ASSEMBLY, No. 505

 

STATE OF NEW JERSEY

 

Introduced Pending Technical Review by Legislative Counsel

 

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

 

 

By Assemblyman ROBERTS

 

 

An Act allowing for the designation of municipal development financing districts and supplementing Title 52 of the Revised Statutes.

 

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

    1. This act shall be known and may be cited as the "Municipal Development Financing Act."

 

    2. The Legislature finds and determines that the State has participated in or otherwise encouraged the development of public-private partnerships with the goal of revitalizing certain municipalities through the construction of major entertainment facilities, and it is appropriate that a share of the new revenues derived from this revitalization be made available to those municipalities to allow for the provision of services to support those new facilities and to provide sufficient financial flexibility to those municipalities in order to allow for and promote further revitalization efforts on the part of those municipalities.

 

    3. As used in this act:

    "District" means the municipal development financing district established by a municipality and approved by the State Treasurer pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

    "Entertainment facility" means any privately or publicly owned and operated entertainment facility within the State of New Jersey such as a theater, stadium, museum, arena, racetrack or other place where performances, concerts, exhibits, games or contests are held and for which an entry fee is charged, excluding any stadium or arena operated by an institution of higher education in this State.

    "Project" means any capital project or any other public improvement, service, facility or equipment which a municipality is legally authorized to undertake, purchase or provide.

    4. a. Any municipality with a population of greater than 84,000 and less than 87,500 in a county of the second class with a population of greater than 470,000 and less than 503,000 according to the latest federal decennial census may by ordinance establish a Municipal Development Financing District. The district shall be a contiguous area of compact shape within the municipality and shall include an entertainment facility with at least 5000 fixed seats which began operation on or after January 1, 1994. For the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill), the date of operation shall be established by the date of issuance of the first certificate of occupancy for the entertainment facility. If a boundary of the district is a body of water, any establishment situated on the body of water and accessible from the district by a dock or ramp shall be considered within the district.

    The district may include any portion of the municipality, notwithstanding designation as an enterprise zone pursuant to section 7 of P.L.1983, c.303 (C.52:27H-66).

    b. Any municipality which has adopted an ordinance pursuant to subsection a. of this section shall submit the ordinance to the State Treasurer who shall certify the area as a Municipal Development Financing District upon a determination that it meets the rules and regulations adopted pursuant to Section 9 of P.L. , c. (C. ) (pending before the Legislature as this bill).

 

    5. a. Fifty percent of all sales tax revenues derived within the district upon (1) receipts of retail sales, except retail sales of motor vehicles, of alcoholic beverages as defined in the "Alcoholic beverage tax law," R.S.54:41-1 et seq., cigarettes as defined in the "Cigarette Tax Act," P.L.1948, c.65 (C.54:40A-1 et seq.) and of manufacturing machinery, equipment or apparatus, made by a certified vendor from a place of business owned or leased and regularly operated by the vendor for the purpose of making retail sales; (2) receipts from the sale of food and drink subject to taxation pursuant to subsection (c) of section 3 of the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-3), but excluding sales of food and drink sold through coin operated vending machines; (3) the rent for the occupancy of a room or rooms in a hotel subject to taxation pursuant to subsection (d) of section 3 of the "Sales and Use Tax Act"; and (4) admission charges subject to taxation pursuant to subsection (e) of section 3 of the "Sales and Use Tax Act," as certified by the Director of the Division of Taxation, shall be remitted to the chief finance officer of the municipality to be used for municipal purposes.

    The State Treasurer may deduct from amounts so retained prior to deposit in the fund an amount equal to that necessary to compensate the Division of Taxation for costs actually incurred by that division in administering the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

    b. The remaining fifty percent of all sales tax revenues derived within the district, as provided in subsection a. of this section, less those amounts deducted by the State Treasurer for administrative costs, shall be deposited into a Municipal Development Assistance Fund to be used for the purposes prescribed in section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill), except as provided in subsection c. of this section.

    c. Notwithstanding the provisions of subsection b. of this section to the contrary, if any portion of the district is included within a designated urban enterprise zone in which an exemption from receipts of retail sales has been granted pursuant to section 21 of P.L.1983, c.303 (C.52:27H-80), the retail sales tax exemption shall not apply and instead, 50 percent of the retail sales tax collected pursuant to subsection a. of this section within that area designated as an enterprise zone shall be remitted to the chief financial officer of the municipality to be used for municipal purposes and the remaining 50 percent shall be deposited into the Municipal Development Assistance Fund as provided in subsection b. herein to the account of that municipality pursuant to section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill).

 

    6. Any vendor making sales from a location within the district required to collect tax pursuant to the "Sales and Use Tax Act", P.L.1966, c.30 (C.54:32B-1 et seq.) shall register with the Director of the Division of Taxation in a manner prescribed by the director and file a return in such form and with such information as the director shall prescribe by rule or regulation as necessary to determine the municipal share of the tax.

 

    7. Any vendor making sales from a location within the district required to register under P.L. , c. (C. ) (pending before the Legislature as this bill) shall, on or before the dates required pursuant to section 17 of the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-17), forward to the director the sales tax collected in the preceding return period and make and file a return for the preceding return period with the director on a form containing any information that the Division of Taxation in the Department of the Treasury shall prescribe by rule or regulation in order to determine the municipal share of the tax.

