Requires municipal tax collectors who obtain payments in lieu of taxes under "Long Term Tax Exemption Law" to share portion of that revenue with school district or districts.

A5228

ASSEMBLY, No. 5228

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED JUNE 8, 2026

Sponsored by:

Assemblyman� ROY FREIMAN

District 16 (Hunterdon, Mercer, Middlesex and Somerset)

SYNOPSIS

���� Requires municipal tax collectors who obtain payments
in lieu of taxes under "Long Term Tax Exemption Law" to share portion
of that revenue with school district or districts.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning the sharing of certain payments in lieu of
taxes under the "Long Term Tax Exemption Law" with school districts,
amending various sections of statutory law, and supplementing P.L.1991, c.431
(C.40A:20-1 et seq.).

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

���� 1.��� Section 3 of P.L.1991,
c.431 (C.40A:20-3) is amended to read as follows:

���� 3.��� As used in P.L.1991,
c.431 (C.40A:20-1 et seq.):

���� a.���� "Gross
revenue" means annual gross revenue or gross shelter rent or annual gross
rents, as appropriate, and other income, for each urban renewal entity
designated pursuant to P.L.1991, c.431 (C.40A:20-1 et seq.).� The financial
agreement shall establish the method of computing gross revenue for the entity,
and the method of determining insurance, operating and maintenance expenses
paid by a tenant which are ordinarily paid by a landlord, which shall be
included in the gross revenue; provided, however, that any federal funds
received, whether directly or in the form of rental subsidies paid to tenants,
by a nonprofit corporation that is the sponsor of a qualified subsidized
housing project, shall not be included in the gross revenue of the project for
purposes of computing the annual
[
services
]

service

charge for
[
municipal
]

public

services supplied to the project; and provided further that any gain realized
by the urban renewal entity on the sale of any unit in fee simple, whether or
not taxable under federal or State law, shall not be included in computing
gross revenue.

���� b.��� "Limited-dividend
entity" means an urban renewal entity incorporated pursuant to Title 14A
of the New Jersey Statutes, or established pursuant to Title 42 of the Revised
Statutes, for which the profits and the entity are limited as follows.� The
allowable net profits of the entity shall be determined by applying the
allowable profit rate to each total project unit cost, if the project is
undertaken in units, or the total project cost, if the project is not
undertaken in units, and all capital costs, determined in accordance with
generally accepted accounting principles, of any other entity whose revenue is
included in the computation of excess profits, for the period commencing on the
date on which the construction of the unit or project is completed, and
terminating at the close of the fiscal year of the entity preceding the date on
which the computation is made, where:�

���� "Allowable profit
rate" means the greater of 12
[
%
]

percent

or the percentage per annum arrived at by adding 1 �
[
%
]

percent
to the annual
interest percentage rate payable on the entity's initial permanent mortgage
financing.� If the initial permanent mortgage is insured or guaranteed by a
governmental agency, the mortgage insurance premium or similar charge, if
payable on a per annum basis, shall be considered as interest for this
purpose.� If there is no permanent mortgage financing the allowable profit rate
shall be the greater of 12
[
%
]

percent

or the percentage per annum arrived at by adding 1 �
[
%
]

percent
per annum to the
interest rate per annum which the municipality determines to be the prevailing
rate on mortgage financing on comparable improvements in the county.�

���� c.���� "Net profit"
means the gross revenues of the urban renewal entity less all operating and
non-operating expenses of the entity, all determined in accordance with
generally accepted accounting principles, but:�

���� (1)�� there shall be included
in expenses: (a) all annual service charges paid pursuant to section 12 of
P.L.1991, c.431 (C.40A:20-12); (b) all payments to the municipality of excess
profits pursuant to section 15 or 16 of P.L.1991, c.431 (C.40A:20-15 or 40A:20-16);
(c) an annual amount sufficient to amortize the total project cost and all
capital costs determined in accordance with generally accepted accounting
principles, of any other entity whose revenue is included in the computation of
excess profits, over the term of the abatement as set forth in the financial
agreement; (d) all reasonable annual operating expenses of the urban renewal
entity and any other entity whose revenue is included in the computation of
excess profits, including the cost of all management fees, brokerage
commissions, insurance premiums, all taxes or service charges paid, legal,
accounting, or other professional service fees, utilities, building maintenance
costs, building and office supplies, and payments into repair or maintenance reserve
accounts; (e) all payments of rent including, but not limited to, ground rent
by the urban renewal entity; (f) all debt service;

���� (2)�� there shall not be
included in expenses either depreciation or obsolescence, interest on debt,
except interest which is part of debt service, income taxes, or salaries,
bonuses or other compensation paid, directly or indirectly to directors,
officers and stockholders of the entity, or officers, partners or other persons
holding any proprietary ownership interest in the entity.

