Sponsored by:
Senator TROY SINGLETON
District 7 (Burlington)
Senator STEPHEN M. SWEENEY
District 3 (Cumberland, Gloucester and Salem)
Senator BRIAN P. STACK
District 33 (Hudson)
Co-Sponsored by:
Senator Oroho
SYNOPSIS
Requires cost-benefit analyses for long term tax exemption; requires DCA to create database of these exemptions; requires new distribution of annual service charges; requires five-year tax exemption and abatement agreements be filed with certain county officials.
CURRENT VERSION OF TEXT
As reported by the Senate Budget and Appropriations Committee on June 11, 2018, with amendments.
An Act concerning long term property tax exemptions and 1five-year property tax exemptions and abatements,1 amending and supplementing P.L.1991, c.431 1, and amending P.L.1991, c.4411.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 8 of P.L.1991, c.431 (C.40A:20-8) is amended to read as follows:
8. Every urban renewal entity qualifying under [this act] P.L.1991, c.431 (C.40A:20-1 et seq.), before proceeding with any projects, shall make written application to the municipality for approval thereof. The application shall be in a form, and shall certify to those facts and data, as shall be required by the municipality, and shall include but not be limited to:
a. A general statement of the nature of the proposed project, that the undertaking conforms to all applicable municipal ordinances, and that the project accords with the redevelopment plan and master plan of the municipality, or, in the case of a redevelopment relocation housing project, provides for the relocation of residents displaced or to be displaced from a redevelopment area, or, in the case of a low and moderate income housing project, the housing units are restricted to occupation by low and moderate income households.
b. A description of the proposed project outlining the area included and a description of each unit thereof if the project is to be undertaken in units and setting forth architectural and site plans as required.
c. A statement prepared by a qualified architect or engineer of the estimated cost of the proposed project in the detail required, including the estimated cost of each unit to be undertaken.
d. The source, method , and amount of money to be subscribed through the investment of private capital, setting forth the amount of stock or other securities to be issued therefor or the extent of capital invested and the proprietary or ownership interest obtained in consideration therefor.
e. A fiscal plan for the project outlining a schedule of annual gross revenue, the estimated expenditures for operation and maintenance, payments for interest, amortization of debt and reserves, and payments to the municipality to be made pursuant to a financial agreement to be entered into with the municipality.
f. A proposed financial agreement conforming to the provisions of section 9 of [this act] P.L.1991, c.431 (C.40A:20-9).
g. A cost-benefit analysis of the project’s impact on the finances of the municipality, county, 1school district1 and other taxing districts, within which the project is located, outlining, at a minimum: (1) the net financial impact on the municipality based on the estimated payments to the municipality to be made pursuant to a financial agreement to be entered into with the municipality and the estimated additional one-time and periodic expenditures to be incurred by the municipality as a result of the project; (2) the municipal revenues to be gained or lost based on this estimated net financial impact and the estimated net financial impact of the property on the municipality if the project is not approved and the current use and condition of the property is continued; (3) the property tax revenues to be foregone by the county and taxing districts in which the project is located if a tax exemption is approved pursuant to P.L.1991, c.431 (C.40A:20-1 et seq.); 1[and]1 (4) 1the impact on the equalization aid component of the school funding formula; and (5)1 any other information relevant to determining the impact of the project on the finances of the municipality, county, 1school district1 and other taxing districts, within which the project is located, as shall be required by the municipality or as may be required by administrative rules adopted by the Commissioner of Community Affairs or the Local Finance Board. Within 30 days of receipt of the application, the municipality shall post the cost-benefit analysis required by this subsection on its Internet website, or, if one does not exist, the cost-benefit analysis shall be provided for public inspection on the Internet website of the Department of Community Affairs.
The application shall be addressed and submitted to the mayor or other chief executive officer of the municipality. The mayor or other chief executive officer shall, within 60 days of his receipt of the application thereafter, submit the application with his recommendations, and an independent cost-benefit analysis of the project’s impact on the finances of the municipality, county, 1school district1 and other taxing districts, within which the project is located, conducted by the office, or other designee, of the mayor or other chief executive officer, to the municipal governing body. The independent cost-benefit analysis shall include, at a minimum, the information required in subsection g. of this section. Within 30 days of submission to the municipal governing body, the municipality shall post the independent cost-benefit analysis on its Internet website, or, if one does not exist, the independent cost-benefit analysis shall be provided for public inspection on the Internet website of the Department of Community Affairs.
