LEGISLATIVE FISCAL ESTIMATE TO
ASSEMBLY COMMITTEE SUBSTITUTE FOR
ASSEMBLY, No. 882
STATE OF NEW JERSEY
DATED: SEPTEMBER 13, 1996
Assembly Committee Substitute for Assembly Bill No.882 of 1996 provides for the remediation and redevelopment of municipal solid waste landfill sites under the terms and conditions of a redevelopment agreement negotiated by a developer and the State.
The committee substitute provides that under a redevelopment agreement, an eligible developer who closes and remediates a municipal solid waste landfill would be eligible for reimbursement of 75 percent of the closure and remediation costs incurred. Reimbursement payments would be derived from one half of the sales tax due and collected on sales generated from any business eventually located on the site.
The redevelopment agreement cited above would be negotiated between the developer and the State, as represented by the Commissioner of the Department of Commerce and Economic Development (DCED), in consultation with the State Treasurer. The committee substitute directs such an agreement to require that the developer undertake the environmentally sound and proper closure and remediation of the municipal solid waste landfill in order to become eligible for the 75 percent cost reimbursement provision. This requirement would be effectuated and certified through a memorandum of agreement with the Commissioner of the Department of Environmental Protection (DEP).
Although none of the affected State agencies provided fiscal information on the committee substitute, the DCED did respond to a request for information concerning a fiscal note prepared for an identical bill, Senate Bill No.294 (1R) of 1996. In its response, the DCED indicated that the overall revenue impact of the bill was unpredictable because the number of potential participants in the program was unknown. The DCED also estimated that one full-time Economic Development Representative position would be required to administer the provisions of S294 (1R), at an annual cost of $65,551.
In the Fiscal Note to S294 (1R), the Office of Legislative Services (OLS) concurred that sufficient data were not available for estimating the bill's revenue impact on the State because the number of participants, plus actual closure and remediation costs, would first have to be determined before estimating the level of reimbursement payments to eligible developers. The personnel requirements of the DCED could not be confirmed for the same reasons.
The OLS also stated that any such estimation of revenue impacts would depend on the nature of the sales tax-collecting businesses on a redevelopment site, which would ultimately affect the gross receipts subject to sales and use taxation. Further, the generation of taxable gross receipts would depend on whether the redevelopment site was located in a regular sales tax rate area or in a reduced rate area (such as Salem County, an urban enterprise zone, or Atlantic City).
The OLS still concurs with these conclusions and offers the following additional information: Based on published information from the DEP, there are 314 municipal landfill sites Statewide that are potentially eligible for the redevelopment agreement program contained in the committee substitute. While the amount of total acreage is unknown, the DEP estimated in 1990 that initial capital costs of closing a 20-acre municipal landfill site could range between $1.3 million and $9.2 million, depending on the degree of remediation and stabilization required. Using this criterion, if 20 of the eligible sites were included in the program through redevelopment agreements, closure costs could range from $26 million to $184 million.
Based on these rough assumptions and cost ranges, developers who finance such closures under this program would receive 75 percent reimbursement payments (as derived from sales tax revenues generated by the retail business constructed on the site) totaling $19.5 million to $138 million. However, these payments would take place over a period of time rather than in any given year.
In sum, this program would result in additional State sales tax revenues regardless of the reimbursement costs to developers because no such revenues are being generated from these sites at the present time. It should also be remembered that any new or expanded retail establishments can be expected to create employment opportunities, generate substantial offsetting tax and economic development revenues, and pay local property taxes (either in full or under a partial abatement agreement) on property that is currently not on the tax rolls. The program created by the committee substitute therefore has the potential to generate substantial net tax and employment benefits to the State if it is assumed that a retail business would not otherwise be opening or expanding elsewhere in the State, and that it would not opt to develop a landfill site in the absence of the subsidy provided by the committee substitute.
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67.