In Your Opinion: Township Council Sets An Ominous Precedent

By Raleigh Steinhauer, Esq., Somerset.

The Township Council’s recent takeover of the Hamilton Street Special Improvement District sets an ominous precedent. And while the Council’s unprecedented actions may not technically be illegal (the point is debatable) they certainly violate the intention of the law.

The Hamilton Street Special Improvement District is a Special Improvement District (“SID”) created pursuant to state statue N.J.S.A. 40:56-65, et seq. According to the New Jersey Department of Community Affairs website, a SID “provides a mechanism for the businesses and property owners of a community to organize as a single entity, to raise funds for activities that enhance or expand upon municipal services, and through a District Management Corporation, to manage themselves to become a more effective destination for commerce.” Essentially, the SID allows the businesses of the area to operate like a mall managed by a single group rather than by each individual business on their own. Each business in the SID is specially assessed (basically an extra tax), and a District Management Corporation (“DMC”) decides how best to utilize the funds in order to economically improve the area. The DMC is a legally distinct entity with its own by-laws, policies and procedures made up principally of the business owners and other private sector stakeholders from the SID. The intention being that since the stakeholders of the SID have the greatest incentive to see the area economically improved, they are in the best position to manage the funds. The ability to manage the funds also operates as a trade-off for having to pay the special assessment.