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A151
ASSEMBLY, No. 151
STATE OF NEW JERSEY
222nd LEGISLATURE
�
PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION
Sponsored by:
Assemblywoman DAWN FANTASIA
District 24 (Morris, Sussex and Warren)
Assemblyman MICHAEL INGANAMORT
District 24 (Morris, Sussex and Warren)
SYNOPSIS
���� Prohibits exemption of school purposes property taxes
under "Long Term Tax Exemption Law."
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 9 of P.L.1991,
c.431 (C.40A:20-9) is amended to read as follows:
���� 9.��� Every approved project
shall be evidenced by a financial agreement between the municipality and the
urban renewal entity.� The agreement shall be prepared by the entity and
submitted as a separate part of its application for project approval.� The
agreement shall not take effect until approved by ordinance of the
municipality.� Any amendments or modifications of the agreement made thereafter
shall be by mutual consent of the municipality and the urban renewal entity,
and shall be subject to approval by ordinance of the municipal governing body
upon recommendation of the mayor or other chief executive officer of the
municipality prior to taking effect.�
���� The financial agreement shall
be in the form of a contract requiring full performance within 30 years from
the date of completion of the project, and shall include the following:
���� a.���� That the profits of or
dividends payable by the urban renewal entity shall be limited according to
terms appropriate for the type of entity in conformance with the provisions of
P.L.1991, c.431 (C.40A:20-1 et seq.).
���� b.��� That
[
all
]
improvements and
land, to the extent authorized pursuant to section 12 of P.L.1991, c.431
(C.40A:20-12), in the project to be constructed or acquired by the urban
renewal entity shall be exempt from taxation
[
as
provided
]
to the extent authorized
in
section 12 of
P.L.1991, c.431
[
(C.40A:20-1 et
seq.)
]
(C.40A:20-12)
.
���� c.���� That the urban renewal
entity shall make payments for municipal services as provided in P.L.1991,
c.431 (C.40A:20-1 et seq.).
���� d.��� That the urban renewal
entity shall submit annually, within 90 days after the close of its fiscal
year, its auditor's reports to the mayor and governing body of the
municipality.
���� e.���� That the urban renewal
entity shall, upon request, permit inspection of property, equipment, buildings
and other facilities of the entity, and also permit examination and audit of
its books, contracts, records, documents and papers by authorized representatives
of the municipality or the State.�
���� f.���� That in the event of
any dispute between the parties matters in controversy shall be resolved by
arbitration in the manner provided in the financial agreement.�
���� g.��� That operation under the
financial agreement shall be terminable by the urban renewal entity in the
manner provided by P.L.1991, c.431 (C.40A:20-1 et seq.).
���� h.��� That the urban renewal
entity shall at all times prior to the expiration or other termination of the
financial agreement remain bound by the provisions of P.L.1991, c.431
(C.40A:20-1 et seq.).
���� The financial agreement shall
contain detailed representations and covenants by the urban renewal entity as
to the manner in which it proposes to use, manage or operate the project.� The
financial agreement shall further set forth the method for computing gross
revenue for the urban renewal entity, the method of determining insurance,
operating and maintenance expenses paid by a tenant which are ordinarily paid
by a landlord, the plans for financing the project, including the estimated
total project cost, the amortization rate on the total project cost, the source
of funds, the interest rates to be paid on the construction financing, the
source and amount of paid-in capital, the terms of mortgage amortization or
payment of principal on any mortgage, a good faith projection of initial sales
prices of any condominium units and expenses to be incurred in promoting and
consummating such sales, and the rental schedules and lease terms to be used in
the project.� Any financial agreement may allow the municipality to levy an
annual administrative fee, not to exceed two percent of the annual service
charge.
(cf: P.L.2015, c.95, s.28)
���� 2.��� Section 11 of P.L.1991,
c.431 (C.40A:20-11) is amended to read as follows:
���� 11.� A financial agreement
approved pursuant to this act shall include findings by the municipality,
approved by the municipal governing body, setting forth appropriate tax
exemption provisions and an appropriate annual service charge schedule which
shall be based upon the provisions of section 12 of
[
this act
]
P.L.1991, c.431
(C.40A:20-12)
and the municipality's determinations as to:
���� a.���� The relative benefits
of the project to the redevelopment of the redevelopment area when compared to
the costs, if any, associated with the tax exemption;�
���� b.��� An assessment of the
importance of the tax exemption to be granted in obtaining the development of
the project and in influencing the locational decisions of probable occupants
of the project or units of the project.�
(cf: P.L.1991, c.431, s.11)
���� 3.��� 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.�
However, with respect to any
project for which a long term tax exemption is sought by an urban renewal
entity 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 financial agreement
shall specify the duration of the exemption for urban renewal entities in
accordance with the parameters of either paragraph (1) or paragraph (2) of this
subsection:
���� (1)�� the financial agreement
may specify a duration 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; or
���� (2)�� for each project
undertaken pursuant to a redevelopment agreement which allows the redeveloper
to undertake two or more projects sequentially, the financial agreement may
specify a duration of not more than 30 years from the completion of a project,
or unit of the project if the project is undertaken in units, or not more than
50 years from the execution of the first financial agreement implementing a
project under the redevelopment agreement.� As used in this subsection,
"redevelopment agreement" means an agreement entered into pursuant to
subsection f. of section 8 of P.L.1992, c.79 (C.40A:12A-8) between a
municipality or redevelopment entity and a redeveloper.
���� A financial agreement may
provide for an exemption period of less than 30 years from the completion of
the entire project, less than 35 years from the execution of the financial
agreement, or less than 50 years from the execution of the first financial agreement
implementing a project under the redevelopment agreement.� Nothing in this
subsection shall be construed as requiring a financial agreement for a project
undertaken pursuant to a redevelopment agreement which allows the redeveloper
to undertake two or more projects sequentially to specify a duration within the
parameters of paragraph (2) of this subsection.
���� b.��� During the term of any
exemption, in lieu of
[
any
]
taxes
,
other than school purposes property
taxes,
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,� less than 35 years from the execution of the financial
agreement, or less than 50 years from the execution of the first financial
agreement implementing a project under the redevelopment 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
]
five
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.2018, c.97, s.17)
���� 4.��� This act shall take
effect immediately and shall apply to every financial agreement entered into
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 project for which a
long term tax exemption is sought by an urban renewal entity after the
effective date of the bill.
���� The exemption of property
taxes for school purposes on real property subject to a long term property tax
exemption under the �Long Term Tax Exemption Law� requires that the property
tax levy for school purposes be allocated among all property taxpayers whose
property is not subject to such a property tax exemption, thereby increasing
their property tax burden.� The purpose of this bill is to prevent these
circumstances from occurring as the result of property tax exemptions granted
after the effective date of the bill.