The Benefits of Open Space:  Appendix II


Impact of Copperas Ridge Project 
on Rockaway Taxpayers

A Report Used in a Successful Case History

Leonard W. Hamilton, Ph.D. Alice Puleo, Project Director
Rutgers University Morris Parks and Land Conservancy


Return to Benefits of Open Space Contents           previous chapter           next chapter 

History

The New Jersey Department of Environmental Protection and Energy Green Acres Program has negotiated a willing seller sale of the 2500-acre Copperas Ridge tract in Rockaway Township. This purchase will preserve the land as open space at no cost to the Rockaway taxpayer.

The Rockaway Township Council opposes the preservation of Copperas Ridge with State Green Acre funds. They propose instead a golf course/residential development for 800 acres, the remainder being preserved by Green Acres. The Council supports this development as producing a positive tax revenue flow for Rockaway Township, when in fact this development would increase taxes for Rockaway residents.

Fiscal Impact Study Conclusions

Method

Accounting methods used by Canger & Cassera, Inc., Consulting and Municipal Engineers, in their original Fiscal Impact Analysis for Copperas Ridge of 1991 (which estimate a deficit of $100,000) were followed. Statistics provided by the Township Council and the developers are used for the Table I computations. Footnotes indicate arguments with statistics or methods. The recalculations shown in Table II reflect a more conservative analysis of the proposed development. Brackets indicate the pages referred to in Canger & Cassera, and

only computations are shown. All budget figures are for 1993:

Table I

Projections Using Township/Developer Data

Municipal Services Local School District Regional H.S. District Total
Revenue $1,147,728 $1,780,149 $995,478 $3,923,355
Costs $ 920,642 $2,640,000 $759,000 $4,319,642
+/- $ 227,086 ($859,851) $236,478* ($396,287)

* A regional district surplus does not come back to the Township budget and should not be computed as part of the total in a Township budget. However, since the original study did so, we compute the total deficit incurred by the proposed development at -$396,287. This deficit was multiplied by 0.68, the amount apportioned to residential taxes, then divided by 7106, the number of households in 1993:

($396,287 x 0.68)/7106 = $37.92 [including Regional H. S. surplus]
[($396,287+$236,478) x 0.68]/7106 = $60.55 [excluding Regional H. S. surplus]

This means an average annual tax increase of $38 per household.

Removing the Regional High School surplus from the local budget predictions yields an average annual tax increase of $61 per household to subsidize the development of Copperas Ridge.

Table II

Projections Using More Realistic Numbers and Including

Costs for Required Local School Expansion

Municipal Services Local School District Regional H.S. District Total
Revenue $896,654 $1,390,728 $777,710 $3,065,092
Costs $985,087 $3,529,400 $759,000 $5,273,487
+/- ($88,433) ($2,138,672) $18,710 ($2,208,395)

Using the same calculations as above:

($2,208,395 x 0.68)/7106 = $211.32 [including Regional H. S. surplus]
[($2,208,395+$18,710) x 0.68]/7106 = $213.12 [excluding Regional H. S. surplus]

Thus, using these more realistic numbers, the average household would face annual tax increases of $211 or $213 to subsidize the development of Copperas Ridge.

Municipal Services

Costs

Golf Course

Local Use Expenditure Non-Residential / Total Assessment First Expenditure Coefficient Non-Residential Allocation

$14,568,126 x 0.26 x 0.61 = $2,310,505

Non-Residential Allocation Added
Assessment
Second C-R Coefficient Estimated
Added Cost

$2,310,505 x 0.06 x 0.30 = $41,589

The proposed golf course would result in approximately $41,589 in added local costs.

Residential

Deducting the nonresidential portion of the municipal costs budget, $2,310,505 from the actual 1993 budget leaves $12,468,268 allocated to the residential municipal costs. The estimated 1993 population for Rockaway Township (1994 Morris County Data Book) is 20,025 persons for a per capita cost of $623 for municipal services. The 350 proposed new households multiplied by a projected 4.031 persons per household would increase the Township population by 1,411 persons. Multiplying 1,411 times the average $623 for municipal services yields a projected increase of $879,053 for the residential portion. Thus, for Table I, the costs in municipal services are:

Golf Course $ 41,589

New Homes $ 879,053

Total Cost $ 920,642

These total costs do not consider capital cost of additional fire engines, police cars, snow plows, ambulances, and so forth, or the additional man-hours necessary to provide these services. In terms of traffic generated, 350 houses would put at least 700 drivers on the road (perhaps 1050 with one driver per child). Estimating one round trip per driver per day through the Township streets means an additional 700 cars that require traffic control, disregarding service traffic. Street maintenance, traffic controls such as traffic lights, and officer and ambulance time responding to the incremental increase in accidents all indicate an increase in the costs budget. The 1,411 projected residents are seven percent of the estimated 1993 Township population of 20,025. Estimating that providing services to this population would increase the municipal residential services costs by the same increment as it increases the population would mean an additional cost increase of $64,445 per year.

