Every summer like clockwork, Peapack-Gladstone municipal officials prepare an annual tax bill for property owners. Among other things, the bill tells us how municipal expenditures will be allocated in the next Borough budget and reminds us again of civic priorities for the year ahead. A helpful graph illustrates where our money is going, with colorful pie-chart slices staking out so much for schools, so much for emergency services, another bit for libraries, and so on.
Helpful as they are, what these bills don’t say are the reasons why our residential property taxes seem to go up every year. Nor do the charts tell us how one of the tiniest line-items, the local Open Space Tax first authorized by voters in 1998, is paying for itself many times over today by helping regulate those bigger chunks, the ones that represent our rising public schools tuition attributable to ever-higher enrollments and our costs of providing borough services.
At tax time, even our most civic-minded neighbor will be forgiven for scoffing at the notion that there is any such thing as a “good” tax. And calling our Open Space tax a giant-killer may be slightly exaggerated. But the record in our community as elsewhere in New Jersey is that public Open Space purchases are tax-smart public policy and among our most cost-effective tools when it comes to regulating municipal expenditures. That’s because municipal, county, and state Open Space trusts address the single largest problem facing New Jersey communities today: runaway growth in residential construction. Voters are learning that when it comes to taming sprawl, the best Defense may very well be a good Offense.
Planners claim that every time the sun rises over New Jersey, another fifty acres of open land has fallen to development. New houses, office parks, roadways and public buildings are quickly displacing pastures, woodlots and forests. Already, 40 percent of the Garden State’s land area is developed, making New Jersey the most densely-developed state in the nation and even more densely populated than India or Japan. Preservationists estimate that development consumes another 18,000 acres of open space every year, and that, in the decade between 1985 and 1996, fully five percent of the state’s remaining open land was developed. At that rate, Rutgers scholars project that it will take just 40 years for the entire state to mirror the land-use density of urban Hudson County. It may be unprecedented in American experience, but reaching full build-out on a statewide basis is entirely conceivable within the lifetimes of current NJ taxpayers.
With all that growth comes demand for more seats in more schools, additional teachers, more buses, greater traffic and sewer capacity, more police and emergency services—in sum, more of all those things that our property taxes subsidize. Given this economic scenario, it’s neither inaccurate nor inhospitable to point out how new neighbors cost everybody more. Nobody advocates hauling in the proverbial welcome mat, but after too many years of spiraling property taxes, concerned voters are demanding new remedies for sprawl. Regulating development and property taxes are undeniably hot political issues for our community as they are all over New Jersey.
Fortunately, courts, legislatures, and politicians are taking notice. Their response has been the introduction of an array of policies that put our communities—including Peapack-Gladstone—at the very forefront of national land-use management and preservation practices.
Communities fight back
Most home owners are familiar with the functions and statutory authority of their local Land Use Boards, municipal bodies charted with the regulation of zoning and other restrictive public covenants. Land Use boards guide municipal officials in adopting desirable zoning plans and then weigh individual development proposals against their likely impact on a community through the negotiation of variances. A significant characteristic of this system is that whatever is not explicitly prohibited by ordinance is deemed permissible. So, both changes to a municipality’s zoning regulations as well as the applications of those restrictions to particular properties require careful jurisprudence. Determining whether grounds exist for a variance or whether an application has been heard fairly is an adversarial process that often results in expensive litigation. With multi-million dollar properties at stake and in a real estate market undergoing hyper-growth, small communities like Peapack-Gladstone are often overmatched.
Recently, neighboring Bernardsville successfully defended its imposition of ten-acre residential zoning against a property-owners’ lawsuit. In upholding Bernardsville’s policy, state courts gave further encouragement to community efforts to regulate sprawl. Nevertheless, it is a truism that public policies won through litigation only inspire more litigation, and that boards of voluntary regulators are ill-equipped to administer booming markets from a defensive perspective.
Enter the Offense
An increasingly popular alternative is to control endangered property by acquiring rights pro-actively via open market competition. This is where Open Space Trusts excel.
Open Space Trusts, those tax-funded capital accounts earmarked for acquisition of undeveloped real estate, conservation easements, and other restrictive land-use covenants, are now in use in over 200 New Jersey municipalities. They are very popular with voters. According to Princeton University’s Policy Research Institute:
From 1996 through 2004, 320 local open space initiatives appeared on the ballot in New Jersey and 271 were approved, allocating around $6 billion for land acquisition and preservation. No state had more such questions on the ballot and only California voters approved more conservation funds. Since New Jersey’s first program began in 1961, state efforts and more than 200 local trust funds (mostly at the municipal and county level) have protected 1.1 million acres.
A primary vehicle for this effort is New Jersey’s Garden State Preservation Trust, a financing authority that provides the funds to preserve forests, watersheds and wildlife habitats, parks and sports fields, working farms, agricultural landscapes and historic structures. Supported by state Sales Tax receipts, the Trust will generate $341 million in fiscal 2005 alone. Through its combination of dedicated funds and bonding, it will average nearly $200 million a year for open space (with $80 million dedicated to farmland) over the program’s lifetime.
Localities like Peapack-Gladstone participate in the Trust’s mission by establishing a qualified local tax authority and raising money that the trust matches through grants administered by its three primary funding agencies: the NJ Green Acres Program, the Farmland Preservation Program, and the Historic Preservation Program.
At present, Peapack-Gladstone has $637,639 in its Open Space Trust and expects to raise an additional $226,000 in 2005 tax receipts. These amounts represent direct investments by borough taxpayers in preserving our community’s open spaces, currently $.03 per $100 in assessed valuation. Three cents is a drop in the bucket of what’s required, but thanks to aggressive solicitation of matching grants, our story doesn’t end there.
When you add the $1,069,219 in our Borough’s Green Acres Planning Incentive Account plus another $575,000 that has been awarded for 2005, our modest $.03 contributions qualify us to compete much harder in the fair market for developable properties. In fact, this year our taxpayers will benefit from additional grants including $500,000 from the Morris Land Conservancy, a non-profit regional preservation group, and potentially another $1,000,000 from Somerset County’s Open Space Partnership program. All of this money will be used to preserve open spaces that would otherwise sprout new subdivisions, school bus stops, and more traffic.
What do these matching grants mean in terms of your leverage? To command the same purchasing power using local tax receipts alone would require another $.42 per $100 in 2005 assessed value! For a median homeowner assessed at $500,000, that’s nearly $2,100 in additional property tax obligations! Clearly, leveraging our Open Space kitty by tapping available matching sources is tax-smart program management.
Since 2000, the Borough’s Open Space tax authorization and matching resources have enabled the retirement of 29 acres of residentially-zoned property from the market, with further projects on the horizon. This accomplishment may seem unremarkable until you understand the tax implications of eliminating over 100 new houses from our public school enrollments. Calculate future tuition costs to educate those new neighbors year after year and the program’s $.03 share of property taxes is indisputably a municipal bargain!
Despite these signs of progress, New Jersey’s 45-year battle against sprawl will be waged for decades to come and nobody forecasts an easy road ahead. Just as surely as there will be new people who cherish our friendly neighborhoods and green valleys, it is not unrealistic to look ahead to a day when there is no more open land in Peapack-Gladstone to subdivide. If they’re very, very fortunate, voters who repeal the borough’s open space taxing authority on that future date will assess how well our “tax-smart Offense” did its job by how little else changed here.