A Host Cities Program

 

                                         A Host Cities Program

By Albert B. Kelly

Certain communities and their counties are unique in that they host what most communities would prefer not to have- correctional facilities whether for youth, woman, or those distinguished by security level (i.e. medium and maximum, etc.). One of the disadvantages involves the loss of taxable land that would otherwise contribute to the ratable base and in smaller communities this can be substantial.

Another downside is simply the negative perception of a neighborhood or community that hosts such a facility. Whether warranted or not, the whole question of these facilities, the reason for their existence, the perception of those inside and the prospect of release of inmates or their families settling in the community all have an undermining effect on the places that host them.

Throw a global pandemic into the mix along with the corresponding arguments about whether it is better to release certain offenders in the name of protecting inmates and officers from the spread of a virus that thrives on population density or come down on the side of keeping communities safe from Covid and recidivism and you get the picture.

Three communities in Cumberland County, three in Mercer County, two in Burlington County, and one each in Essex, Hunterdon, and Union Counties host state correctional facilities and Cumberland and Mercer also host federal facilities. Some also host ancillary nonprofit programs. Over time, the upsides do not offset the downsides.

In my community hosting South Woods, I remember talk about creating local jobs, but many of the positions were filled by those transferring and commuting and as for local hiring, it didn’t result in the type of workforce boost that was projected to be on paper. As for talk about potential investment in the local economy whether buying goods and services or commuter spending- again the theory was shinier than the reality.

There’s a reason communities are selected. Host communities are generally lower income, sometimes rural, often in need. Some are county seats, others more urban, many have a higher percentage of exempt properties whether government, nonprofit, or religious. All could use some tools to help offset the impacts to the ratable base.

It is one thing to complain, it is another to attempt solutions. Toward that end, credit belongs to Bridgeton’s Tax Assessor for walking me through strategies to help revitalize not only my community, but other host communities as well.

One important potential tool could be a “Host Cities Pilot”. Different from the one-size-fits all pilots available in the state, this pilot (payment in lieu of taxes) would allow host communities to establish by ordinance the length, the type of incentive, and the performance requirements (i.e. improvements increasing value) in line with what is reasonable for that community whether residential or commercial. 

Similar to the existing Long Term Tax Exemption (LTTE), properties would be exempt (except for land), but unlike the existing long term exemption, it would not require a redevelopment area or creating an Urban Renewal Entity. There would be the 5% contribution to the county and pilot agreements would be contingent on code compliance and keeping payments current.

On both the residential and commercial side, this would result in a meaningful reduction in real estate taxes, provide a stable payment agreement for taxpayers and the pilot payments would not count as State and Local Tax (SALT) payments for federal tax reporting.

Another tool for urbanized host communities would be a wage tax. In Bridgeton with roughly 7,600 people working in the community with the vast majority living and spending wherever home is, a wage tax of half a percent would generate roughly $1.3 million in revenue that would lower the tax rate some 18 cents. The average cost per employee would be approximately $175 per year and this would help ease the burden of a diminished ratable base. For any resident paying a wage tax, they would receive a refund. 

Rather than seek handouts and one-shot injections, this approach provides tools that would peg revenues to economic activity happening on the ground allowing each community’s governing body to offer incentives to commercial developers on a case-by case basis while also setting parameters within an enabling ordinance for residential pilots.

Whether it involves hosting correctional facilities, multiple government buildings, an abundance of nonprofits providing services, or a combination of these exempt properties, such a local tool kit would incentivize a broader range of revitalization in targeted ways in host communities and that’s no small thing.