 

    8. a. There is created a Municipal Development Assistance Fund to be held by the State Treasurer, which shall be the repository for all moneys required to be deposited therein under subsection b. of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill) or moneys appropriated annually to the fund. All moneys deposited in the fund shall be held and disbursed in the amounts necessary to fulfill the purposes of this section and subject to the requirements hereinafter prescribed. The State Treasurer may invest and reinvest any moneys in the fund, or any portion thereof, in legal obligations of the United States or of the State or of any political subdivision thereof. Any income from, interest on, or increment to moneys so invested or reinvested shall be included in the fund.

    b. The State Treasurer shall maintain separate accounts for each municipality which has an approved Municipal Development Financing District designated under section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill). The State Treasurer shall credit to each account an amount of the moneys deposited in the fund equal to the amount of revenues collected from the taxation of retail sales made in the district as provided in subsection b. of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill) and appropriated to the Municipal Development Assistance Fund.

    c. The Municipal Development Assistance Fund shall be used for the purpose of assisting municipalities which have established municipal development financing districts in undertaking public improvements and economic development projects in those municipalities.

    d. A governing body which has designated an approved municipal development financing district may, by ordinance, propose to undertake a project for the public improvement of the municipality and to fund that project from moneys deposited in the Municipal Development Assistance Fund and credited to the account maintained by the State Treasurer for the municipality.

    The proposal so adopted shall set forth a plan for the project and shall include:

    (1) A description of the proposed project;

    (2) An estimate of the total project costs and an estimate of the amounts of funding necessary annually from the municipal account;

    (3) A statement of any other revenue sources to be used to finance the project;

    (4) A statement of the time necessary to complete the project;

    (5) A statement of the manner in which the proposed project furthers the municipality's policy and intentions for addressing municipal economic and social conditions; and

    (6) A description of the financial and programmatic controls and reporting mechanisms to be used to guarantee that the funds will be spent in accordance with the plan and that the project will accomplish its purpose.

    e. Upon adoption by the governing body of the municipality, the proposal shall be sent to the State Treasurer for evaluation and approval. The State Treasurer shall approve the proposal upon a finding that the proposed project furthers the municipality's policy and intentions for addressing municipal economic and social conditions, thereby contributing to an increase in the municipality's economic self-sufficiency;

    f. The State Treasurer may at any time revoke the approval of a project upon a finding that the payments made from the Municipal Development Assistance Fund are not being used as required by this section.

    g. Upon certification by the State Treasurer of the annual amount to be paid to a municipality with respect to any project, the State Treasurer shall pay in each year to the municipality from the amounts deposited in the Municipal Development Assistance Fund the amount so certified, within the limits of the amounts credited to the municipal account.

 

    9. The State Treasurer shall promulgate those rules and regulations necessary to effectuate the purposes of this act pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

 

    10. This act shall take effect immediately and shall be applicable to sales taxes imposed on and after the first day of the sixth month following enactment.

 

 

STATEMENT

 

  This bill would allow for the sharing of retail sales tax revenues by the State with certain municipalities and under certain circumstances. Specifically, the bill allows any municipality with a population of greater than 84,000 and less than 87,500 in a county of the second class with a population of greater than 470,000 and less than 503,000 according to the latest federal decennial census having an entertainment facility with at least 5,000 fixed seats which began operation on or after January 1, 1994 to delineate a Municipal Development Financing District, by ordinance. These provisions effectively limit the applicability of the bill to the city of Camden.

    Under the terms of the bill, fifty percent of those sales taxes collected within the district derived from retail sales, with certain exceptions, sales of food and drink, hotel room occupancy and admission charges, as set forth in the bill, must be returned to the appropriate municipality by the State Treasurer to be used for municipal purposes. The district must be a contiguous area of compact shape and must include within it the entertainment facility. The State Treasurer shall certify the area as a Municipal Development Financing District upon a determination that it meets the rules and regulations adopted pursuant to the bill. The bill provides for a reporting procedure on the part of vendors whose sales are subject to the bill's provisions and requires the State Treasurer to promulgate such rules and regulations as are necessary in order to effectuate the bill's provisions.

    The bill requires that the remaining three percent sales tax collected in any Municipal Development Financing District be placed in an account designated for the municipality by the State Treasurer, to be used for projects which are defined in the bill. Those projects are defined broadly to include any capital project or other public improvement which furthers the municipality's economic revitalization goals and which is legally authorized. The municipality shall propose the project by ordinance and the proposal shall set forth a plan which includes a project description, estimate of project costs, statement of other revenues to be used to fund the project, estimated time necessary to complete the project, and other significant information of similar nature. The bill permits the State Treasurer to revoke the approval if the payments made from the fund are not being used in accordance with the terms of the approval.

    The bill also provides for an exemption from 50 percent of the retail sales tax with exceptions for motor vehicles and manufacturing machinery, equipment or apparatus, alcoholic beverages and cigarettes, which is the same exemption that exists in some enterprise zones under the "New Jersey Urban Enterprise Zones Act," P.L.1983, c.303 (C.52:27H-60 et seq.). Those amounts which are otherwise to be deposited into the Municipal Development Assistance Fund under the provisions of this bill which are generated in an urban enterprise zone shall be allocated as otherwise provided in the "New Jersey Urban Enterprise Zones Act." Other retail sales tax revenues which are exempted under this bill, generated in a designated urban enterprise zone which receives the benefit of the retail sales tax exemption and which are payable into the Municipal Development Assistance Fund shall be payable to the municipal account as provided for in this bill.

    In the event of an overlap between an urban enterprise zone in which a 50 percent exemption from the retail sales tax has been granted and a Municipal Development Financing District, the retail sales tax exemption granted pursuant to the "Urban Enterprise Zones Act," P.L.1983, c.303 (C.52:27H-60 et seq.) shall not apply and instead, the retail sales tax paid shall be allocated in accordance with the provisions of section 5 of the bill.

 

 

 

"Municipal Development Financing Act."