At last evening’s Millville City Commission meeting, Bob Tesoroni questioned the Commission regarding economic development. Until this year, Millville employed Don Ayres as the economic development officer. This man was paid approximately $110,000 annually. With his benefits, it was estimated Mr. Ayres earned about $150,000.

In what was touted as a money-saving move, Mr. Ayres retired from the city. The city did not fill the position. Instead, Mr. Ayres went to work in the private sector. Millville hired his firm to do the same job he had been doing.

In a cost savings move, the city sourced out economic development to a newly formed nonprofit entity with a board of directors, which includes long-time civic leaders to the Millville Urban Redevelopment Corporation. This action will initially save the city $100,000 a year. And it is hope and expected that corporation will become self-sustaining within two years.

No longer is the $150,000 coming from the general fund to pay Mr. Ayres and his benefits. Rather, Millville is paying this private firm more than $225,000 annually.

This may seem like typical politics.

Not according to Commissioner Derella. The money-man of the Commission (and soon to be a Cumberland County freeholder), Derella defends with a straight face that this is indeed a cost savings for Millville.

Follow this logic . . .

When Mr. Ayres was an employee drawing $150,000, some (but not all) of his salary and benefits were paid by Millville city property owners. The balance of the compensation was funded by UEZ funds.

When Ayres retired, property taxes were saved.

Now, the $225,000+ Ayres’ firm makes from Millville is 100% UEZ funds; no property tax dollars are spent for economic development.

In Mr. Derella’s eyes, this is a cost savings.

Yes, I am scratching my head too.

This issue clearly highlights the misunderstanding Derella and other politicians have regarding public money. UEZ money to these folks is considered free money. It is not property or income taxes so they feel it can be used without concern. Need to toss political favors to folks? There’s UEZ. A little short in general funds? There’s UEZ. Want to build a theatre? There’s UEZ. Theatre wants more? There’s UEZ. Bank pulls out of theatre project? UEZ to the rescue.

UEZ money is magic! 🙂 It does anything the politicians want.

Want to claim repeatedly that you cut costs? Shell out $250,000 more of tax dollars for the same work and say you’re saving money. It only makes sense if you use political speak.

For the rest of us, UEZ dollars are tax dollars.

In today’s Daily Journal, Vice Mayor Joe Derella is quoted as saying:

We cut as far as we could and couldn’t make any changes.

Commissioner Derella is wrong.

Just yesterday the same newspaper ran an article stating that Millville had money to give to developers.

The city has several financing options, including:

# Through the NDC, it could offer a developer loans and federal tax credits to help finance the project.

# The city has money in its Urban Enterprise Zone accounts, but Shannon said using those funds is less likely due to an ongoing state review of the UEZ program that might result in that money being unavailable.

# The city could use funds from its Revenue Allocation District to offer loans to a developer. The hotel, in turn, would generate more revenue for the district, which allocates half the tax on new development and uses it for restoring properties in Center City and the 3rd Ward or other projects.

Let’s look at the RAD money. If you are not familiar with the Revenue Allocation District, Carl Johnson has an excellent post about how Millville provides the tax abatements to businesses, siphons off half of the taxes that are actually collected, and then farms out that money to homeowners in certain neighborhoods (not mine, mind you) to fix up their homes.

business is lured to the area with promises of tax abatements.

In return for creating jobs, businesses are given five years of tax breaks to offset the costs of starting up a new location. The first year they pay no property taxes, the second they pay 20% of the assessed taxes, then 40%, 60% and so on until by the fifth year they are paying taxes on the full assessed value.

. . .

Incentives and programs are created to entice homeowners to locate in these areas, and to repair and maintain their properties. The work you are seeing done on the house is the product of these programs.

So, businesses are provided tax abatements. As they do begin to pay some taxes, the city puts half of it in a pot for Johnson and others to improve their properties.

According to the quoted article above, Millville pools this money. It makes sense. No one knows when someone in the RAD area will need something new for the home. Money has to be on hand.

Yet, someone is feeding the reporter information that RAD money may be available to loan to a developer.

Loaning public money to a private developer to develop public land with money that already is diminished from the public coffers because another private business was provided an abatement so some homeowners can improve their homes sure seems like a convoluted plan.

If there is so much money in the pot right now that RAD homeowners don’t need to entice a private developer, the city can certainly find ways to capture that money for its use.

Surely there is $100,000 worth of city expenditures within the RAD district budgeted. The RAD district is:

an 820 acre area comprising the three central neighborhoods, the downtown, and over two miles of Maurice River Waterfront including old glass manufacturing sites and a vacant textile mill. The northern end of the RAD includes a 60 acre site where Union Lake Crossing

As such, the city can easily tap the RAD fund. Put together a resolution with some language that includes forsooth and whereas as well as neighborhood revitalization and all will be as sound as the program is now.

Sure, the private developer doesn’t get the money. Sure, the public-private venture is delayed. Sure, Derella et al. don’t want to do it.

But, there’s the $100,000 they said couldn’t be found.

Don’t want to do that? Okay, find something else in the budget. If you can’t, enact this plan.

What cannot be done is to raise taxes. Don’t blame Governor Christie. You were elected to solve the city’s problems. Part of those problems is dealing with state mandates. It is the city who is hiring employees whose pensions the governor is requiring the city to fund. An alternative would be to lop off a few employees. Isn’t taking the RAD money easier?

If the city cannot/won’t hold the line on taxes this year, it never will. They promised us a zero-tax increase budget. Hold them to it.

FWIW, Johnson’s house is currently for sale.

Vice Mayor Joe Derella just finished presenting the proposed budget for next year. There are plenty of things I need/want to research, but allow me to applaud Derella for a job well done.

Millville has proposed a no tax-increase budget. From I can glean, we are not putting off our bills to a later date. It appears to be a sound budget.

Derella made a strong point for abatements this evening. He outlined costs that Millville pays that the county and school budgets do not fund, but reap the benefits from. The property re-evaluation is one of them. That is a strong argument in favor of abatements.

There is plenty to research. Derella made plenty of comments covering Lou Magazzu’s butt at the county. He also took a big swipe at Governor Christie too. This budget proposal would have been even better without the political rhetoric.

Even so, good job guys. Now, let’s start trimming for next year’s budget. Given that the crappy economy still exists, your city teachers haven’t received a pay increase this year, etc., increasing taxes next year makes no sense either. 😉