���� The urban renewal entity shall
provide to the municipality an annual audited statement which clearly
identifies the calculation of net profit for the urban renewal entity during
the previous year.� The annual audited statement shall be prepared by a certified
public accountant and shall be submitted to the municipality within 90 days of
the close of the fiscal year.

���� d.��� "Nonprofit
entity" means an urban renewal entity incorporated pursuant to Title 15A
of the New Jersey Statutes for which no part of its net profits inures to the
benefit of its members.

���� e.���� "Project"
means any work or undertaking pursuant to a redevelopment plan adopted pursuant
to the "Local Redevelopment and Housing Law," P.L.1992, c.79
(C.40A:12A-1 et al.), which has as its purpose the redevelopment of all or any
part of a redevelopment area including any industrial, commercial, residential
or other use, and may include any buildings, land, including demolition,
clearance or removal of buildings from land, equipment, facilities, or other
real or personal properties which are necessary, convenient, or desirable
appurtenances, such as, but not limited to, streets, sewers, utilities, parks,
site preparation, landscaping, and administrative, community, health,
recreational, educational and welfare facilities, and zero-emission vehicle
fueling and charging infrastructure.

���� f.���� "Redevelopment
area" means an area determined to be in need of redevelopment and for
which a redevelopment plan has been adopted by a municipality pursuant to the
"Local Redevelopment and Housing Law," P.L.1992, c.79 (C.40A:12A-1 et
al.).�

���� g.��� "Urban renewal
entity" means a limited-dividend entity, the New Jersey Economic
Development Authority or a nonprofit entity which enters into a financial
agreement pursuant to P.L.1991, c.431 (C.40A:20-1 et seq.) with a municipality
to undertake a project pursuant to a redevelopment plan for the redevelopment
of all or any part of a redevelopment area, or a project necessary, useful, or
convenient for the relocation of residents displaced or to be displaced by the
redevelopment of all or any part of one or more redevelopment areas, or a low
and moderate income housing project.

���� h.��� "Total project unit
cost" or "total project cost" means the aggregate of the
following items as related to a unit of a project, if the project is undertaken
in units, or to the total project, if the project is not undertaken in units,
all of which as limited by, and approved as part of the financial agreement:
(1) cost of the land and improvements to the entity, whether acquired from a
private or a public owner, with cost in the case of leasehold interests to be
computed by capitalizing the aggregate rental at a rate provided in the
financial agreement; (2) architect, engineer and attorney fees, paid or payable
by the entity in connection with the planning, construction and financing of
the project; (3) surveying and testing charges in connection therewith; (4)
actual construction costs which the entity shall cause to be certified and
verified to the municipality and the municipal governing body by an independent
and qualified architect, including the cost of any preparation of the site
undertaken at the entity's expense; (5) insurance, interest and finance costs
during construction; (6) costs of obtaining initial permanent financing; (7)
commissions and other expenses paid or payable in connection with initial
leasing; (8) real estate taxes and assessments during the construction period;
(9) a developer's overhead based on a percentage of actual construction costs,
to be computed at not more than the following schedule:

����������� $500,000 or less� -���������������������������� 10%

����������� $500,000 through
$1,000,000���� -��� $50,000 plus 8% on excess above $500,000

����������� $1,000,001 through
$2,000,000�� -�� $90,000 plus 7% on excess above $1,000,000

����������� $2,000,001 through
$3,500,000�� - � $160,000 plus 5.6667% on excess above $2,000,000

����������� $3,500,001 through
$5,500,000�� -�� $245,000 plus 4.25% on excess above $3,500,000

����������� $5,500,001 through
$10,000,000� -� $330,000 plus 3.7778% on excess above $5,500,000

����������� over $10,000,000��� - ����������� 5%

���� If the project includes units
in fee simple, with respect to those units, "total project cost"
shall mean the sales price of the individual housing unit which shall be the
most recent true consideration paid for a deed to the unit in fee simple in a
bona fide arm's length sales transaction, but not less than the assessed
valuation of the unit in fee simple assessed at 100 percent of true value.

