When Residential Development Becomes a Ratable

Introduction

In my comment found at http://holmdel-hazlet.patch.com/articles/who-pays-the-most-taxes-in-holmdel, I stated that the rate of growth in Holmdel, since the year 2000, has been so low that our school population is decreasing and will continue to fall for several years. This will result in a reduction in our tax rate.

I also explain briefly, in my comment, the potential adverse impact of non-residential, particularly commercial, ratables. I state further that an increasing number of our existing residential developments will cease to be a burden and will become reliable ratables.

They will contribute more revenue for our schools than the cost of providing for the education of the children they will send to our public schools. Support for these statements is presented below as well as some data, which suggests that the Schools portion of our tax rate should drop each year until at least 2020 without more non-residential ratables and, because the School portion is over 65 percent of our total tax rate, our total rate should be reduced as well.

The intent here was to provide a very solid basis for all conclusions and explain a plot of the number of school children per residential unit of a subdivision as a function of time. The plot and additional related information was provided to me by Charlie Pike, the Director of the County Planning Board (CPB) in the 60s shortly after I became a member of the Holmdel PB.

It is the same plot that Vince Domidion, now Chairman of the CPB, gave me about 10 years ago that was in a CPB Report; dated 1974. However, I’ve been repeatedly told that the story is too long and too technical; so I will cut it short.

The message of the plot was repeated to me quite clearly by a member our Fire Co. No 1, on Community Day, when I mentioned my concern with the continued talk of attracting more Commercial Development into Holmdel. He observed that initial occupants of homes in new subdivisions are usually young and in their child bearing years.

But, as the years pass, many, like he and I, continue to live in our homes and the average number of school age children (SAC) per unit, after the initial peak, drops to a much lower number. The man made my day because I have been trying, for 50 years, to get our Township Officials to 1) understand this, 2) support a population study of our town to provide a basis for a very accurate projection of our school population and 3) understand that, if we grow slowly, we wouldn’t need more non-residential ratables.

Certificates of Occupancy for New Residential Units

I authored a paper in 06, which provided a very detailed discussion of the SAC contribution of subdivisions. In an Addendum to the paper, the number of Certificates of Occupancy (COs) issued in Holmdel through the year 2000 was presented. The numbers were taken from the year 2000 census data on the CPB website. I updated the numbers through 2012 through a combination of the 2009 data on the CPB website and the 2010 through 2012 info from our Construction Office.

The numbers include the age restricted housing but the numbers of units was a small fraction of those issued and this fact doesn’t change any of the conclusions presented here. Before presenting the tabulation, I should note that the peak number of SAC per unit occurs in 12 to 15 years after occupancy.

There are reasons to believe that the peak for Holmdel would occur in 12 years. The peak for Holmdel today would be about 1.55 per residential unit (not age restricted), while the average after about 20 years would be about 0.52 per residential unit (not age restricted), or a difference of essentially 3. In the past, about 10 percent of our SAC attended private schools; so the number of children that would attend Holmdel’s schools would, at the peak, be 1.395 per unit and the after-20-years number would 0.468 per unit.

Now let’s look at the numbers that excited me:

DATE Number of COs

Prior to 1939: 176

40 through 59: 491

60 through 69: 726

70 through 79: 794

80 through 89: 1299

90 through 99: 1419

2000: 232

2001 through 2004: 239

2004 through 2009: 91

2010 through 1012: 13

First, the new residential units occupied by 1989 have past the 20-year age and aren’t contributing more children to Holmdel’s schools than about 0.468 per unit. Nearly half of the 90 through 99 units have reached this low contribution level and all of the remaining are on the down slope beyond the peak.

Even the occupancies through 2004, the end of enough new residential units being added to have a significant impact of school population, are close to peak number of SAC and will soon be on the down slope to reduced numbers. Without very large additional development, we should experience fewer numbers of students in our schools every year through 2020.

This will reduce our tax rate and it will happen without any additional commercial development, which would adversely impact existing and possible future residential development and the quality of life in Holmdel.

It may be of interest that the total number of COs listed is 5480. Our tax office collects taxes on 5447 units. This small difference is the result of homes being destroyed and replaced as has happened with 3 in the original Blue Hills Drive subdivision.

Residential Units as Ratables:

Understanding that the a large fraction of the residential units in Holmdel will become ratables at the age of about 20 years is especially important today because we read and hear regularly that more Commercial development is needed to hold our tax rate down. Nonsense!! Assuming the estimate above for the long-term average number of school children per residential unit of 0.468 and a cost per student of $15,173, the school cost per residence becomes $7100.

At our current school tax rate of 1.325 per hundred, this equates to an assessed value of about $536,000. This is less than the average assessed value of new residences on the Southern part of town and, from what I’ve seen, it is less than the average assessed value of residences on lots of 1 acre or more in town.　 Because school costs represent 65.69 percent (this year’s percent) of our tax rate, it is clear that developments with homes having this or a higher assessed valuation are Holmdel’s best and strongest ratables.

School Costs of Lucent Tract Proposal

It might be of interest to look at what the proposed residential units on the Lucent tract could cost Holmdel. The peak school cost per year of 225 units, if the Age Restriction for the 185 proposed to be Seniors only were dropped, would be about (15,173 X 225 X 1.395) $4.8 mil. If the age restriction is not dropped, the peak cost per year of the remaining 40 units would be about $0.85 mil.

Conclusion

The TC committee and the tax-paying residents must consider the facts presented here concerning residential development (as Charlie Pike tried to help us understand years ago) and the potential negative impact of commercial development.

We should eliminate the push for more non-residential ratables of any type. Unless we do something stupid like 1) allowing sewers to be extended unnecessarily, which would permit excessive residential development, or 2) attract more undesirable commercial development, which can degrade residential property values, Holmdel’s tax rate will fall and property values will increase and we will preserve the rural atmosphere that makes Holmdel SPECIAL.