The governing body shall by resolution approve or disapprove the application, but in the event of disapproval, changes may be suggested to secure approval. The resolution shall include specific findings about the project’s estimated net impact on the finances of the municipality, county, 1school district1 and other taxing districts, within which the project is located. Within 30 days of adoption of the resolution, the municipality shall post the resolution on its Internet website, or, if one does not exist, the resolution shall be provided for public inspection on the Internet website of the Department of Community Affairs. An application may be revised and resubmitted.
(cf: P.L.1991, c.431, s.8)
2. (New section) a. A municipality shall notify the Department of Community Affairs within 30 days after approving a financial agreement pursuant to section 9 of P.L.1991, c.431 (C.40A:20-9). The notice shall include the same information required to be included in a plain language budget summary for long term tax exemptions pursuant to subsection b. of section 39 of P.L.2007, c.63 (C.40A:5-48).
b. The Department of Community Affairs, in consultation with the Office of Information Technology, shall design, develop, and maintain a database on its Internet website that contains and displays: (1) the information provided to the department pursuant to subsection a. of this section, and (2) the information included in plain language budget summaries for long term tax exemptions pursuant to subsection b. of section 39 of P.L.2007, c.63 (C.40A:5-48), which were approved prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), sorted by municipality.
13. Section 12 of P.L.1991, c.431 (C.40A:20-12) is amended to read as follows:
12. The rehabilitation or improvements made in the development or redevelopment of a redevelopment area or area appurtenant thereto or for a redevelopment relocation housing project, pursuant to P.L.1991, c.431 (C.40A:20-1 et seq.), shall be exempt from taxation for a limited period as hereinafter provided. When housing is to be constructed, acquired or rehabilitated by an urban renewal entity, the land upon which that housing is situated shall be exempt from taxation for a limited period as hereinafter provided. The exemption shall be allowed when the clerk of the municipality wherein the property is situated shall certify to the municipal tax assessor that a financial agreement with an urban renewal entity for the development or the redevelopment of the property, or the provision of a redevelopment relocation housing project, or the provision of a low and moderate income housing project has been entered into and is in effect as required by P.L.1991, c.431 (C.40A:20-1 et seq.).
Delivery by the municipal clerk to the municipal tax assessor of a certified copy of the ordinance of the governing body approving the tax exemption and financial agreement with the urban renewal entity shall constitute the required certification. For each exemption granted pursuant to P.L.2003, c.125 (C.40A:12A-4.1 et al.), upon certification as required hereunder, the tax assessor shall implement the exemption and continue to enforce that exemption without further certification by the clerk until the expiration of the entitlement to exemption by the terms of the financial agreement or until the tax assessor has been duly notified by the clerk that the exemption has been terminated.
Within 10 calendar days following the later of the effective date of an ordinance following its final adoption by the governing body approving the tax exemption or the execution of the financial agreement by the urban renewal entity, the municipal clerk shall transmit a certified copy of the ordinance and financial agreement to the chief financial officer of the county and to the county counsel for informational purposes.
Whenever an exemption status changes during a tax year, the procedure for the apportionment of the taxes for the year shall be the same as in the case of other changes in tax exemption status during the tax year. Tax exemptions granted pursuant to P.L.2003, c.125 (C.40A:12A-4.1 et al.) represent long term financial agreements between the municipality and the urban renewal entity and as such constitute a single continuing exemption from local property taxation for the duration of the financial agreement. The validity of a financial agreement or any exemption granted pursuant thereto may be challenged only by filing an action in lieu of prerogative writ within 20 days from the publication of a notice of the adoption of an ordinance by the governing body granting the exemption and approving the financial agreement. Such notice shall be published in a newspaper of general circulation in the municipality and in a newspaper of general circulation in the county if different from the municipal newspaper.
a. The duration of the exemption for urban renewal entities shall be as follows: for all projects, a term of not more than 30 years from the completion of the entire project, or unit of the project if the project is undertaken in units, or not more than 35 years from the execution of the financial agreement between the municipality and the urban renewal entity.