���� If the financial agreement so
provides, there shall be excluded from the total project cost: (1) actual costs
incurred by the entity and certified to the municipality by an independent and
qualified architect or engineer which are associated with site remediation and
cleanup of environmentally hazardous materials or contaminants in accordance
with State or federal law; and (2) any extraordinary costs incurred by the
entity and certified to the chief financial officer of the municipality by an
independent certified public accountant in order to alleviate blight conditions
within the area in need of redevelopment including, but not limited to, the
cost of demolishing structures considered by the entity to be an impediment to
the proposed redevelopment of the property, costs associated with the
relocation or removal of public utility facilities as defined pursuant to
section 10 of P.L.1992, c.79 (C.40A:12A-10) considered necessary in order to
implement the redevelopment plan, costs associated with the relocation of
residents or businesses displaced or to be displaced by the proposed
redevelopment, and the clearing of title to properties within the area in need
of redevelopment in order to facilitate redevelopment.

���� i.���� "Housing
project" means any work or undertaking to provide decent, safe, and
sanitary dwellings for families in need of housing; the undertaking may include
any buildings, land (including demolition, clearance or removal of buildings
from land), equipment, facilities, or other real or personal properties or
interests therein which are necessary, convenient or desirable appurtenances of
the undertaking, such as, but not limited to, streets, sewers, water,
utilities, parks; site preparation; landscaping, and administrative, community,
health, recreational, educational, welfare, commercial, or other facilities, or
to provide any part or combination of the foregoing.

���� j.���� "Redevelopment
relocation housing project" means a housing project which is necessary,
useful or convenient for the relocation of residents displaced by redevelopment
of all or any part of one or more redevelopment areas.

���� k.��� "Low and moderate
income housing project" means a housing project which is occupied, or is
to be occupied, exclusively by households whose incomes do not exceed income
limitations established pursuant to any State or federal housing program.

���� l.���� "Qualified
subsidized housing project" means a low and moderate income housing
project owned by a nonprofit corporation organized under the provisions of
Title 15A of the New Jersey Statutes for the purpose of developing,
constructing and operating rental housing for senior citizens under section 202
of Pub.L. 86-372 (12 U.S.C. s.1701q) or rental housing for persons with
disabilities under section 811 of Pub.L. 101-625 (42 U.S.C. s.8013), or under
any other federal program that the Commissioner of Community Affairs by rule
may determine to be of a similar nature and purpose.

���� m.�� "Debt service"
means the amount required to make annual payments of principal and interest or
the equivalent thereof on any construction mortgage, permanent mortgage or
other financing including returns on institutional equity financing and market
rate related party debt for a project for a period equal to the term of the tax
exemption granted by a financial agreement.

���� n.��� "Zero-emission
vehicle" means a vehicle certified as a zero emission vehicle pursuant to
the California Air Resources Board zero emission vehicle standards for the
applicable model year, including but not limited to, battery electric-powered
vehicles and hydrogen fuel cell vehicles.

���� o.��� "Zero-emission
vehicle fueling and charging infrastructure" means infrastructure to
charge or fuel zero-emission vehicles, including but not limited to, public
electric vehicle charging stations and public hydrogen fueling stations.

����
p.��� "Chief executive
officer of the county" means the county executive, county manager, county
supervisor, or president of the board of county commissioners, as appropriate
to the form of government of a county.

(cf: P.L.2021, c.168, s.4)

���� 2.��� Section 8 of P.L.1991,
c.431 (C.40A:20-8) is amended to read as follows:

���� 8.��� Every urban renewal
entity qualifying under
[
this
act
]

P.L.1991,
c.431 (C.40A:20-1 et seq.)
, before proceeding with any projects, shall make
written application to the municipality for approval thereof
, and shall
provide copies of the application, for informational purposes, to the board of
county commissioners and the chief executive officer of the county within which
the municipality is located, and to the board of education and superintendent
of any school district, including a regional school district, that is
coextensive with the municipality, or of which the municipality is a
constituent.� The urban renewal entity, at the time an application is made,
shall provide notice of the application submission to the Director of the
Division of Local Government Services in the Department of Community Affairs,
which shall post the notice on the Internet website of the department
.� The
application shall be in a form, and shall certify to those facts and data, as
shall be required by the municipality, and shall include but not be limited to:

���� a.���� A general statement of
the nature of the proposed project, that the undertaking conforms to all
applicable municipal ordinances, and that the project accords with the
redevelopment plan and master plan of the municipality, or, in the case of a
redevelopment relocation housing project, provides for the relocation of
residents displaced or to be displaced from a redevelopment area, or, in the
case of a low and moderate income housing project, the housing units are
restricted to occupation by low and moderate income households.�

���� b.��� A description of the
proposed project outlining the area included and a description of each unit
thereof if the project is to be undertaken in units and setting forth
architectural and site plans as required.

