Silver Lining to Superstorm Sandy: Influx of Aid Led to Property Tax Decreases

Colleen O'Dea | April 4, 2014 | Map of the Week, Maps, Sandy
New Jersey municipalities with the largest declines rank among those with the most damage

When superstorm Sandy devastated New Jersey 17 months ago, municipal officials and property owners braced for huge tax increases that many thought would be the result of a loss of $4.3 billion in property valuation and massive cleanup and rebuilding costs.

For many of the municipalities most affected by storm damage, that has not happened, property value and tax data shows. In fact, half of the municipalities that had the 10 largest average property tax decreases in 2013 suffered significant damage from Sandy.

The reason: State and federal loans and grants to both municipalities and school districts not only helped pay for storm-related costs, but also offset what would have been devastating property tax hikes.

“The State of New Jersey and the Department of Community Affairs have been very good to Sea Bright, and I’m sure to the other towns, as well, that were hit,” said Joseph Verruni, acting borough administrator.

According to DCA data, Sea Bright’s total property valuation dropped by more than 13 percent between 2012 and 2013. Normally, a large drop in valuation would dictate a large increase in the tax rate to stabilize the tax levy, which is the actual amount of money raised through taxation.

But Verruni said the borough got an Essential Services Grant, administered by the DCA from federal block grant money, equal to roughly one-quarter of the municipal budget — about $1.3 million. The tax levy declined and so did the average tax bill — by about 9 percent, to $6,550.

“We couldn’t have increased taxes that much in order to fill that gap,” Verruni said.

The largest average property tax cut was in Mantoloking, a wealthy barrier-island community in Ocean County that lost a third of its property valuation to the storm. Michelle Swisher, the borough’s chief financial officer, said Mantoloking received $1.4 million in storm-related funding from the Federal Emergency Management Agency, as well as a FEMA loan of $831,074 that will not need to be paid back if the borough continues to lose at least 5 percent of revenues for three years after Sandy. The result: The average tax bill in Mantoloking dropped by more than a quarter from 2012 to 2013, to $11,855.

Property owners in Toms River, whose Ortley Beach section was devastated by the storm, were also spared due to generous FEMA loans and state grants. The township’s tax base declined by 30 percent, or some $2 billion, but the average tax bill dropped by 15 percent, the third-biggest drop in the state, due to storm aid. The township and its school district each received significant sums of money, which reduced the tax levy.

“We were very fortunate in that regard,” said Paul Shives, the township administrator.

He said the township got about $5 million from the FEMA Community Disaster Loan Program and another $15.5 million in the form of a state Essential Services Grant. The school district got a total of about $15 million.

As of last October, 62 local governments and school districts had received $179 million in FEMA disaster loans, and another 11 were sharing about $45 million in Essential Services Grants, according to an article by DCA Commissioner Richard Constable in New Jersey Municipalities magazine.

Overall, property taxes dropped last year in nearly 1 out of every 5 New Jersey municipalities, although in nearly half of those towns the decline was less than 1 percent.

And not all of those property tax reductions were related to Sandy aid.

In the case of Newark, which had the second-largest average property tax drop, it was due to a revaluation that increased the value of many businesses while the average residential property value dropped by about 7 percent. As a result, despite a slight increase in the tax levy, the average residential tax bill dropped by 20 percent, to $5,081, the data shows.

Meanwhile, property taxes rose in more than 8 of every 10 New Jersey municipalities, with the average property tax bill rising by more than 10 percent in seven towns — Wrightstown, Asbury Park, Audubon Park, Longport, Harvey Cedars, Hi-Nella and Shiloh.

Scott Gurian contributed to this article.