One justification that is often claimed for the Borough’s investment in revitalization is the increase in real estate tax revenue. Let’s take a look at this claim.
A $1 million Borough investment in a certificate of deposit could generate about $40,000 per year.
At the Borough’s current real estate tax rate, 3.296 mils, it would take $12,135,922 in new real estate ratables to produce the same $40,000.
This assumes that $12 million in new development imposes no additional costs of government services and ignores any tax abatement programs, such as LERTA, which reduce taxes on new development.
If we assume that the development would require $10,000 a year in government services, the amount of new development required would rise to $15,169,903.
Do you think that $1 million of bricks and lights generates $15 million in new ratables?
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