���� c.���� A statement prepared by
a qualified architect or engineer of the estimated cost of the proposed project
in the detail required, including the estimated cost of each unit to be
undertaken.

���� d.��� The source, method and
amount of money to be subscribed through the investment of private capital,
setting forth the amount of stock or other securities to be issued therefor or
the extent of capital invested and the proprietary or ownership interest obtained
in consideration therefor.

���� e.���� A fiscal plan for the
project outlining a schedule of annual gross revenue, the estimated
expenditures for operation and maintenance, payments for interest, amortization
of debt and reserves, and payments
[
to
the municipality
]

in lieu of taxes
to be made pursuant to a financial agreement to be
entered into with the municipality.

���� f.���� A proposed financial
agreement conforming to the provisions of section 9 of
[
this act
]

P.L.1991,
c.431 (C.40A:20-9)
.�

����
g.��� Any other information
relevant to determining the financial impact of the project as may be required
pursuant to a rule adopted by the Commissioner of Community Affairs or the
Local Finance Board.

���� The application shall be
addressed and submitted to the mayor or other chief executive officer of the
municipality.�
Within five business days of receipt of an application, the
mayor or other chief executive officer of the municipality and urban renewal
entity shall notify the board of education and superintendent of any school
district, including a regional school district, that is coextensive with the
municipality, or of which the municipality is a constituent, of the application
and the urban renewal entity.� The superintendent or chief executive of the
board of education of any school district, including a regional school
district, that is coextensive with the municipality, or of which the
municipality is a constituent, shall lead negotiations on behalf of the board
of education concerning the agreement with the municipality and urban renewal
entity.�

���� The mayor or other chief
executive officer
of the municipality
shall, within 60 days of
[
his
]
receipt of
the application thereafter, submit the application with
[
his
]

any

recommendations to the municipal governing body.�
[
The
]

Simultaneously, the mayor or
other chief executive officer of the municipality shall submit copies of any
recommendations to the board of county commissioners and the chief executive
officer of the county within which the municipality is located and to the board
of education and superintendent of any school district, including a regional
school district, that is coextensive with the municipality, or of which the
municipality is a constituent.� Representatives of the county and school
district or districts may submit recommendations to the municipal governing
body within 10 days after the date of submittal of the recommendations of the
mayor or chief executive officer of the municipality. �After affording
representatives of the county and school district, or districts, a 10-day
period to review the proposed project and the recommendations of the mayor or
chief executive officer of the municipality, and after giving due consideration
to the recommendations submitted by all interested parties, the municipal

governing body shall by resolution approve or disapprove the application, but
in the event of disapproval, changes may be suggested to secure approval. �An
application may be revised and resubmitted.�

(cf: P.L.1991, c.431, s.8)

���� 3.��� 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.� The municipality shall notify the chief financial officer of the
county and the clerk to the board of county commissioners of the county within
which the municipality is located of the date, time, and place of the public
hearing required to be held prior to the passage of the ordinance.� 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 in P.L.1991, c.431
(C.40A:20-1 et seq.).

���� 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
,
in which the urban renewal entity shall certify to the mayor and the governing
body of the municipality the number of school-age children residing in the
approved project who are attending a public school.� The urban renewal entity,
at the time the auditor�s reports are submitted, shall provide copies of the
reports to the Director of the Division of Local Government Services in the
Department of Community Affairs, which shall post the reports on the department�s
Internet website
.

���� 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
for public services
.

(cf: P.L.2025, c.91, s.1)

���� 4.��� 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
Director
of the Division of Local Government Services in the Department of Community
Affairs, the
chief financial officer of the county
,
and to the
county counsel
of the county within which the municipality is located, and
to the board of education and the superintendent of any school district
coextensive with the municipality or of which the municipality is a
constituent, including a regional school district,
for informational
purposes.�
Upon receipt of an ordinance and financial agreement, the
Department of Community Affairs shall post the ordinance and agreement on the
department�s Internet website.

