Phoenix Advisors explains fiscal effects of proposed Hobo 57 pilot to Hopewell Borough Council

Brian Morris, a financial adviser with Phoenix Advisors, told the Hopewell Borough Council on March 5 that a PILOT — a payment‑in‑lieu‑of‑taxes financial agreement — can help finance projects that private lenders otherwise would not support. "A pilot ... is an amount that the property owner pays to the municipality pursuant to a financial agreement instead of paying generally applicable real estate taxes," Morris said, adding that the borough keeps 95% of each pilot dollar (5% goes to the county).

Morris walked the council through why PILOTs are used and how they differ from conventional taxation. He said the term of the financial agreement is typically 30 years and that, once it expires, the property reverts to conventional taxation. Using top‑line assumptions for the Hobo 57 project, he estimated municipal PILOT revenue at roughly $115,000 per year at full stabilization and roughly $12 million in net municipal receipts over a 30‑year period.

The presentation focused heavily on how a PILOT would affect contributions to the regional school district. "The school district strikes its budget and then allocates shares to each participating municipality," Morris said, noting that adding a conventional ratable (a new taxable property) increases a town’s share of the district budget but does not increase the district’s total budget. In the borough’s example, a $27 million ratable (the scale Morris used for Hobo 57) could shift the borough’s share from about 6.7% to about 7.1%, increasing the dollar amount the borough must pay to the district if the project were conventionally taxed.

Morris contrasted that outcome with a PILOT: because a PILOT is typically not included in the school tax base, the borough would receive discretionary PILOT dollars it could use to assist the school district or for other municipal priorities. He noted timing and scale caveats: PILOT receipts do not appear until construction is complete and units are leased, which could be years after approvals. "We’re talking years before there’s actually children living there and going into the school district," Morris said.

Council members and residents pressed for additional detail. Morris explained how the borough might structure support for the school district — year‑to‑year, multi‑year or long‑term commitments — and emphasized that negotiations can be tailored as PILOT receipts appear. Olivia Bole, a resident, asked whether any agreement with the district must be fixed in advance; Morris said no fixed deadline exists and that arrangements can be changed annually.

Mark Peters, the borough’s representative to the regional school board, urged caution. He said costs can rise not only with classroom additions but also when a subset of students require costly special‑education services or when transportation routes must be added or altered. "A percentage of those kids require a significant amount of additional help, that is a huge cost burden," Peters said, adding that some school costs show up in subsequent budgets.

Council members said they will continue working with the district and municipal staff to determine whether and how any discretionary PILOT funds might be shared. The presentation made clear that PILOTs are a financing tool that trade an altered tax base for predictable municipal revenue and political latitude to direct new funds; they do not automatically increase the regional school district’s total spending.