. In the past, warehouse projects were developed by repurposing vacant buildings in or near or urban areas. These tended to be marginalized regions with higher-than-normal crime rates to begin with. There is data showing that crime rates accelerated slightly in these urban areas. The most significant increases, however, occurred if the warehouse eventually became vacant.

More recently, as the warehouse market has expanded into suburban and more rural areas, a significant increase in the crime rate of that community has not been evidenced. Locally, Logan Township has been a warehouse mecca in the region for many years, but it has a much lower crime rate, across the board, than the national average. Without the urban backdrop and the possibility of abandoned buildings, crime is not an issue. The workers in the warehouses in South Jersey are not considered potential perpetrators with an average salary of nearly $60,000.

In a December 2020 video, the mayor stated that Harrison was “not selling out in the commercial ratable chase and building warehouses everywhere.” Why did that change two years later?

As the warehousing market began to emerge in our region, we spent the years prior to December of 2020 avoiding the warehousing surge by saying “no” to developers expressing interest in areas not zoned for it. We have that ability (to say “no”) when a developer expresses an interest in a property where they would need a variance to build a warehouse. During this time, we took the defensive zoning and Redevelopment actions referenced above to protect areas that had long been zoned for warehousing, like the Tomlin Station Road area. We did this to ensure our ability to control what a project would look and operate like should a warehouse developer seek to move forward there. The video statement expressed the factual history at that point. We had chosen NOT to “sell out” by granting variances to allow warehousing to be built where the zoning did not allow it. We had also taken the defensive actions referenced above to curtail warehousing being built under the traditional zoning requirements that would have allowed for development similar to the ugly warehousing projects we see being built west of us on Route 322. Hence the December 2020 statement. By the end of 2022, the warehousing developers that had purchased the properties in the Tomlin Station Road area recognized the Redevelopment measures we had put in place and put forth plans that met the higher standards we had put in place.

What would be considered a positive or beneficial impact of having a warehouse in a community?

Beyond the obvious revenue impact, any business that immediately adds hundreds of good paying jobs to a community has a positive ripple effect on commerce in that community. Workers often spend money in the town where they work by using the professional services there, patronizing their shops and eating in the restaurants. Hundreds of new workers in a town can even spur an expansion of the existing business footprint there. That said, none of that impact was quantified or considered in the Study.

How do they calculate the number of vehicles that will enter and leave a warehouse project?

The process calls for the developer to disclose the size of the proposed building and the number of loading docks included to the NJ Department of Transportation (DOT). Based on that information, the DOT uses the Federal Commerce Guidelines to determine the number of vehicles a project of that size will generate. The developer must use that data in the traffic studies they submit. The developer has no say or control over the number of vehicles their plan must show. They are required to base their studies on the number given to them by the DOT.

Why are they still building warehouses in NJ when many of them are vacant?

That is actually a falsehood. In September of 2022, The Office of Planning Advocacy outlined the demand and strategic geographic position of our region and its role in the supply chain in the Northeast. According to a 2021 report by the CoStar Group, an industry leader in commercial real estate data and information, almost 30 million square feet of space would be built in New Jersey in the next several years. This is based on the need created by the sustained growth and traffic at South Jersey’s ports, including Camden, Paulsboro, and Salem. The reality is that the vacancy rate for warehouses in New Jersey is less than 2%, with demand increasing by 30% in each of the last two years.

Why is there suddenly such a substantial tax increase related to this warehouse decision?

The tax increase related to our decision on warehousing has nothing to do with warehousing directly. The reality is there have been two major areas dedicated to commercial zoning in our town for decades. Neither area has produced the anticipated revenue over the last 10-15 years. They are the Richwood area and the Tomlin Station Commerce Center area.

During this last decade, the Township Committee decided to limit the property tax increases on our residents as we waited for those commercial tax revenues to materialize. We have maintained one of the lowest Tax Rates in Gloucester County this entire time, but the commercial development world has changed in the last decade. Brick ‘n mortar retail development is no longer a realistic consideration, and the warehousing demand is driving the commercial development market in our region now. If we do not allow some of that development in the designated areas in Harrison Township, there is no other option but to bring the local Tax Rate up to the required level to maintain our municipal services to our residents. This changing landscape and a decision to eliminate any warehousing development would leave no option but to pass the burden onto our residents.

