The Westfield Leader and Scotch Plains-Fanwood Times newspapers

2016-07-08 HRC -This worksheet models the project to outline a financial plan for Garwood. No other options are evaluated such as Reduce Scope, Do Nothing, Make a Park. email comments to press@goleader.com

Download the Summary Report -- Download Developer's Response August 30, 2016 -- Download Mayor's Discussion October 06, 2016 -- 2017-07-11-Agreement-proposed

Documents List - Discussion: A financial plan is essential. Any Plan involves risks whereby some elements will not be achieved and/or the outcome will not be exactly as hoped. Therefore the Plan must have a success scenario where something is gained and risk is minimized. The plan must guard against a worst case scenario and limit downside impacts. A Breakeven Plan in itself would be a failure. A Plan with a loss scenario would be a disaster. This work is done to encourage government to develop the best possible Financial Plan and present it to the public for consideration. This Proposed Project, compared to the size of Garwood, is one of the largest in the State of New Jersey, projected to increase the population of the Borough by ~13%.

July 14, 2017, Horace Corbin, Garwood Borough Council Meeting Notes; Subject: Developer Agreement Approved, 5-1 Vote
Dreadful. See enclosed newspaper report; I and many others consider this a disaster for the residents of Garwood. Essentially, the Mayor and Council proceeded against strong objections from the public and would not even consider an accounting summary showing that this is a very bad deal - Mayor and Council saying only that the impact to the public may be negative but this deal is the best they could negotiate with the developer! The Mayor/Council logic befuddles me.
Doing nothing would be superior. Making it a public park would be superior. But what was done essentially dooms the public to a 10% property tax increase (forever) and instantly enriches the developer by tens of millions of $. I was afraid that my analysis may have been wrong - now I'm afraid that my analysis is right. From the figures, there is a shortfall to the public of about $1.5-2.0 million per year.
To my knowledge, there is no place at the NJ State or Governor level, at Union County or in the courts for which to contest this matter. In fact the State is driving much of this with the PILOT statutes. Read the report on the grim condition of the NJ finances; reported to be the worst in the nation.
Don Quixote: The next battle coming is Cranford Hartz Mountain 900 unit proposal.
Horace Corbin, Publisher of the Westfield Leader newspaper.

Method: Compute cost of government per person. Compute new cost based on population increase with the project. Determine Revenue required for a Successful Plan.

Procedure: Define Basis (expense and revenue), Create Model, Assess Risk and Uncertainty, Perform Computations, Minimize Risk, Make Recommendations.

2016 Basis: Municipal Budget ($7.9 million), municipal portion of property tax ( $6.17MM); Sewer Tax ($540,000); School Expense ($17,700 per student, $8.3 million, 470 enrollment); County Tax ($3.4 million)

Assumptions Cost of Government Escalates at 3%/yr; State Municipal and School Aid will continue at 2016 rate; Not included (changes in bonding, debt and surplus)

The Project: Multi-story complex including 315 rental units (30 affordable housing), 9 stores and a parking deck. Scope ~$70 million, 3 years to construct. Population (+500?), School enrollment (+??)

Misc.: The Borough will encounter capital cost (~$2 million) and Professional Services cost (~$0.5 million)

2016 Government Expense ($MM)	2016 Government Revenue ($MM)
E1 Schools E2 Municipal E2 County	R1 School Aid plus misc. R2 Municipal Aid plus misc. R3 County, n/a R4 Property Tax (87.2% of Total)
ET $19.6 MM Total Expense	RT $19.6 MM Total Revenue
Data from newspaper and Borough Website	(difference due to rounding of values)
Other 2016 Data	Reference Cash Flow Calculator
Z1 Sewer Assessment (included in E2) Z2 School Enrollment Z3 $ Cost per Enrollment	Formulae: ET = RT ET = E1+E2+E3 RT = R1+R2+R3+R4

Project Variables and Input for Analysis: under construction

x10 Government Expense Escalation, percent per year compounded

x11 Return on Project (ROP), percent above break even

x12 Added School Enrollment by Project

x13 Added Total Housing Units by Project

x14 Added Affordable Housing Units by Project

x15 Added Retail Units by Project

x16 Capital Outlay required by Garwood, $MM

x17 Professional Fees and Services required by Garwood, $MM

x18 Years to Complete the Project from 2016

x19 Garwood Population 2016, ** Borough web site

x20 Residential Property Taxable Entities 2016, **

x21 Residential Property Tax 2016, average calculated (R4/x20)

x22 other

Feedback and Notes: Municipal and BOE websites, Newspaper articles: Garwood Sewer 2015 = $540000; Garwood $7.6-million budget that was unveiled March 6; average county tax increase county-wide is 2.98 percent; Garwood BOE Adopts $9-Million Spending Plan, 90% from property tax; 2016: Westfield will pay an additional $1,168,271 for a total of $39,321,123; Scotch Plains will pay $21,019,506, a hike of $365,206; Fanwood’s county tax will be $6,022,379, a jump of $321,917; Cranford will pay $21,264,339, up $1,215,146; Garwood’s tax is $3,333,859, down $43,581, while Mountainside will pay $9,222,251, an increase of $365,910. Project new residents developer in his doc he handed out forecasts 500 residents, Project new school kids developer in his doc he handed out forecasts 20 kids tops; Capital Projects required ($2 million?) schools, etc.-at this point we see no capital projects required-the washington school that is being rented to the YMCA has 4 extra classrooms (that handles about 75 kids-but it would incur additional teaching and principal and overhead costs. (the old days Quigly wore both hats-supt and principal over at washington) if more than 20 kids guess of teachers at base salary and benefits plus overhead, say around $150k; What other factors should be considered? Capital expenditures in the near future is a new fire truck since it will be a four story building: New truck est cost= $1 mill; Maybe landfill costs and street light electric; I started some misc comps on my TREE if you want to review: http://treeeditor.blogspot.com/2016/04/nothingyet222-city-of-garwood.html - Can affordable housing be age restricted so as not to allow school kids? I asked about age restricted a year ago, victor vinegra said no; something about we have a quota for that from the village already.