ASSEMBLY COMMITTEE SUBSTITUTE FOR
ASSEMBLY, No. 2033
STATE OF NEW JERSEY
ADOPTED JUNE 3, 1996
Sponsored 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 R.S.54:5-19, and supplementing various sections of statutory law.
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. a. The governing body of each municipality may by resolution fix the rate of discount to be allowed for the payment of taxes [or], assessments, or other municipal charges 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, or other municipal charges would become delinquent. The governing body may also fix the rate of interest to be charged for the nonpayment of taxes [or], assessments, or other municipal charges 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.
b. In any year when the governing body changes the rate of interest to be charged for delinquent taxes, assessments or other municipal charges, the governing body shall include with the next property tax bill mailed after adoption of a resolution changing the rate of interest, a notice to all taxpayers stating the previous rate, the new rates to be charged and the date that the new rates take effect. The notice shall be separate from the tax bill and printed in at least 12 point type, with at least a 24 point bold headline entitled, "Notice of Change of Interest Rate." No change in the rate of interest shall take effect until the required notice has been provided in accordance with this paragraph.
c. In municipalities that have sold their property tax levy pursuant to section 7 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, assessments or other municipal charges shall be the same interest rate charged by the municipality, to be calculated from the date the tax was payable until the date of actual payment to the tax collector. The purchaser of the property tax levy shall not be entitled to collect an amount that is greater than the amount that is owing and due to the tax collector.
"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 with respect to the most recent fiscal year only.
(cf: P.L.1994, c.32, s.4)
2. R.S.54:5-19 is amended to read as follows:
54:5-19. When unpaid taxes or any municipal lien, or part thereof, on real property, remains in arrears on April first in the fiscal year following the fiscal year when the same became in arrears, or, in the case of municipalities that operate on the State fiscal year, on October first in the fiscal year following the fiscal year when the same became in arrears, the collector or other officer charged by law in the municipality with that duty, shall subject to the provisions of the next paragraph, enforce the lien by selling the property in the manner set forth in this article. Alternatively, a municipality, by resolution, may determine to conduct its public tax lien sale or levy sale in the final month of its fiscal year provided that all statutory notice requirements are followed.
The term "collector" as hereinafter used includes any such officer, and the term "officer" includes the collector.
The municipality may by resolution direct that where unpaid taxes or other municipal liens, or part thereof, are in arrears for more than one year, such sale shall include only such unpaid taxes or other municipal liens as were in arrears in the year designated in such resolution, and may by resolution, either general or special, direct that there shall be omitted from such sale any or all such unpaid taxes, and other municipal liens, or parts thereof, on real property, upon which regular, equal monthly installment payments are being made, in pursuance to such agreement as may be authorized by said resolution between the collector and the owner or person interested in the property upon which such delinquent taxes may be due; provided, that said agreement shall require payment of such installment payments in amounts large enough to pay in full all delinquent taxes, assessments and other municipal liens held by the municipality, in not more than five years from the date of such agreement; provided, that the extension of time for payment of such arrearages herein authorized shall not apply to any parcel of property which prior thereto has been included in any plan theretofore adopted by any municipality of this State under and pursuant to the provisions of any public statute of this State whereunder prior extensions for the payment of delinquent taxes were authorized; provided further, that the right of any person interested in such property to pay such arrears in such installments shall be conditioned on the prompt payment of the installments of taxes for the current year in which such agreement is made, and all subsequent taxes, assessments and other municipal liens imposed or becoming a lien thereafter, including all installments thereafter payable on assessments theretofore levied, and also the prompt payment of all installments of arrears as hereinbefore authorized; and provided further, that in case any such installment of arrears or any new taxes, assessments or other liens are not promptly paid, that is to say, within thirty days after the date when the same is due and payable, then such agreement shall be void, and in any such case the collector, or other officer charged by law with that duty, shall proceed to enforce such lien by selling in the manner in this article provided.
(cf: P.L.1991, c.75, s.43)
3. (New section) A municipality may reduce its reserve for uncollected taxes by deducting any or all payments anticipated during the fiscal year from the sale of the property tax levy pursuant to subsection c. of section 8 of P.L. , c. (C. ) (now pending before the Legislature as this bill), from the reserve for uncollected taxes as calculated pursuant to N.J.S.40A:4-30 and N.J.S.40A:4-31, provided that the obligation to make such payment is entered into prior to adoption of the budget. Any revenues received pursuant to this section may be excluded from any calculation of the tax collection rate or receipts from delinquent taxes pursuant to N.J.S.40A:4-29.