In hindsight, the only thing that we could have done differently would have been to increase local property taxes at a higher rate over the last decade, assuming that Richwood and the Tomlin Station Road area were never going to produce the revenue our Master Plan expected from them. That would have resulted in our current Tax Rate being about 33% higher than it is right now, ranking us around 17th in the county versus having the 4th lowest Tax Rate in the county. Our avoidance of that path for all these years is the reason we now face this decision on warehousing with such significant tax implications.

Why did Township Committee make this decision without further input from the public?

The township leadership took the last two months conducting an internal evaluation of our Budget & Tax Rate history, our staffing needs (now and going forward) and the revenue required to meet those needs. Those details and that data are contained in the Study just released. The fiscal impact defined in this Study would cause a major hardship for many residents in our community. Additional input would not change these facts and it was clear to our leadership team that there was no other path forward at this moment. The Township Committee members agreed on this unanimously, as they did that there will be an annual review of the zoning and tax policy going forward.

SPECIFIC QUESTIONS ABOUT THE KINGS LANDING WAREHOUSE PROJECT:

Harrison’s Joint Land Use Board (JLUB) voted against the warehouse project – what is the status of that project since it was already approved in Woolwich?

The developer has the right, and is pursuing legal action, to have the JLUB’s denial overturned.

What is the current revenue from that land compared to revenue the township would get from the Kings Landing warehouse project?

The land is currently farmed and pays the township less than $2,000 a year in taxes. The warehousing project had a PILOT (Payment In Lieu Of Taxes) in place that called for an annual payment of $1.6 million that would accelerate every five years, based on the new assessed value. In addition to the PILOT payment, the warehouse project would be required to pay the Land Tax, which would be approximately $256,000 annually. The township’s portion of that payment would be about $43,000.

How does the PILOT impact the revenue the township will receive from this project versus a traditional tax payment?

The township keeps 95% of the PILOT payment after the County is allotted 5% of that total payment. That equates to $1.52 million (or $1,520,000) per year for 30 years. The township’s portion of a traditional tax payment on that project would be about $300,000 annually. After factoring in the incremental increases every five years (mentioned above), that amounts to about a $50 million increase in revenue to the township over 30 years when comparing the PILOT payment to a traditional tax payment in this case.

Where were the entrances and exits to that project located?

There was one entrance/exit point planned for this project, located at a signalized intersection that would be created on Route 322 about halfway between Tomlin Station Road and the light at the entrance to the NJ Turnpike. There is no access from Tomlin Station Road.

Woolwich already approved this project – what would happen to the project if the Harrison portion is not part of it?

The assumption is that the developer would amend the Woolwich plan to fit more square footage there and move forward with the project with the same or similar entrance/exit location.

There was concern expressed during the Public Hearing about both the Environmental and Traffic Impact Study provided. Who oversees that and can the township require more details or information?

Traffic Studies and related road or infrastructure improvements fall under the jurisdiction of the DOT (Department of Transportation) and the Gloucester County Engineering Department, depending on what road the project’s entrance/exit lies on. In this case, Route 322 is a state road that Gloucester County has jurisdiction over in that area. Therefore, The Gloucester County Engineering Department is the “superseding agency” that has jurisdiction over all the traffic approvals.

All required Environmental Studies fall under the jurisdiction of the DEP (Department of Environmental Protection). As the superseding agency, the NJ DEP has total authority on all environmental and emission/pollution issues. The good news on that front is that NJ is known for having some of the strictest environmental requirements and oversight in the nation. Local municipalities cannot and do not supersede these authorities and therefore cannot request or require standards higher than these agencies have in place.

As recently promised, an internal evaluation has been conducted to clarify and quantify the fiscal implications related to warehousing development in Harrison Township. While no one really “wants” warehousing, important tax implications need to be considered should we choose to ban all warehousing in our community. We recognize and wish to address the voices calling for “NO WAREHOUSES,” which is the basis for this study. Note that anything in GOLD may be clicked to open and see details.

With certain legal limitations, our Township Committee does have the authority to change the zoning of properties in town provided that the change is consistent with the township’s Master Plan. This information is not meant to make the case “for or against” warehousing, rather, it is meant to be a basis for making a totally informed decision. This Study contains all the facts that should be considered before taking action to change long-standing zoning regulations that would eliminate warehousing from being built anywhere in our town.