���� 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
]

The

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
]

online
pursuant to the requirements of P.L.2025, c.72 (C.35:3-1 et seq.)
.

���� 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
]

for public services.� The municipality
shall remit a portion of that
revenue to the county
, and to the school district or districts,
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
]

public

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
]

public

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.�
Revenue derived from an
annual service charge pursuant to a financial agreement for municipal purposes,
county purposes, or school purposes shall

be used solely and
exclusively by the municipality, county, or school district for the purpose of
reducing the amount that is required to be raised through the local property
tax levy by the municipality for municipal purposes, by the county for county
purposes, and by the school district for school district purposes, as
appropriate.�

����
(3)
� Each municipality
[
which
]

that

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 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
, and the school district or districts, including regional
school districts, pursuant to paragraph (4) of this subsection
.�
The remittance requirements pertaining to school
districts shall not be applicable to a 100 percent low- and moderate- income
housing project dedicated to housing 100 percent senior citizen occupants, who
are persons 62 years of age or older and who qualify as low- and moderate-income
households
.
� If the five percent remittance due to the county
and
the remittance due to the school district or districts, including regional
school districts,
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
and school
district or districts, including regional school districts,
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.

����
(4)�� (a)� Each
municipality that enters into a financial agreement on or after the effective
date of P.L.��� , c.��� (pending before the Legislature as this bill), shall
remit a percentage of the annual service charge to the school district or
districts, including regional school districts, immediately upon receipt of
that service charge, either:

����
(i)��� within 90 days
following the municipality�s receipt of an application pursuant to section 8 of
P.L.1991, c.431 (C.40A:20-8); or

����
(ii)�� for a municipality,
school district or districts, including regional school districts, and urban
renewal entity that seek to modify their agreement pursuant to section 4 of
P.L.1991, c.431 (C.40A:20-4), not less than 60 days prior to the date that the
next installment payment is due for any county tax due pursuant to the
provisions of R.S.54:4-74.
�

����
(b)�� The payment received
by a school district or districts, including regional school districts,
pursuant to this section, shall equal the percentage of the amount of property
taxes that are distributed to a given school district or districts, including
regional school districts.

����
(c)�� When a municipality
that is a constituent of a regional school district enters into a financial
agreement that includes properties within that regional school district�s
jurisdiction, the remittance to the regional school district shall,
notwithstanding subparagraph (b) of this paragraph, be:

����
(i)��� distributed to
reflect the equalized valuation that would have been contributed by the
property subject to a tax exemption to the regional school district�s cost
apportionment formula absent the tax exemption.� In the event that the cost
apportionment method adopted by the regional school district is based solely on
the proportional number of pupils in the constituent municipalities or based on
a combination of equalized valuations and pupil enrollment as authorized
pursuant to N.J.S.18A:13-23, the remittance shall be distributed to reflect the
percentage of the amount of property taxes that the constituent municipality
otherwise pays to the regional school district; and

����
(ii)�� calculated to ensure
that constituent municipalities of the regional school district that did not
approve the financial agreement do not experience an increase in their
proportionate share of the regional school district�s costs solely as a result
of the tax exemption granted by another constituent municipality.

���� 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)

���� 5.��� Section 3 of P.L.2007,
c.62 (C.18A:7F-38) is amended to read as follows:

���� 3.��� a.� Notwithstanding the
provisions of any other law to the contrary, a school district shall not adopt
a budget pursuant to sections 5 and 6 of P.L.1996, c.138 (C.18A:7F-5 and
18A:7F-6) with an increase in its adjusted tax levy that exceeds, except as provided
in subsection e. of section 4 of P.L.2007, c.62 (C.18A:7F-39), the tax levy
growth limitation calculated as follows: the sum of the prebudget year adjusted
tax levy and the adjustment for increases in enrollment multiplied by 2.0
percent, and adjustments for an increase in health care costs, increases in
amounts for certain normal and accrued liability pension contributions set
forth in sections 1 and 2 of P.L.2009, c.19 amending section 24 of P.L.1954,
c.84 (C.43:15A-24) and section 15 of P.L.1944, c.255 (C.43:16A-15) for the year
set forth in those sections,
less any payment received in the prebudget year
pursuant to section 12 of P.L.1991, c.431 (C.40A:20-12),
in the case of an
SDA district as defined pursuant to section 3 of P.L.2000, c.72 (C.18A:7G-3),
during the 2018-2019 through the 2024-2025 school years, increases to raise a
general fund tax levy to an amount that does not exceed its local share, and, in
the case of a school district first receiving preschool education aid in the
2025-2026, 2026-2027, or 2027-2028 school years and participating in the pilot
program established by the commissioner pursuant to subsection h. of section 12
of P.L.2007, c.260 (C.18A:7F-54), increases to raise a general fund tax levy
for the local share of preschool education costs.

