Requires municipalities comprised within regional school districts to share certain payments received in lieu of taxes with counties and regional school districts.

A4399

ASSEMBLY, No. 4399

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 19, 2026

Sponsored by:

Assemblyman� JAY WEBBER

District 26 (Morris and Passaic)

SYNOPSIS

���� Requires municipalities comprised within regional
school districts to share certain payments received in lieu of taxes with
counties and regional school districts.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act

concerning long-term 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.� 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 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 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 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 percent in the case of a low- and
moderate-income housing project, nor less than 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 two percent in the case of a low- and moderate-income housing project
and shall not be less than 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 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 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 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 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
a portion of the annual service charge as
follows:

����
(i)��� In a municipality
not comprised within a regional school district, the municipality shall remit

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.� If the five percent
remittance due to the county is not paid when due, the unpaid balance thereof
and interest, at the rate of one percent per month accrued thereon, together
with attorneys' fees and court costs, may be recovered by the county from the
municipality in an action filed in a court of competent jurisdiction.� A
municipal finance officer certificate may be subject to revocation or
suspension pursuant to section 7 of P.L.1988, c.110 (C.40A:9-140.12) for
willful or intentional failure, neglect, or refusal to comply with this
section.� If the municipality enters into a contract with a board of education
pursuant to section 7 of P.L.2023, c.311 (C.18A:7G-15.1a), the municipality
shall also remit to the board of education such amounts as may be required
under the contract.

����
(ii)�� In a municipality
comprised within a regional school district, following the effective date of
P.L.��� , c.�� (pending before the Legislature as this bill), the municipality
shall remit a percentage of the annual service charge to the county and to the
regional school district immediately upon receipt of that charge, in proportion
to the distribution of the amount raised by taxation in the taxing district to
those entities, as displayed on the prior year�s tax bill pursuant to paragraph
(1) of subsection b. of R.S.54:4-65.

���� 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.2025, c.91, s.2)

���� 2.��� This act shall take
effect immediately.

STATEMENT

���� This bill would require
municipalities comprised within a regional school district to provide a portion
of the amounts received in lieu of property taxation from urban renewal
entities to the county and to the regional school district.� A municipality
that receives a payment in lieu of taxation from an urban renewal entity would
be required to distribute a portion of the amount received, immediately upon
receipt, to the county and to the regional school district based upon the
distribution of the amount raised by taxation in the taxing district to those
entities in the prior year.