ASSEMBLY APPROPRIATIONS COMMITTEE

STATEMENT TO

ASSEMBLY, No. 5424

with committee amendments

STATE OF NEW JERSEY

DATED:  MAY 15, 2025

      The Assembly Appropriations Committee reports favorably and with committee amendments, Assembly Bill No. 5424.

     As amended and reported, this bill imposes a fee on an institutional investor that holds, acquires, or purchases any ownership interest in residential properties that are abandoned or vacant and which qualify as a subject property, as defined in the bill.

     Specifically, the bill imposes a fee on an institutional investor that holds, acquires, or purchases any ownership interest, whether directly or indirectly, or through any combination of an institutional investor’s constituent persons or entities, in a subject property in the amount equal to the product of $30,000 and the number of subject properties, as defined in the bill, owned by the institutional investor as of the last day of the calendar year.  The fee would be paid to the Commissioner of Community Affairs (commissioner) in a manner prescribed by the commissioner pursuant to the bill.

     The bill defines the term "subject property" to mean real property, any part of which is zoned for residential use, which is unproductive real property that is purchased, owned, or acquired by an institutional investor, which has not maintained a continuous or seasonal occupancy for certain time periods specified in the bill.  The bill defines the term "unproductive real property" to mean real property, including raw land and structures, which qualifies as abandoned or vacant.

     The bill specifies that the term "unproductive real property" does not include predominantly agricultural land, or development or construction activities that have not yet begun, but will begin, in the subsequent 18 months to the 12-month period, demonstrated by criteria specified in the bill. 

     The bill would not apply to: (1) certain nonprofit organizations; (2) small institutional investors, as defined in the bill; (3) financial institutions owning or acquiring real property through foreclosure or through a secured transaction; (4) an institutional investor acting as a condemnor; (5) a governmental authority; or (6) other institutional investors excepted from the requirements of the bill by the commissioner, in consultation with the Director of the Division of Consumer Affairs in the Department of Law and Public Safety (director).  The bill requires all institutional investors to provide an annual report to the commissioner containing certain information, which is to be provided on a form established by the Department of Community Affairs (department).  An institutional investor that fails to provide the annual report would, in addition to the fee, be liable to a civil penalty of $500 for a first offense, and $1,000 for a second and any subsequent offense, to be collected as provided in the bill.  Each day that the commissioner is not in receipt of the annual report would constitute a separate and distinct offense. 

     The bill requires the commissioner to adopt rules and regulations to implement the provisions of the bill in consultation with the director.  The bill would take effect on the first day of the sixth month next following the date of enactment, and apply to an institutional investor that holds, acquires, or purchases any ownership interest in a subject property on or after the effective date, except that the commissioner and director would be permitted to take anticipatory action necessary to effectuate the provisions of the bill.

COMMITTEE AMENDMENTS:

      The committee amended the bill to revise the definition of a "small institutional investor" to include institutional investors that own 20 or fewer parcels of subject property, as defined in the bill, instead of real property.

FISCAL IMPACT:

      The Office of Legislative Services (OLS) concludes that the bill would result in an indeterminate upfront increase in State costs from the requirement that the Department of Community Affairs, in consultation with the Division of Consumer Affairs, adopt rules and regulations and establish a form for institutional investors to utilize when submitting their annual report.

      The OLS finds that the bill would result in an indeterminate increase in annual State expenditures from the cost to the Office of the Attorney General of enforcing the bill’s provisions regarding the reporting requirements of institutional investors, and the additional administrative cost to the Superior Court from civil actions brought for failing to submit the required report.

      The OLS further finds that the bill would result in an increase in annual State revenue due to the fee imposed on certain institutional investors and from fines paid by any of these investors found violating the bill’s reporting requirements. The OLS is unable to calculate how many institutional investors would be required to pay the fee, and in what amount, or any fines to arrive at a revenue estimate.