In compiling this information, we called upon our CFO/Treasurer to provide us with Audited Budget data, our Deputy Administrator and Police Chief to provide the required budget and staffing projections and our Joint Land Use Board Secretary to provide the zoning histories. The Study includes facts and data provided by the Gloucester County Board of Taxation, the Harrison Township Construction Office and information derived from our Master Plan and published Tax Bills & Pie Charts.

We began this process by acknowledging that there are no perfect solutions, only tradeoffs. We also recognize that Township Committee is tasked with the responsibility of making these decisions and that ultimately, this will come down to a choice:

Should Harrison Township “stay the course” and continue to allow warehousing in the areas where our zoning permits it?

– OR –

Should we change the zoning to ban all warehousing permanently, with the understanding that there would be a substantial residential tax increase associated with that choice?

Though a “substantial residential tax increase” is the universal assumption, quantifying what that tax increase would be is a key element and objective of this Study. The information included here details our tax rate and budget history going back 20+ years to provide perspective on our current fiscal/budget status. It also looks forward several years and identifies the anticipated cost increases, as well as the expected revenues from the traditional commercial tax ratables already slated for development (i.e. Medical Office Buildings, Gas Station, Car Wash, restaurants, small retail, etc.).

To weigh the positive and negative impacts of a warehousing project on a community, this Study does not delve deeply into a few areas, because of certain jurisdictional limitations that exist. Those areas include the traffic and environmental impacts, data on crime rates and the increase in commerce created by warehousing projects. However, we have provided the Frequently Asked Questions (FAQs) section on the landing page that does address questions on these topics that have arisen.

Considering the amount of detail and information included here, we have broken the study down into five sections. They are:

SECTION I: Understanding Municipal Revenue & What Your Taxes Pay For
SECTION II: What Does It Cost to Run Our Municipality?
SECTION III: Budget History – Why We Are Where We Are
SECTION IV: The Plan We Have in Place
SECTION V: The Choice Moving Forward

SECTION I:

UNDERSTANDING MUNICIPAL REVENUE & WHAT YOUR TAXES PAY FOR

Though it seems rather elementary, it is important for everyone to have the same basic understanding of the services that Harrison Township provides, and the costs associated with providing those services. It should also be clear “where” that money comes from, which is why every Municipal Budget is required to identify all the Revenue Sources in an itemized fashion. The first source labeled in a Municipal Budget is Miscellaneous Revenues, which covers about 40% of the total local budget revenue. These revenues include all State Aid or Grants related to various programs, as well as all the fees that a municipality generates locally, including permit and construction office fees, court & traffic ticket fees and liquor license fees. Miscellaneous Revenues also include the Interest or Receipts on uncollected taxes and the sale of any township-owned property.

In discussing a Municipal Budget, we are reminded that this only represents 16.89% of a resident’s total tax payment, according to Harrison Township’s 2022 Tax Bill & Pie Chart¹, which every resident received in the mail. Most of the total tax payments go to the School Districts and the County (about 75%).

The second source of revenue identified in a Municipal Budget is labeled the Amount to be Raised by Taxes and covers the other 60% of the local budget revenue. This amount includes both the Residential and Commercial tax revenue of the municipality and is the money that residents and business owners pay in property taxes. Clearly, the more revenue generated by Commercial taxes, the lower the requirement for Residential tax revenue.

In evaluating “what a resident gets” for their property tax payment, the best analogy to make is to compare a property tax payment to the payments people make monthly to maintain their home. Services like gas, electric, water, sewer, cable/internet, and property or landscape maintenance. Homeowners know how much they pay for these services, and they understand what they get in return for that payment.

By comparison, resident homeowners always know what they pay in property taxes, but some might not make the connection to what they get in return for that tax payment. The municipal services (16.89% of a resident’s Total Tax Bill) paid for with a resident’s tax payment include Police and Fire protection, Emergency Management, Parks and Recreation facilities, EMS Ambulance Service, Adult & Children’s Activity Programs, Trash/Recyclable/Bulk pickup services, Yard Waste Removal, Town Events, Local Road/Street Maintenance, Vital Statistics & License services, Code Inspection services and Tax Assessment & Collection.

SECTION II: WHAT DOES IT COST TO RUN OUR MUNICIPALITY?