Thus, for Table II, the more realistic cost of municipal services would be:

$920,642 + $64,445 = $985,087

Revenues

Market Value Equalization Ratio Assessed Value
New Homes*
(350 @ $500,000)
$175,000,000 62.83% $109,952,000
Golf Course $11,400,000 62.83% $7,162,620
Total $186,400,000 62.83% $117,114,620


Thus, for Table II, municipal revenues would be:

Assessed Valuation** Local Use Tax Local Use Revenue

$117,114,620 x 0.98 = $1,045,796

* These figures seem high for a community so far to the west, being removed from the job market normally associated with the executive jobs which would support these homes. Also, tax assessors do not appraise new homes for their selling price, but according to a set formula at a lower value. Since we cannot devote pages to appraisal techniques, we will let the Town Council's high appraisal assumption stand.

** Existing assessed valuation of the undeveloped property, $3,629,300, should be deducted here as these are tax revenues already in the Township budget. However, since these taxes are currently in arrears, we will not deduct this assessed value for the first analysis, but will in the more conservative analysis.

A more realistic estimate of the Total Assessed Value is as follows:

Houses Re-Valued Market Value Equalization Ratio Assessed Value

350 @ $400,000 = $140,000,000 x 62.83 = $87,962,000

Minus Current Valuation of Undeveloped Tract ($ 3,629,300)

Plus Golf Course (same as above) $ 7,162,620

Total $91,495,320

Thus, for Table II, the more realistic municipal revenues would be:
Assessed Valuation Local Use Tax Local Use Revenue

$91,495,320 x 0.98 = $896,654

The Town Council report of April 4, 1994 refers to a sewer extension financed by the developer to service the Lake Telemark area. A figure of $500,000 is referred to in the notes from that Council meeting. It costs about $20,000 per home in connection costs to sewer an already existing neighborhood. Assuming 400 homes are tied in, $8,000,000 would be the real cost of hook-up (the $500,000 is less than 6 percent of the total cost!) Put another way, this "free" trunk line brings the service to the door, but leaves the homeowner with a$20,000 connection bill. There are less expensive neighborhood septic systems that are more cost efficient (see Thonet Report on Rockaway Township by ANJEC.)

This report also refers to lost existing taxes should the State purchase Copperas Ridge. They are not lost. A 13-year pay down in lieu of taxes gradually eases the tract off the tax rolls. Studies have shown that property near open space increases in value. Moreover, the owner whose home has been appreciating due to open space preservation receives a nice bonus when the home is sold. As a final note, these taxes are currently in arrears, so there would in actuality be no loss to the tax rolls without State pardons or appreciation.

Local School District

Costs

Grade Per Unit Multiplier Number of Students Public School Multiplier Total

Students

350 New

Homes

K-6 0.803* 281 0.8418** 237
7-8 0.305  107 0.8743  93

Local municipal expenditures per pupil in 1993 totaled $8,000. Multipled by 330 new students, this would increase local school costs by $2,640,000 as entered in Table I.

* The per unit multipliers of 0.803 and 0.305 are low figures which, when combined with the high school 0.220, equate to about 1.3 children per household. Although 1.5 is the more standard multiplier used in these studies, we used the lower number throughout. The 84 percent attendance of public school is unrealistic in an area with few private day school education alternatives such as Rockaway. A figure of 90 percent would be more realistic.

** $8,000 and $8,600 are recurring figures for local per student costs in Rockaway. We use $8,000 for the Township model and $8,600 for the more conservative model.

The more realistic student numbers would be as follows:
Grade Per Unit Multiplier Number of Students Public School Multiplier Total

Students

350 New

Homes

K-6 0.803 281 0.90 253
7-8 0.305 107 0.90  96

With local expenditures per pupil of $8,600, multipled by 349 new students, this would increase local school costs by $3,001,400. Adding the required new school bond of $528,000, the more realistic total cost would be $3,529,400 as entered in Table II.

Revenues

The Local School District Revenues as calculated for Table I are as follows:
Total Assessed Value Local School Tax Rate Revenue

$113,485,320 x 1.52 = $1,724,977

Using the more conservative values, the more realistic revenue projection for Table II would be as follows:

$91,495,320 x 1.52 = $1,390,728

Regional High School District

Costs

Grade Per Unit Multiplier Number of Students Public School Multiplier Total

Students

350 Homes 9-12 0.220 77 0.8950 69

The Regional District Costs for 69 new students at $11,000 per student would be $759,000 as entered in Tables I and II.

Revenues

The High School District Revenues as calculated for Table I are as follows:
Total Assessed Value Local School Tax Rate Revenue

$113,485,320 x 0 .85 = $964,625

Using more realistic assessed values for Table II, the revenues would be:

$ 91,495,320 x 0 .85 = $777,710

Conclusions

The Unanswered Questions

 


Return to Benefits of Open Space Contents          previous chapter           next chapter