���� b. (1)� The allowable
adjustment for increases in enrollment authorized pursuant to subsection a. of
this section shall equal the per pupil prebudget year adjusted tax levy
multiplied by EP, where EP equals the sum of:

���� (a)�� 0.50 for each unit of
weighted resident enrollment that constitutes an increase from the prebudget
year over 1
[
%
]

percent
,
but not more than 2.5
[
%
]

percent
;

���� (b)�� 0.75 for each unit of
weighted resident enrollment that constitutes an increase from the prebudget
year over 2.5
[
%
]

percent
,
but not more than 4
[
%
]

percent
;
and

���� (c)�� 1.00 for each unit of
weighted resident enrollment that constitutes an increase from the prebudget
year over 4
[
%
]

percent
.

���� (2)�� A school district may
request approval from the commissioner to calculate EP equal to 1.00 for any
increase in weighted resident enrollment if it can demonstrate that the
calculation pursuant to paragraph (1) of this subsection would result in an
average class size that exceeds 10
[
%
]

percent

above the facilities efficiency standards established pursuant to P.L.2000,
c.72 (C.18A:7G-1 et al.).

���� c.���� (Deleted by amendment,
P.L.2010, c.44)

���� d.� (1)� The allowable
adjustment for increases in health care costs authorized pursuant to subsection
a. of this section shall equal that portion of the actual increase in total
health care costs for the budget year, less any withdrawals from the current
expense emergency reserve account for increases in total health care costs,
that exceeds 2.0 percent of the total health care costs in the prebudget year,
but that is not in excess of the product of the total health care costs in the
prebudget year multiplied by the average percentage increase of the State
Health Benefits Program, P.L.1961, c.49 (C.52:14-17.25 et seq.), as annually
determined by the Division of Pensions and Benefits in the Department of the
Treasury.

���� (2)�� The allowable adjustment
for increases in the amount of normal and accrued liability pension
contributions authorized pursuant to subsection a. of this section shall equal
that portion of the actual increase in total normal and accrued liability
pension contributions for the budget year that exceeds 2.0 percent of the total
normal and accrued liability pension contributions in the prebudget year.

���� (3)� In the case of an SDA
district, as defined pursuant to section 3 of P.L.2000, c.72 (C.18A:7G-3), in
which the prebudget year adjusted tax levy is less than the school district's
prebudget year local share as calculated pursuant to section 10 of P.L.2007,
c.260 (C.18A:7F-52), the allowable adjustment for increases to raise a tax levy
that does not exceed the school district's local share shall equal the
difference between the prebudget year adjusted tax levy and the prebudget year
local share.

���� (4)� In the case of a school
district first receiving preschool education aid in the 2025-2026, 2026-2027,
or 2027-2028 school years and participating in the pilot program established by
the commissioner pursuant to subsection h. of section 12 of P.L.2007, c.260
(C.18A:7F-54), the allowable adjustment for increases to raise a general fund
tax levy for the local share of preschool education costs shall be equal to the
actual increase required to provide preschool education under the pilot program
less State aid provided pursuant to subsection h. of section 12 of P.L.2007,
c.260 (C.18A:7F-54).

���� A school district first
receiving preschool education aid in the 2025-2026 school year and
participating in the pilot program established by the commissioner pursuant to
subsection h. of section 12 of P.L.2007, c.260 (C.18A:7F-54) may, prior to the
delivery of tax bills pursuant to R.S.54:4-64, recertify to the county board of
taxation the sum to be raised in the district during the ensuing school year if
the change in the amount to be raised is equal to the district's local share of
preschool education costs for that school year.

���� e.���� (Deleted by amendment,
P.L.2010, c.44)

���� f.���� The adjusted tax levy
shall be increased or decreased accordingly whenever the responsibility and
associated cost of a school district activity is transferred to another school
district or governmental entity.

