MORRISTOWN -- The Morristown Redevelopment Commission on Wednesday passed a resolution which establishes a tax-increment financing district for the Freudenberg-NOK expansion area.
By doing so, the commission will collect property tax proceeds stemming from the company's growth, but because of the tax abatement approved by the town to help with the expansion, that income won't be available for another five years.
Based on the estimated assessed value of the new development, the TIF could bring in at least an additional $192,070 a year to the redevelopment commission, which already oversees three other TIF districts in Morristown -- Central Soya, Integrity Biofuels and Integrity Metals.
"Obviously this assumes tax rates stay constant. I think we all know five years from now, one year from now, 10 years from now, it's not going to be the same tax rate," said Brian Colton, a partner at Umbaugh who leads the firm's public finance group. "It also hasn't put in any other assessed valuation growth in the town, it's just looking at the project-specific piece."
The TIF lasts for 25 years from when the town adds an obligation on it.
"So if you don't formally pledge it to something or don't formally have bonds, that 25-year clock doesn't start. It starts when you have a debt obligation," Colton said. "If you don't pledge it to a bond issue, under current legislation, (the clock) doesn't start until you have the obligation."
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