Once a resident understands how much they pay in taxes and what it pays for, the next step is to comprehend how the municipality spends that money. A line-by-line description of our Municipal Budget is always available for the public to view, but the details of revenue & expenditures can be confusing to read. The best way for a resident to understand what it costs to run a municipality is to ask them to view the municipality like a business. Like any business, Harrison Township has a bottom-line cost to provide the services referenced above. Those costs include all municipal employees (salaries, benefits & pensions) and all the required equipment and vehicles, along with any debt payments associated with purchasing the required equipment and vehicles. In 2022, our total local budget appropriation (cost) was $13,553,396.48 and there were 4731 tax-paying properties, 4012 of which were residential.²

We reference the 4012 residential properties because their demand for municipal services impacts the municipal budget much differently than the commercial properties. The fact is that commercial properties do not require the same level of municipal services as residential properties. For example, Police & Fire protection and EMS Services are municipal services that are extended equally to both residential and commercial properties. Regardless of whether a crime, fire, or medical emergency occurs at a business or residence, they each receive the same response. Beyond that though, commercial properties do not use our services, for the most part. They do not utilize our parks and recreation amenities or programs. They do not put kids in our schools or impact our administrative staff. They do not put pressure on our local infrastructure since most businesses are located on state or county roads. And, in most cases, we do not pick up their trash since most businesses have private trash & recyclable hauling services. Hence, the commercial tax revenue generated in a municipality has a significant positive impact on the tax burden that is passed onto residents.

In Harrison Township, the simple math tells us that it costs the township $2,865 per property (annually) to provide all the services outlined here. We arrive at that number by taking the total budget of $13,553,396 divided by the 4731 properties. (Note: This assumes an “equal” sharing of the services for commercial and residential properties, which we know is not the case, as identified in the previous paragraph). If we adjust the calculation to only spread the cost over the 4012 residential properties, the price tag per property jumps to $3,378 ($13,553,396 divided by 4012 properties). The reality is that the township does provide some municipal services to commercial properties, as we have stated. Therefore, the exact answer lies somewhere in the middle. For the purposes of the example to follow, we will use $3,000 as the township’s cost per household to provide all these services.

According to Harrison Township’s 2022 Tax Statement and Pie Chart, the total tax rate in 2022 was $3.204 (per $100 of Assessed Value), with the average priced home being $343,691 in our town.2 As stated previously, only 16.89% of the total tax collected is attributed to the Local Municipal Budget. Therefore, the average priced home paid $11,011.86 in total taxes2, of which $1,859.90 (16.89%) went to the township to pay for all the municipal services mentioned here. Clearly, that $1,859.90 is not enough to cover the $3,000 cost per home to provide those services.

These numbers confirm that the only way for a municipality to maintain or even lower the local tax rate is to substantially increase the commercial revenue portion of the Amount to be Raised by Taxes in a Municipal Budget.

SECTION III: BUDGET HISTORY – WHY WE ARE WHERE WE ARE

The warehouse tax ratable conversation becomes even more urgent when we look at where the township stands relative to our current and future budget needs. Evaluating that fiscal status requires a comprehensive understanding of our Tax Rate history and population increase looking back more than 20 years. The first major population surge in Harrison Township occurred in the 1990’s when the population went from 4,715 (1990 Census) to 8,788 (2000 Census). By the 2010 Census, the population had grown to 12,417 and until the economic downturn and housing bust in 2008, we were the fastest growing town in the entire state in the mid-2000’s. We can trace our current budget challenges to this period when we look at the numbers.

In 2000, we had a total local budget of $3,652,000 with $1,250,000 coming from the Amount to be Raised by Taxes. The Local Tax Rate was 27.6 cents ($.276) per $100 of Assessed Value. By 2006, the local budget had nearly doubled to $6,582,950 but the Amount to be Raised by Taxes had only increased to $1,891,600.³ How could that be? The answer is that the Township Committee at the time decided not to raise the local Tax Rate for seven consecutive years (2000-2006). This decision to not raise the Local Tax Rate, possibly for political reasons, resulted in the budget gap we are still dealing with today.

The numbers and documented historical circumstances tell us “how” they did it; meaning where did they get the money to cover the shortfall? As stated, Harrison Township was the fastest growing town in the state during this period. The number of new homes built during this seven-year stretch was 1,199.⁴ That is a massive amount, averaging more than 170 a year. By comparison, we have not eclipsed 30 new homes a year in the last seven years, with the most recent four years producing new home numbers in the single digits.

