SENATE BUDGET AND APPROPRIATIONS COMMITTEE

 

STATEMENT TO

 

[First Reprint]

SENATE, No. 538

 

with committee amendments

 

STATE OF NEW JERSEY

 

DATED:  SEPTEMBER 24, 2018

 

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 538 (1R), with committee amendments.

      This bill, as amended, permits a municipal governing body to extend a long term tax exemption granted to certain low-income housing projects. The extended tax exemption time frame is limited to the number of years that the project remains subject to affordability controls pursuant to federal rental assistance.  The extended exemption may apply to any such subsidized housing project.

 

COMMITTEE AMENDMENTS:

      The committee amendments clarify that a project that receives a federal rent subsidy at the outset, but remains subject to affordability controls, may still have its long term tax exemption extended as long as the affordability controls are in place and the municipality agrees to continue the exemption.

 

FISCAL IMPACT:

      The Office of Legislative Services (OLS) estimates that the bill could result in a potential decrease in local property tax revenues for certain counties, municipalities, school districts, and special districts.  Specifically, the bill permits a municipality to extend the long term property tax exemption of certain federally subsidized housing projects that remain subject to affordability controls.  If a municipality were to extend the tax exemption of a federally subsidized housing project, as permitted by the bill, then the affected local government units would forego the collection of those property tax revenues that would have been generated if the housing project was subject to regular ad valorem taxation. 

      The amount of foregone local revenue would be equal to the difference between: (1) the amount of the property tax collections that would have been paid to all taxing districts if the property were assessed for ad valorem taxation, and (2) the amount of the payment in-lieu of taxes paid to the municipality pursuant to the financial agreement governing the tax exemption.  Given the permissive nature of the bill, the OLS is unable to determine the number of long term tax exemptions that would be extended as a result of the bill.