ASSEMBLY, No. 2033







By Assemblyman JONES



An Act authorizing the public sale of a municipal property tax levy to the highest bidder, amending R.S.54:4-67 and supplementing chapter 5 of Title 54 of the Revised Statutes.


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


    1. R.S.54:4-67 is amended to read as follows:

    54:4-67. The governing body of each municipality may by resolution fix the rate of discount to be allowed for the payment of taxes or assessments previous to the date on which they would become delinquent. The rate so fixed shall not exceed 6% per annum, shall be allowed only in case of payment on or before the thirtieth day previous to the date on which the taxes or assessments would become delinquent. The governing body may also fix the rate of interest to be charged for the nonpayment of taxes or assessments on or before the date when they would become delinquent, and may provide that no interest shall be charged if payment of any installment is made within the tenth calendar day following the date upon which the same became payable. The rate so fixed shall not exceed 8% per annum on the first $1,500.00 of the delinquency and 18% per annum on any amount in excess of $1,500.00, to be calculated from the date the tax was payable until the date that actual payment to the lienholder will be next authorized.

    In municipalities that have sold their entire annual property tax levy pursuant to section 3 of P.L. , c. (C. ) (now pending before the Legislature as this bill), the rate of interest to be charged for the nonpayment of taxes or assessments shall be fixed at 18% per annum, to be calculated from the date the tax was payable until the date of actual payment.

    "Delinquency" means the sum of all taxes and municipal charges due on a given parcel of property covering any number of quarters or years. The property shall remain delinquent, as defined herein, until such time as all unpaid taxes, including subsequent taxes and liens, together with interest thereon shall have been fully paid and satisfied. The delinquency shall remain notwithstanding the issuance of a certificate of sale pursuant to R.S.54:5-32 and R.S.54:5-46. The governing body may also fix a penalty to be charged to a taxpayer with a delinquency in excess of $10,000 who fails to pay that delinquency prior to the end of the fiscal year. If such taxes are fully paid and satisfied by the holder of an outstanding tax sale certificate, the holder shall be entitled to receive the amount of the penalty as part of the amount required to redeem such certificate of sale. The penalty so fixed shall not exceed 6% of the amount of the delinquency.

(cf: P.L.1994, c.32, s.4)


    2. (New section) Notwithstanding the payment of any property taxes, assessments or municipal charges by the purchaser of the tax levy pursuant to section 3 of P.L. , c. (C. ) (now pending before the Legislature as this bill), the accounts of the properties shall be deemed delinquent for purposes of the creation, assignment, sale, redemption and foreclosure of tax lien certificates.

    The purchaser of a property tax levy pursuant to section 3 of P.L.    , c. (C. ) (now pending before the Legislature as this bill) and the municipality shall comply with the notice and redemption provisions relating to the creation of tax certificates as hereinafter provided, except the purchaser shall not be required to purchase, nor will the municipality be required to sell, the tax lien certificates by public sale, if the right to purchase the certificates has been assigned or sold in advance to the levy purchaser in connection with the sale of the property tax levy.


    3. (New section) a. Notwithstanding the provisions of any other law, rule or regulation to the contrary, a municipality may, by resolution of the governing body, agree to sell its annual property tax levy, including the advance assignment or sale of the municipality's right to collect delinquent property taxes and the assignment or sale of any subsequently created property tax lien certificates relating to the delinquent properties, to a third party, at a public sale to the highest responsible bidder, subject to the terms and conditions of law and the bid specifications and the approval of the Local Finance Board. The sale shall be held after a copy of the public notice of sale stating the manner of submitting and method of receiving the bids and the time and place of sale has been published in a legal newspaper circulating within the municipality at least 14 days in advance of the date fixed for receiving bids.

    b. The sale of a tax levy shall not become effective until approved by the Local Finance Board.

    c. The Director of the Division of Local Government Services in the Department of Community Affairs, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), shall adopt such rules and regulations as are necessary to accomplish the purposes of this section.


    4. (New section) The sale of the property tax levy shall be subject to the following minimum terms and conditions:

    a. The right of the municipality to set a minimum price, including reserving the right to reject any and all bids if, in the discretion of the municipality, it determines that the bid sale price is inadequate.

    b. The municipality shall require the purchaser to have a rating in one of the four highest rating categories of a nationally recognized statistical rating agency or shall require the purchaser to secure its payment obligation with either a letter of credit or by a bond from a surety company, the sufficiency of which is acceptable to and approved by the municipality.

    c. The purchaser shall pay for the tax levy in quarterly installments. These installments shall be due no earlier than 10 days, and no later than 30 days after the quarterly tax due date, upon the presentation of a certification from the tax collector stating; (1) the amount of property taxes that are delinquent for the quarter and (2) a list of the amount of the delinquent property taxes for each property, which property shall be identified by block, lot and street address, including the name and mailing address of the owner and any mortgagee. At the time of the quarterly payment the purchaser shall receive as a credit against the payment due, an amount equal to the quarterly taxes paid to the tax collector on or before the tenth day following the quarterly due date.

    d. Upon payment in full of the quarterly delinquent property taxes, the purchaser shall have the same rights and obligations as the municipality to collect delinquent property taxes, including all fees, interest and costs, and to foreclose the subsequently created liens, all as provided for and limited by law.

    e. The purchaser shall have the right to purchase subsequent property tax delinquencies relating to the properties upon payment of the full amount of principal and interest due. That right shall expire at a subsequent sale by the municipality of its tax levy or on the date the municipality sells the delinquencies at a tax sale, whichever occurrs earlier.

    f. The purchaser shall be required to purchase, at the time of assignment of the property tax lien certificates, any other delinquent municipal charges relating to the delinquent properties, including water and sewer charges. The purchaser shall pay the full amount of the principal and interest due for those charges as of the date of the assignment.

    g. At the closing of the levy sale, the purchaser shall have the right, but not the obligation, to acquire by assignment all tax lien certificates held by the municipality, excluding, however, those certificates relating to known or suspected sites of environmental contamination. This right of the purchaser may be exercised only if the purchaser's bid is equal to or greater than 98% of the combined dollar value of the tax levy and the full redemptive value of the municipal tax lien certificates so assigned.

    h. The collection of taxes and the preparation of redemption statements and discharges of tax lien certificates shall remain the right and obligation of the municipal tax collector.

    i. The purchaser shall provide quarterly account status reports and such other financial data and reports as are requested by the municipality.


    5. This act shall take effect immediately.





    This bill is intended to authorize a municipality to sell its annual tax levy to the highest responsible bidder. The sale of the annual tax levy would enable a municipality to improve upon its historical tax collection rate and in some cases, potentially guarantee a rate at or above 100% of the tax levy. Such a sale would eliminate or virtually eliminate the need for a municipality to maintain a reserve for uncollected taxes. The risk of non collection of property taxes would be assumed by a successful bidder, who would be guaranteed a delinquent interest rate of 18% per annum. The sale of the annual property tax levy would be subject to the approval of the Local Finance Board.




Permits public sale of municipal property tax levy to highest bidder.