So why is the number of houses being built pertinent to the township’s budget and tax revenue status? Very simply, all the taxing entities (County, School Districts, Library and Local Municipalities, etc) are required to base their annual budgets on all the properties that are “on the books” (meaning they have a Certificate of Occupancy or CO) the prior October. Once we all finalize our budgets for the year, we cannot use any tax payments made by properties that are built after that and receive a CO. However, all newly CO’d properties start paying taxes immediately – so where does that money go?

The reality is that the property tax payments from new houses are still collected by the municipality, but 100% of those funds are added to the township’s surplus. We cannot, by law, disperse those funds to the Schools or County or even use it for our own local budget in that year. Because of that limitation and the fact that 170+ new houses that were being built annually between 2000-2006, Harrison Township was adding $1.5 million to $2.5 million to its surplus every year. The decision was made back then NOT to increase the Tax Rate to cover the budget increases, but instead use the surplus money to cover the shortfall.

This might make sense at first glance, until you recognize that the budget surplus was temporary. The housing boom came to an end in 2008, however the annual operating budget had increased permanently because of the costs associated with servicing all the new homes and residents. The surplus from the boom years eventually ran out, so there was not enough tax revenue to cover the township’s expenses – primarily because the Tax Rate had not been increased for seven straight years.

SECTION IV: THE PLAN WE HAVE IN PLACE

As a result, and after the housing boom subsided, the shortfall in the budget was roughly $1 million to $1.5 million annually and this was acknowledged by the Township Committee in 2007, when they raised the local Tax Rate for the first time in eight years. By 2008-2010, when our team became engaged, we did an analysis to determine the best path forward. We concluded that if we raised our tax rate as much as we could legally, we would still run out of the extra surplus created during the housing boom by the year 2014 or so. Trenton had implemented a “2 Percent CAP” on local budgets, so even if we wanted to raise taxes the required amount to cover the existing expenses, we could not. Faced with these circumstances, we implemented a plan to raise the Local Tax Rate an acceptable amount each year, which we have done, to slowly bring the rate up to the necessary level.

The data and projections also told us that raising the tax rate alone would not increase our revenue in time. Therefore, we also implemented a spending freeze on all new capital projects. You will note that over the last decade, the Capital Program of our annual budget (equipment/vehicles we purchase or projects/structures that we build) only consists of purchasing equipment or vehicles that we are required to replace. We also cut spending in our Operating Budget (paying for employees) through attrition. As employees retired or moved on, our Department Heads sought to make do with a smaller staff. This policy has been in place for the last decade and our employees have done an unbelievable job while being short-staffed for the last 10 years.

We have proudly stated that we run the leanest municipal government in the county. The reality is, we didn’t have much of a choice. During this period, we were also fortunate to have a few “fiscal band-aids” in the form of liquor license sales. Between 2013 and 2018, we sold 6 licenses (5 Consumption and 1 Distribution) for a total of $3.3 million dollars. These proceeds flowed into our surplus account, and we used it sparingly, as needed annually, to cover the budget shortfall.

By using a combination of controlled spending on capital projects and operating expenses, running a very lean staff (actually, understaffed), and strategically utilizing our surplus generated by liquor license sales, we have successfully navigated the last 8-10 years without passing the entire burden on to our taxpayers. We still maintain the fourth lowest tax rate in Gloucester County.⁵

Another key element of this strategy and plan was to be the realization of the commercial tax revenue expected from the areas in our community designated for commercial development. For the last decade-plus, projects have been planned in Richwood and at the Tomlin Station Commerce Center that were slated to provide a substantial amount of commercial tax revenue to the township. Since 2009, the Richwood area has been owned by the same developer (Madison Marquette) and that project has never materialized despite our efforts to move it forward. The Tomlin Station Commerce Center has sat stagnant for the last 10 years as well.

These two areas would have produced approximately $7 million in total tax revenue, with the municipal portion totaling about $1.2 million to 1.4 million annually. If that had happened, the township’s current and future fiscal situation would be more stable. Our annual revenue would be at a much higher level, our staffing needs would be addressed and there would not be a sense of urgency to substantially increase our revenue over the next five years. The future would include a slow and nominal increase in our residential tax rate and the normal/traditional commercial growth slated for our community, which includes a few more medical office buildings, desired small retail shops and some restaurants.

