By DON STINE
The cost for a feasibility study to look into merging Interlaken with neighboring Loch Arbour, which may result in a one-time tax increase of about $121 to $193 for the average Interlaken homeowner in 2015, will be reviewed by the Borough Council during a special meeting on Wed., April 8.
“The requests for proposals came in considerably higher than we anticipated,” Interlaken Mayor Michael Nohilly said earlier this week.
The borough sent out a request for proposals (RFP) to do a feasibility study and two were submitted by the March 27 deadline. A $50,000 proposal was submitted by Hodulik and Morrison, based in Highland Park, and a $77,000 proposal was submitted by CGR, based in Rochester, NY.
The council was going to put in a one-time $35,000 line item in the 2015 municipal budget to cover the cost for a feasibility study, which would have resulted in an increase of $84 for each average household in addition to the budget’s overall increase of $38.94 per average household, for a total increase of $122.94.
According to the borough’s Chief Financial Officer Stephen Gallagher, paying $50,000 for a study will increase the $98 amount to $120.54 per average household, for a total tax increase of $159.48; or by $192.86 to fund the $77,000 study, or for a total of $231.80.
“This increase would be a one-time shot and not reflected in next year’s budget,” Gallagher said.
Nohilly said that the special April 8 meeting is being held to determine if the $35,000 line item should be increased or totally deleted from the budget.
“The council can decide to put more money in the budget or take it out completely. Anything is an option right now and it’s up to the council,” he said.
Loch Arbour recently conducted a merger feasibility study but at a cost of only $5,000. Reagen Burkholder, based in Summit, conducted the study, which also including sending a representative to a public forum to present the study.
“The price can depend on the scope of the study and our study focused primarily on the fiscal impact of the merger,” Loch Arbour Mayor Paul Fernicola said earlier this week.
Nohilly said the Interlaken RFPs also focused two other primary issues: the creation of a special taxing district and issues that may arise with the Ocean Township Board of Education because Loch Arbour would no longer send its children to the school district or pay school taxes.
Under their merger proposal, Loch Arbour plans to pay Interlaken $5 million over a 10-year period with the money generated through a Loch Arbour special-taxing district comprised only of village residents. The money would be issued in 10 payments and used to retire Interlaken’s debt and to eventually create surplus.
Legislation is currently pending that would allow for the creation of these special-taxing districts but one can also be set up with approval from the state Department of Community Affairs (DCA) if the legislation is not approved.
Under the merger proposal, the Loch Arbour feasibility study shows that there will be a 24 percent tax savings for Interlaken residents for the first 10 years after the merger, or about $2,000 a year for the average home.
The Interlaken tax rate for an average home (assessed at $620,795) would drop from $8,400 to about $6,400, or by about 24 percent, during the first 10 years of the merger while the Loch Arbour tax rate for an average home ($1,051,702) would drop from $21,800 to $14,200, or by 35 percent, which includes the $5 million in special tax assessments to Loch Arbour residents.
After the first 10 years, the Interlaken tax rate should remain reduced by about 21 percent and the Loch Arbour rate by 49 percent since the $5 million will then be paid off.
Loch Arbour residents saw their annual school tax rise by $1.3 million, or to $1.6 million, about four years ago after the state Legislature enacted the School Funding Reform Act.