b. During the term of any exemption, in lieu of any taxes to be paid on the buildings and improvements of the project and, to the extent authorized pursuant to this section, on the land, the urban renewal entity shall make payment to the municipality of an annual service charge, which shall remit a portion of that revenue to the county as provided hereinafter. In addition, the municipality may assess an administrative fee, not to exceed two percent of the annual service charge, for the processing of the application. The annual service charge for municipal services supplied to the project to be paid by the urban renewal entity for any period of exemption, shall be determined as follows:
(1) An annual amount equal to a percentage determined pursuant to this subsection and section 11 of P.L.1991, c.431 (C.40A:20-11), of the annual gross revenue from each unit of the project, if the project is undertaken in units, or from the total project, if the project is not undertaken in units. The percentage of the annual gross revenue shall not be more than [15%] 15 percent in the case of a low and moderate income housing project, nor less than [10%] 10 percent in the case of all other projects.
At the option of the municipality, or where because of the nature of the development, ownership, use or occupancy of the project or any unit thereof, if the project is to be undertaken in units, the total annual gross rental or gross shelter rent or annual gross revenue cannot be reasonably ascertained, the governing body shall provide in the financial agreement that the annual service charge shall be a sum equal to a percentage determined pursuant to this subsection and section 11 of P.L.1991, c.431 (C.40A:20-11), of the total project cost or total project unit cost determined pursuant to P.L.1991, c.431 (C.40A:20-1 et seq.) calculated from the first day of the month following the substantial completion of the project or any unit thereof, if the project is undertaken in units. The percentage of the total project cost or total project unit cost shall not be more than [2%] two percent in the case of a low and moderate income housing project, and shall not be less than [2%] two percent in the case of all other projects.
(2) In either case, the financial agreement shall establish a schedule of annual service charges to be paid over the term of the exemption period, which shall be in stages as follows:
(a) For the first stage of the exemption period, which shall commence with the date of completion of the unit or of the project, as the case may be, and continue for a time of not less than six years nor more than 15 years, as specified in the financial agreement, the urban renewal entity shall pay the municipality an annual service charge for municipal services supplied to the project in an annual amount equal to the amount determined pursuant to paragraph (1) of this subsection and section 11 of P.L.1991, c.431 (C.40A:20-11). For the remainder of the period of the exemption, if any, the annual service charge shall be determined as follows:
(b) For the second stage of the exemption period, which shall not be less than one year nor more than six years, as specified in the financial agreement, an amount equal to either the amount determined pursuant to paragraph (1) of this subsection and section 11 of P.L.1991, c.431 (C.40A:20-11), or [20%] 20 percent of the amount of taxes otherwise due on the value of the land and improvements, whichever shall be greater;
(c) For the third stage of the exemption period, which shall not be less than one year nor more than six years, as specified in the financial agreement, an amount equal to either the amount determined pursuant to paragraph (1) of this subsection and section 11 of P.L.1991, c.431 (C.40A:20-11), or [40%] 40 percent of the amount of taxes otherwise due on the value of the land and improvements, whichever shall be greater;
(d) For the fourth stage of the exemption period, which shall not be less than one year nor more than six years, as specified in the financial agreement, an amount equal to either the amount determined pursuant to paragraph (1) of this subsection and section 11 of P.L.1991, c.431 (C.40A:20-11), or [60%] 60 percent of the amount of taxes otherwise due on the value of the land and improvements, whichever shall be greater; and
(e) For the final stage of the exemption period, the duration of which shall not be less than one year and shall be specified in the financial agreement, an amount equal to either the amount determined pursuant to paragraph (1) of this subsection and section 11 of P.L.1991, c.431 (C.40A:20-11), or [80%] 80 percent of the amount of taxes otherwise due on the value of the land and improvements, whichever shall be greater.
If the financial agreement provides for an exemption period of less than 30 years from the completion of the entire project, or less than 35 years from the execution of the financial agreement, the financial agreement shall set forth a schedule of annual service charges for the exemption period which shall be based upon the minimum service charges and staged adjustments set forth in this section.
The annual service charge shall be paid to the municipality on a quarterly basis in a manner consistent with the municipality's tax collection schedule.