Since some residents have questioned the impact of commercial tax revenue from ratables other than warehousing, it is important to quantify the revenue the township receives from these traditional commercial projects. As an example, a 15,000 square foot medical office building will pay about $150,000 in total property tax, with about $25,000 of that payment going to the municipality. A gas station/convenience store will pay about $80,000 in total property tax, with $13,500 going to the municipality. We have some of these uses slated for the future and we expect to add more in the coming years. Nevertheless, with municipal tax portions that range from $10,000 to $30,000, we would need to add about 75+ individual uses like these to address our current need. This is not a feasible expectation.

Lastly, recognizing the understaffed status of our workforce brought on by these circumstances, we must hire additional employees for our Public Works & Police Departments, Wastewater Treatment Facility and Administration Offices over the next 5 years. Our Department Leaders have given us their internal projections and we estimate that will add approximately $4.5 million to our local budget in that timeframe. When we add that to the $1 million to $1.5 million shortfall we have been dealing with for the last decade, we will need to increase our municipal revenue by $5.5 million – $6 million over the next 5 years. This additional revenue needed will have to come from both our Commercial and Residential property taxes.

SECTION V: THE CHOICE MOVING FORWARD

All of the numbers and historical facts bring us to the “choice” we mentioned at the very beginning of this study:

Option I – Allow warehousing where it is currently zoned, with a projected property tax increase of 7.5% in a resident’s Total Tax Bill over the next five years detailed here.

– OR –

Option II – Ban all warehousing in our town going forward, with a projected property tax increase of 32.5% in a resident’s Total Tax bill over the next five years detailed here.

In order for the Township Committee members to be in position to make the informed decision that is required of them, these options must be quantified fiscally. Those details are defined below.

OPTION I DEFINED

The plan we have been following for the last 8-10 years was designed to control the tax burden passed onto our residents with the expectation of the required tax revenue from the designated commercial areas to address the shortfall created by the actions taken from 2000-2006 referenced earlier. These expected commercial revenues would also address our needs going forward without sole reliance on our residents for that revenue. As previously cited, that plan has included:

• Annual acceptable increases in our local Tax Rate that still has us ranked as the 4th lowest tax rate in the County.⁵
• Spending freezes on our capital expenditures, along with operating budget reductions based on our hiring/staffing practices.
• Strategic use of temporary fiscal “band-aids” (Liquor License sales proceeds) to extend our solvent timeline.

Staying this course would now include selling of one of the larger pieces of property owned by the township to bolster our surplus for needed use. There are only two considerations. One is the 100-acre parcel the township owns next to Ella Harris Park, where the Water Tower sits, and Harbaugh Village currently resides. The township purchased the property more than a decade ago when we still had a shortage of parks and recreational space for our youth sports programs. Since then, both William Wilt Park and PVS Park have been developed into recreational areas. That parcel would be suited for some commercial development, with frontage on Route 77 (i.e. perhaps a restaurant/bar, gourmet food market, etc.), along with some housing on the Commissioners Road side of the parcel. The other parcel is known as the Maccherone Farm at the corner of High Street & Tomlin Station Rd. The township bought that 95-acre parcel in 2007. At the time, the property was approved for a 73-house, residential subdivision. We could consider accepting housing proposals there again.

The best option is probably the parcel next to Ella Harris Park. If we decide to move forward with either consideration, it is advisable to enter into an RFP (Request For Proposals) process. This would allow us to solicit and review proposals before deciding if any proposal was acceptable. Should that be the case, any sale proceeds would be added to our surplus and be utilized as needed in this plan.

This option accepts the reality that there has been a substantial reduction in demand for new retail and office space over the last decade. The warehousing market has emerged as the dominant option in our region seeking approvals to build projects to meet the supply chain demands. Naturally, we would also continue to pursue other large retail or commercial projects going forward. “If” another warehousing project should emerge, there are two primary areas where the current zoning allows for warehousing. The Township’ Zoning Map⁶ clearly identifies these higher intensity areas. They are the Tomlin Station Commerce Center on our western edge of town approaching the NJ Turnpike Exit and the Richwood area up against Route 55 at the Route 322 interchange, though that entire area is currently under contract for another project.

This option allows these areas to retain their current zoning, which permits warehousing if other commercial projects do not emerge. Couple that with the utilization of the surplus money from the potential sale of a property mentioned above, this option would NOT require a substantial property tax increase every year over the next five years. This assumption is based upon the expectation that those commercial revenues will materialize in that timeframe, as we raise our local rate nominally during this period. Combined with the County and School District increases, we project that a resident’s Total Tax Bill would increase about 7.5% over the next 5 years under these circumstances.

