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A1224
ASSEMBLY, No. 1224
STATE OF NEW JERSEY
222nd LEGISLATURE
�
PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION
Sponsored by:
Assemblyman MICHAEL INGANAMORT
District 24 (Morris, Sussex and Warren)
Assemblywoman DAWN FANTASIA
District 24 (Morris, Sussex and Warren)
SYNOPSIS
���� Limits long term tax exemptions in municipalities
with school districts receiving certain State school aid.
CURRENT VERSION OF TEXT
���� Introduced Pending Technical Review by Legislative
Counsel.
��
An Act
concerning financial agreements for certain
property tax exemptions and amending P.L.1991, c.431.
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� 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
; except that with respect to
any financial agreement for a project located in a municipality having a school
district that is an SDA district, as that term is defined in section 3 of
P.L.2000, c.72 (C.18A:7G-3), that is executed on or after the effective date of
P.L. , c. (C.��������������� ) (pending
before the Legislature as this bill), the rehabilitation or improvements shall
not be exempt from property taxes for school purposes
.
���� 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
, except
for property taxes for school purposes, as set forth in this section
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
to the extent permitted in
this section
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
exempted under this section
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.) 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.
���� 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.
(cf: P.L.2015, c.247, s.1)
���� 2.��� This act shall take
effect immediately and shall apply to every financial agreement entered into on
or after the effective date of this act.
STATEMENT
���� This bill would amend the
�Long Term Tax Exemption Law,� P.L.1991, c.431 (C.40A:20-1 et seq.) to prohibit
the exemption of property taxes for school purposes for any financial agreement
for a project located in a municipality having a school district that is an SDA
district on or after the effective date of the bill.
���� The term �SDA district� is
defined in section 3 of P.L.2000, c.72 as a school district that received
education opportunity aid or preschool expansion in in the 2007-2008 school
year.� Effectively, the provisions of this bill would be limited to the school
districts formerly known as �Abbott districts,� which were affected by the New
Jersey Supreme Court decisions in the line of
Abbott
v.
Burke
cases.