February 12, 2016

Last May, Judge Armstrong ruled in favor of Solberg Airport in the litigation over the Township's move to acquire the open space surrounding the airport.  As a result, unless the decision is overturned on appeal, the township is responsible for the Solbergs' legal fees.  There has been a lot of discussion about how those fees would be paid, and a tax increase was feared.  On February 1st 2016, the Readington Township Committee voted unanimously to dedicate $4.3M of the 2006 bond approval toward these legal fees.  What does this mean for us, as residents?

Legal fees incurred by the Solbergs since 2001 amount to approximately $2.9M.  Until the action by the Township Committee last week, the maximum amount of the bond that could be used for legal expenses was $1M.  The only other source of funding for those legal fees would have been to increase taxes.

Important figures: (all figures rounded)

  • The original bond amount, as approved by the voters in 2006, was $21.7M to be used for land acquisition of the acreage surrounding the airport.
  • The Township has paid for its own legal fees as they were incurred, and has paid down the bond, so the total amount due on the bond as of November 30, 2015, is $20.5M.
  • Over $1.8M in interest has been earned on that bond and, as of November 30, 2015, the balance was $23.5M.

If the Township wins an appeal to the May 2015 decision in court, it is likely that the amount of legal fees will be greatly reduced or even eliminated.  The bond funds would be held in escrow during the appeal process, then that money would be used for the acquisition as originally planned.

If the decision stands, there are enough funds in the bond to cover both the Solberg legal fees and pay off the bond.  The vote by the Township Committee last week removes the barrier to this approach and eliminates the need for a tax increase to pay those costs. [The Township Committee conservatively added some cushion in the amount of funds that can be used for these purposes to cover unforeseen events.]

Ultimately, the possibility of paying legal fees to the Solbergs was a known risk associated with the bond that voters approved a decade ago.  As it stands, if those fees remain after the appeal, much of the cost will be covered by the interest earned on the Bond, and the Township Committee has ensured taxes will not need to be increased to pay the balance.

The resolution of back taxes owed to the town by the Solbergs for the airport facility property is still pending, and this is an additional factor that could influence the total amount of money the Township would pay the Solbergs.  The amount of back taxes owed by the Solbergs for the property where they operate the airport is over $700,000 according to the tax record, but the final report of the court appointed assessor has not yet been completed because property values need to be re-assessed.

The Solbergs have not paid real estate taxes on their airport in 10 years.  They had filed a post-trial motion to the May 2015 court decision requesting tax debt forgiveness.  Judge Ciccone denied the request and ordered an independent appraiser to adjust the tax assessment for the years 2006-2015, the time period that the lands surrounding the airport facility property were subject to restricted development. 

Readington Township Committee Avoids a Tax Increase by Voting Unanimously to Pay Solberg Legal Fees from Existing Bond