Interlaken and Loch Abour residents will have to wait until after the first of the year to see if the Interlaken Borough Council will proceed to study a proposal to merge to two small communities together.
The council last week split three-to-three on approving a request for proposals to be issued to hire an independent company to further study the merger issue after a larger, joint meeting was held on the matter earlier this month.
Mayor Michael Nohilly, who could have broken the tie, abstained from voting so the matter. It will be carried on to the next council, which will be seated on Jan. 7 when new council members John Gunn and Mindy Horowitz will be sworn in.
“One step at a time,” Nohilly said. “There are a lot of emotions out there right now and a couple of weeks will not change things. We need to get more information under our belts.”
Councilmen Robert White, Jonathan Cohen and Mervin Franks voted against proceeding with any merger study, while Councilmen Keith Miller, Robert Napoli and William Handerhan voted in favor. Napoli and Cohen will not be seated on the next council.
Many residents attending last week’s meeting said that Loch Arbour’s school tax problem, the reason behind the proposed merger, is not Interlaken’s problem and that, although they feel badly for village residents, they think the merger is not a good idea.
Their sentiments were pretty much summed up in comments from Cohen.
“We have a good thing going here in Interlaken and I do not know why people would want to merge with another town. This isn’t something we should be entertaining. Loch Arbour has a problem but that is not our problem,” he said.
White said there is a lot of uncertainty out there right now and that the hot topics are taxes and educational costs. Franks also expressed concerns about future educational costs.
However, other council members and some residents said they at least want to get more information before making any decision.
Handerhan said that the issue should be presented to voters.
“We haven’t even explored the best or the worst of this yet…and everybody is trying to kill this off before it even gets off the ground. I am all for giving this proposal a fair shake,” he said.
“There is a clear tone here that is palpable and obvious and we need to be objective, without bias. We are bringing up the worst-case scenarios and none of this has even happened yet. We are throwing out numbers before there has been any review of taxes. We should go to the voting booth knowing all of the facts with information to make a legitimate decision,” he said.
Napoli said that if the state Attorney General and other state officials sign off on a merger plan then any concerns by residents should be permanently addressed.
“Everybody has an opinion but, at the end of the day, it comes down to perception and we need to do a study,” he said.
Miller said the school board needs to be more involved if the merger proposal proceeds any further.
Councilwoman-elect Horowitz suggested that Loch Arbour consider paying for the borough to conduct a feasibility study.
“We need to know if the benefits are worth more than the risks. The devil is in the details and we have not even touched that yet,” she said.
Borough Attorney Richard L. Shaklee said the issue of creating a special taxing district is a “fundamental component” in any merger proposal.
“There is no clear special tax district right now,” he said.
Shaklee said there may be a possibility that Interlaken’s current educational formula, which sends students to West Long Branch schools and Shore Regional High School on a set tuition basis, could be challenged by Ocean Township, where Loch Arbour currently sends its students at a cost of more than $2 million in taxes a year.
“It sounds like Ocean Township is not just going to walk away from (that amount of money),” Franks said.
On Nov. 7, Acting State Commissioner of Education David C. Hespe said in a letter that, if the merger were to take place, then Loch Arbour children would be educated the same way Interlaken students are educated.
Loch Arbour has about 20 potential school-age children but only about 14 are likely to go to public schools, with the rest going to private schools, Loch Arbour Mayor Paul Fernicola said previously.
Any potential lawsuits, especially one from Ocean Township over the loss of Loch Arbour as a tax-paying consolidated school district, would be solely paid for by Loch Arbour through a special taxing district.
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 ten years after the merger, or about $2,000 a year for the average home.
Loch Arbour would also 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.
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 about 21 percent and the Loch Arbour rate by 49 percent since the $5 million will then be paid off.
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.
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.