4. (New section) A municipality may reduce its reserve for uncollected taxes by deducting any or all receipts anticipated during the fiscal year from the sale of unpaid taxes or municipal liens when conducted in the final month of the fiscal year as allowed pursuant to R.S.54:5-19, provided that such amount be calculated in the same manner as receipts for delinquent taxes are calculated in N.J.S.40A:4-29, and that prior to adoption of the budget, such sale is authorized by resolution of the governing body. Any revenues received pursuant to this section shall be excluded from any calculation of the tax collection rate or receipts from delinquent taxes pursuant to N.J.S.40A:4-29.
5. (New section) Prior to the award of a contract for the sale of the property tax levy pursuant to section 7 of P.L. , c. (C. ) (now pending before the Legislature as this bill), or when a municipality chooses to reduce its reserve for uncollected taxes by deducting the receipts anticipated during the fiscal year from the sale of unpaid taxes or municipal liens when conducted in the final month of the fiscal year as allowed pursuant to R.S.54:5-19, the chief financial officer shall provide the governing body a fiscal analysis of the impact of the sale on the current and projected budget for the subsequent year. The Director of the Division of Local Government Services in the Department of Community Affairs may provide a standard form to be used for this purpose, which shall include, but not be limited to, the amount of the reserve for uncollected taxes, receipts for delinquent taxes and the municipal tax rate. The analysis shall be a public record.
6. (New section) Notwithstanding the payment of any property taxes, assessments or municipal charges by the purchaser of the property tax levy pursuant to subsection c. of section 8 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 7 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.
7. (New section) 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 property tax levy, including 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. 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.
8. (New section) The sale of the property tax levy shall be subject to the following minimum terms and conditions:
a. The municipality shall have the right 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 successful bidder, within a reasonable period of time after being selected, to secure its payment obligation with either an irrevocable letter of credit or a bond from a surety company, the sufficiency of which is acceptable to and approved by the municipality, but which shall not be less than the amount of the reserve for uncollected taxes for the prior year or the amount actually paid by the levy purchaser in the prior year, whichever is greater, or, in the case of a levy sale in the final month of the fiscal year, an amount equal to the actual tax collection delinquency for that fiscal year.
c. The purchaser shall pay for the tax levy bid amount in quarterly installments or, if there is to be one annual installment, after the last fiscal year quarterly delinquent date as indicated in the contract for the sale of the tax levy. These installments shall be due no earlier than 10 days, and no later than 30 days after the quarterly tax due date, except that if there is to be one annual installment payment prior to the end of the fiscal year as indicated in the contract for the sale of the tax levy, upon the presentation of a certification from the tax collector stating; (1) the amount of property taxes that are delinquent for the quarter or year, as appropriate, 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 shown on the tax records. At the time of the quarterly or annual payment, as appropriate, the purchaser shall receive as a credit against the payment due, an amount equal to the taxes paid to the tax collector.
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, through the municipal tax collector, delinquent property taxes, including all fees, interest and costs, and to foreclose the subsequently created liens, all as provided for and limited by law, except that the purchaser shall have the right of foreclosure pursuant to R.S.54:5-86 et seq.
e. Upon the receipt of a duly issued tax sale certificate any tax lien 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 occurs earlier.
f. The purchaser shall be required to purchase, at the time of creation 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 as provided for pursuant to R.S.54:5-112, R.S.54:5-113, R.S.54:5-114, section 1 of P.L.1941, c.232 (C.54:5-114.1), and section 1 of P.L.1943, c.149 (C.54:5-114.2).
g. At the time of creation of the property tax lien certificates, the purchaser shall have the right, but not the obligation, to acquire by assignment all tax lien certificates held by the municipality on any particular property, excluding, however, those certificates for which a resolution for redemption of a lien by installment payments has been adopted pursuant to R.S.54:5-65 and those certificates relating to properties upon which is located a hazardous discharge site, as listed by the Department of Environmental Protection pursuant to section 3 of P.L.1982, c.202 (C.58:10-23.17). 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.
j. The purchaser of the tax levy may be obligated by contract to pay all subsequent taxes, municipal liens and other municipal charges on each tax sale certificate acquired under the tax levy purchase until the next following tax levy sale or until redemption or foreclosure of the tax sale certificate has been completed, whichever occurs first. The tax levy purchase contract may provide that failure to make such payments shall result in the forfeiture of any such certificate and any amount due thereon and require the assignment of the certificate back to the municipality.
9. (New section) 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.), may adopt such rules and regulations as are necessary to effectuate the purposes of this act.
10. This act shall take effect immediately.
Permits municipality to sell property tax levy to highest bidder at public auction.