(cf: P.L.2025, c.100, s.3)

���� 6.��� Section 4 of P.L.1991,
c.441 (C.40A:21-4) is amended to read as follows:

���� 4.��� The governing body of a
municipality may determine to utilize the authority granted under Article VIII,
Section I, paragraph 6 of the New Jersey Constitution, and adopt an ordinance
setting forth the eligibility or noneligibility of dwellings, multiple dwellings,
or commercial and industrial structures, or all of these, for exemptions or
abatements, or both, from taxation in areas in need of rehabilitation.� The
ordinance may differentiate among these types of structures as to whether the
property shall be eligible for exemptions or abatements, or both, within the
limitations set forth in P.L.1991, c.441 (C.40A:21-1 et seq.).� With respect to
a type of structure, the ordinance shall specify the eligibility of
improvements, conversions, or construction, or all of these, for each type of
structure.� The ordinance may differentiate for the purposes of determining
eligibility pursuant to this section among the various neighborhoods, zones,
areas or portions of the designated area in need of rehabilitation.

���� An ordinance adopted pursuant
to this section may be amended from time to time.� An amendment to an ordinance
shall not affect any exemption, abatement, or tax agreement previously granted
and in force prior to the amendment.

���� Application for exemptions and
abatements from taxation may be filed pursuant to an ordinance so adopted to
take initial effect in the tax year in which the ordinance is adopted, and for
tax years thereafter as set forth in P.L.1991, c.441 (C.40A:21-1 et seq.), but
no application for exemptions or abatements shall be filed for exemptions or
abatements to take initial effect in the eleventh tax year or any tax year
occurring thereafter, unless the ordinance is readopted by the governing body
pursuant to this section.

����
The municipality shall
provide a copy of an ordinance introduced or adopted pursuant to this section,
including one amending or repealing an ordinance, to the Director of the
Division of Local Government Services in the Department of Community Affairs, which
shall post the ordinance on the Internet website of the department.

(cf: P.L.2007, c.268, s.2)

���� 7.� (New section)�
The Commissioner of Education, in
consultation with the Director of the Division of Local Government Services,
shall promulgate rules and regulations pursuant to the
"
Administrative Procedure Act,
"
P.L.1968, c.410 (C.52:14B-1 et
seq.), for the calculation and distribution of payments pursuant to paragraph
(4) of subsection b. of
section 12 of P.L.1991, c.431 (C.40A:20-12)
.

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

STATEMENT

���� This bill revises various
aspects of the laws governing property tax exemptions.� Specifically, the bill
requires municipalities to share certain payments in lieu of property taxes
(PILOTs) with school districts.� The bill also requires notice to be provided
to the county, school districts, and Department of Community Affairs (DCA) when
a municipality considers and approves a property tax exemption, and when a
municipality decides to enter into negotiations for an agreement with a school
district and urban renewal entity.

���� Under the bill, any revenue
derived from an annual service charge pursuant to the PILOT is required to be
used solely and exclusively by the municipality, county, or school district for
the purpose of reducing the amount that is required to be raised through the
local property tax levy by the municipality for municipal purposes, by the
county for county purposes, and by the school district for school district purposes,
as appropriate.�

���� Under the bill, the payment
received by a school district or districts, including regional school
districts, is to equal the percentage of the amount of property taxes which are
distributed to a given school district or districts, including regional school
districts.

���� When a municipality that is a
constituent of a regional school district enters into a financial agreement
that includes properties within that regional school district�s jurisdiction,
the remittance to the regional school district is required to be distributed to
reflect the equalized valuation that would have been contributed by the
property subject to a tax exemption to the regional school district�s cost
apportionment formula absent the tax exemption.� In the event that the cost
apportionment method adopted by the regional school district is based solely on
the proportional number of pupils in the constituent municipalities or based on
a combination of equalized valuations and pupil enrollment as authorized
pursuant to N.J.S.18A:13-23, the remittance is to be distributed to reflect the
percentage of the amount of property taxes that the constituent municipality
otherwise pays to the regional school district.

���� The bill also provides that
when an urban renewal entity applies for a long-term property tax exemption,
the entity is required to provide copies of the application to the county,
school districts, and the Director of the Division of Local Government Services
(DLGS) in the DCA.� The DLGS is required to post this application on the
Internet website of the DCA.