There are two things to note here. First, if a warehouse developer pursues a project in these areas, they would have to adhere to the more stringent requirements we have in place pertaining to project size, landscape buffering & berming, sound & lighting requirements and the building’s aesthetic values. Due to these more stringent guidelines in our Redevelopment Plans, versus traditional zoning, future interest from warehouse developers may or may not occur.

It should also be noted that choosing a path that allows some warehousing in town does not definitively mean that our local tax rate will never increase, going forward. Tax implications would depend on the level of revenue that is actually realized from any of these projects; however, should the PILOT (Payment In Lieu Of Taxes) revenue approach $3 million annually, the fiscal issues we face would be addressed. The foundation for this confidence is rooted in the expectation that other traditional commercial revenues will also come on line in this timeframe and the flexibility that exists with PILOT Programs. The first 15-20 years of a PILOT provides a municipality with multiple options, including the ability to pay off existing debt early and pass the savings on to taxpayers in the form of a stable local tax rate. In recent years, we have seen this happen successfully in East Greenwich and it will be happening in Woolwich soon.

OPTION II DEFINED

This option chooses to change the zoning in the areas that currently allow warehousing, in essence, banning that use anywhere in our community. Absent any other significant commercial projects, this option requires the fiscal shortfalls and projections detailed here to be addressed by substantially raising the local residential property tax rate over the next five years. Yes, if the retail/commercial and office space world changes in the future and the market dictates the building of retail malls and large office complexes again, of course, that realized commercial tax revenue would help mitigate this residential tax burden.

The history, data and numbers included in this study provide a basis for us to offer a “ballpark” estimate on this fiscal choice. To put an actual number on the potential property tax increase residents would face over the next five years, we will use the specific increases in our local budget that we have detailed here. They are definitive.

However, we cannot be as definitive with any potential increases by the other main taxing entities on your tax bill. They are the two school districts and the county and, they make up about 75% of your tax bill. We can only assume their annual tax rate increases going forward based on their history.

With that in mind, and for example purposes, let’s assume there will be no need for any major expansions to the school campuses in the next five years. Over the long term, the total historical increase of these three taxing entities has been 2% to 3% annually. If we combine that with the more significant local municipal increases mentioned earlier, we project a resident’s Total Tax Bill to increase between 30% and 35% over the next five years. For this example, we will use the average of this projection, which is a 32.5% increase in the current tax rate of $3.204 (per $100 of Assessed Value). Factoring in this 32.5% increase, the new tax rate will be $4.245 (per $100 of Assessed Value) five years from now.

Using these assumptions, a home valued at $400,000 that currently pays a total property tax of $12,816 would be paying $16,980 for the same $400,000 assessment in five years. This compares with the 7.5% increase described in OPTION I above, which would produce a Total Tax Rate of $3.444 (per $100 of Assessed Value) in 5 years. Using that Tax Rate, a home valued at $400,000 would be paying $13,776 in total property tax in 5 years.

Therefore, the stark choices for Township Committee members are:

Option I – Allow warehousing where it is currently zoned with a projected property tax increase of 7.5% in a resident’s Total Tax Bill over the next five years detailed here.

– OR –

Option II – Ban all warehousing in our town going forward with a projected property tax increase of 32.5% in a resident’s Total Tax bill over the next five years detailed here.

All aspects of this Study are necessary to put Township Committee members in position to make the required informed decision. Based on the members input and approval, we will “go public” with this information with a simplified Decision Statement linked to a Warehouse Information landing page. The page will include this full Study, other supporting documentation, a Frequently Asked Questions (FAQ) section and the ability for residents to provide feedback.

*All data contained was sourced from the Audited Budgets of Harrison Township and the Gloucester County Board of Taxation, as footnoted. All projections of future tax rates or payments are non-binding and based upon the documented historical records and reasonable expectations of commercial tax revenue growth.
¹ Harrison Township 2022 “Where Your Tax Dollars Go” chart and statement from Tax Bill mailing
² Harrison Township 2022 Budget
³ Harrison Township Budgets 2000-2006
⁴ Harrison Township Construction Office
⁵ Gloucester County Board of Taxation
⁶ Harrison Township Zoning Map

The Community Feedback

Please answer the four questions below and provide your comments/feedback regarding the zoning for warehouses and the potential tax impact on our community. There are three required information fields to include as well. Thank you for taking the time to share your opinion with us.