Each municipality which enters into a financial agreement on or after the effective date of P.L.2003, c.125 (C.40A:12A-4.1 et al.), and before the effective date of P.L. , c. (pending before the Legislature as this bill), shall remit 5 percent of the annual service charge collected by the municipality to the county in accordance with the provisions of R.S.54:4-74.
Each municipality that enters into a financial agreement on or after the effective date of P.L. , c. (pending before the Legislature as this bill) shall remit a portion of the annual service charge collected by the municipality to the county, school district, and any other taxing district, within which the project is located, in direct proportion to the distribution of the amount raised by taxation in the prior tax year to the county, school district, and any other taxing district, as displayed on the property tax bill for that year pursuant to paragraph (1) of subsection b. of R.S.54:4-65. The annual service charge portion shall be remitted to the county, school district, or other taxing district in the same manner as property taxes.
Against the annual service charge the urban renewal entity shall be entitled to credit for the amount, without interest, of the real estate taxes on land paid by it in the last four preceding quarterly installments.
Notwithstanding the provisions of this section or of the financial agreement, the minimum annual service charge shall be the amount of the total taxes levied against all real property in the area covered by the project in the last full tax year in which the area was subject to taxation, and the minimum annual service charge shall be paid in each year in which the annual service charge calculated pursuant to this section or the financial agreement would be less than the minimum annual service charge.
c. All exemptions granted pursuant to the provisions of P.L.1991, c.431 (C.40A:20-1 et seq.) shall terminate at the time prescribed in the financial agreement.
Upon the termination of the exemption granted pursuant to the provisions of P.L.1991, c.431 (C.40A:20-1 et seq.), the project, all affected parcels, land and all improvements made thereto shall be assessed and subject to taxation as are other taxable properties in the municipality. After the date of termination, all restrictions and limitations upon the urban renewal entity shall terminate and be at an end upon the entity's rendering its final accounting to and with the municipality.1
(cf: P.L.2015, c.247, s.1)
14. Section 11 of P.L.1991, c.441 (C.40A:21-11) is amended to read as follows:
11. a. All tax agreements entered into by municipalities pursuant to sections 9 through 12 of P.L.1991, c.441 shall be in effect for no more than the five full years next following the date of completion of the project.
b. All projects subject to tax agreement as provided herein shall be subject to all applicable federal, State and local laws and regulations on pollution control, worker safety, discrimination in employment, housing provision, zoning, planning and building code requirements.
c. That percentage which the payment in lieu of taxes for a property bears to the property tax which would have been paid had an exemption and abatement not been granted for the property under the agreement shall be applied to the valuation of the property to determine the reduced valuation of the property to be included in the valuation of the municipality for determining equalization for county tax apportionment and school aid during the term of the tax agreements covering the properties, and at the termination of an agreement for a property the reduced valuation procedure required under this section shall no longer apply.
d. Within [30] 10 days after the execution of a tax agreement, a municipality shall forward a copy of the agreement to the [Director of the Division of Local Government Services in the Department of Community Affairs,] the chief financial officer of the county, and the county counsel.1
(cf: P.L.2007, c.268, s.4)
15. Section 21 of P.L.1991, c.441 (C.40A:21-21) is amended to read as follows:
21. The governing body of a municipality adopting an ordinance pursuant to this act shall report, on or before October 1 of each year, to the Director of the Division of Local Government Services in the Department of Community Affairs and to the Director of the Division of Taxation in the Department of the Treasury, the chief financial officer of the county, and the county counsel the total amount of real property taxes exempted and the total amount abated within the municipality in the current tax year for each of the following:
a. improvements of dwellings;
b. construction of dwellings;
c. improvements and conversions of multiple dwellings;
d. improvements of commercial or industrial structures;
e. construction of multiple dwellings under tax agreements; and
f. construction of commercial or industrial structures under tax agreements.
In the case of e. and f. above, the report shall state instead the total amount of payments made in lieu of taxes according to each formula utilized by the municipality, and the difference between that total amount and the total amount of real property taxes which would have been paid on the project had the tax agreement not been in effect, for the current tax year.
The Director of the Division of Taxation shall include a summary of the information provided in the annual reports in the annual report of the division.1
(cf: P.L.1991, c.441, s.21)
1[3.] 6.1 This act shall take effect 1[immediately] on the first day of the ninth month next following enactment1.