S1813

An Act concerning long term property tax exemptions and five-year property tax exemptions and abatements, amending and supplementing P.L.1991, c.431, and amending P.L.1991, c.441.

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

1. 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. 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 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. A cost-benefit analysis of the project’s impact on the finances of the municipality, county, school district, and other taxing districts, within which the project is located, outlining, at a minimum: (1) the net financial impact on the municipality based on the estimated payments to the municipality to be made pursuant to a financial agreement to be entered into with the municipality and the estimated additional one-time and periodic expenditures to be incurred by the municipality as a result of the project; (2) the municipal revenues to be gained or lost based on this estimated net financial impact and the estimated net financial impact of the property on the municipality if the project is not approved and the current use and condition of the property is continued; (3) the property tax revenues to be foregone by the county and taxing districts in which the project is located if a tax exemption is approved pursuant to P.L.1991, c.431 (C.40A:20-1 et seq.); (4) the impact on the equalization aid component of the school funding formula; and (5) any other information relevant to determining the impact of the project on the finances of the municipality, county, school district, and other taxing districts, within which the project is located, as shall be required by the municipality or as may be required by administrative rules adopted by the Commissioner of Community Affairs or the Local Finance Board. Within 30 days of receipt of the application, the municipality shall publish the cost-benefit analysis required by this subsection on its Internet website, excluding project specific information deemed to be proprietary by the parties involved, or, if one does not exist, the municipality shall transmit the cost-benefit analysis to the Department of Community Affairs and the department shall publish the analysis for public inspection on the department’s Internet website. The analysis pursuant to this subsection shall not be required for an inclusionary development, as defined pursuant to subsection f. of section 4 of P.L.1985, c.222 (C.52:27D-304), that is part a municipality’s compliance certification or a pending request for a compliance certification pursuant to the "Fair Housing Act," P.L.1985, c.222 (C.52:27D-301 et al.).

The application shall be addressed and submitted to the mayor or other chief executive officer of the municipality. The mayor or other chief executive officer shall, within 60 days of his receipt of the application thereafter, submit the application with his recommendations, and an independent cost-benefit analysis of the project’s impact on the finances of the municipality, county, school district, and other taxing districts, within which the project is located, conducted by the office, or other designee, of the mayor or other chief executive officer, to the municipal governing body. The independent cost-benefit analysis shall include, at a minimum, the information required in subsection g. of this section. Within 30 days of submission to the municipal governing body, the municipality shall publish the independent cost-benefit analysis on its Internet website, excluding project specific information deemed to be proprietary by the parties involved, or, if one does not exist, the municipality shall transmit the independent cost-benefit analysis to the Department of Community Affairs and the department shall publish the analysis for public inspection on the department’s Internet website.

The governing body shall by resolution approve or disapprove the application, but in the event of disapproval, changes may be suggested to secure approval. The resolution shall include specific findings about the project’s estimated net impact on the finances of the municipality, county, school district, and other taxing districts, within which the project is located. Within 30 days of adoption of the resolution, the municipality shall publish the resolution on its Internet website, or, if one does not exist, the municipality shall transmit the resolution to the Department of Community Affairs and the department shall publish the analysis for public inspection on the department’s Internet website. An application may be revised and resubmitted.

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

2. (New section) a. A municipality shall notify the Department of Community Affairs within 30 days after approving a financial agreement pursuant to section 9 of P.L.1991, c.431 (C.40A:20-9). The notice shall include the same information required to be included in a plain language budget summary for long term tax exemptions pursuant to subsection b. of section 39 of P.L.2007, c.63 (C.40A:5-48).

b. The Department of Community Affairs, in consultation with the Office of Information Technology, shall design, develop, and maintain a database on its Internet website that contains and displays: (1) the information provided to the department pursuant to subsection a. of this section, and (2) the information included in plain language budget summaries for long term tax exemptions pursuant to subsection b. of section 39 of P.L.2007, c.63 (C.40A:5-48), which were approved prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), sorted by municipality.

3. Section 11 of P.L.1991, c.441 (C.40A:21-11) is amended to read as follows:

11. a. All tax agreements entered into by municipalities pursuant to sections 9 through 12 of P.L.1991, c.441 (C.40A:21-9 through C.40A:21-12) shall be in effect for no more than the five full years next following the date of completion of the project.

b. All projects subject to tax agreement as provided herein shall be subject to all applicable federal, State and local laws and regulations on pollution control, worker safety, discrimination in employment, housing provision, zoning, planning and building code requirements.

c. That percentage which the payment in lieu of taxes for a property bears to the property tax which would have been paid had an exemption and abatement not been granted for the property under the agreement shall be applied to the valuation of the property to determine the reduced valuation of the property to be included in the valuation of the municipality for determining equalization for county tax apportionment and school aid during the term of the tax agreements covering the properties, and at the termination of an agreement for a property the reduced valuation procedure required under this section shall no longer apply.

d. Within [30] 10 days after the execution of a tax agreement, a municipality shall forward a copy of the agreement to the [Director of the Division of Local Government Services in the Department of Community Affairs,] chief financial officer of the county, and the county counsel.

(cf: P.L.2007, c.268, s.4)

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

21. The governing body of a municipality adopting an ordinance pursuant to this act shall report, on or before October 1 of each year, to the Director of the Division of Local Government Services in the Department of Community Affairs and to the Director of the Division of Taxation in the Department of the Treasury, the chief financial officer of the county, and the county counsel the total amount of real property taxes exempted and the total amount abated within the municipality in the current tax year for each of the following:

a. improvements of dwellings;

b. construction of dwellings;

c. improvements and conversions of multiple dwellings;

d. improvements of commercial or industrial structures;

e. construction of multiple dwellings under tax agreements; and

f. construction of commercial or industrial structures under tax agreements.

In the case of e. and f. above, the report shall state instead the total amount of payments made in lieu of taxes according to each formula utilized by the municipality, and the difference between that total amount and the total amount of real property taxes which would have been paid on the project had the tax agreement not been in effect, for the current tax year.

The Director of the Division of Taxation shall include a summary of the information provided in the annual reports in the annual report of the division.

(cf: P.L.1991, c.441, s.21)

5. This act shall take effect on the first day of the ninth month next following enactment.

STATEMENT

This bill encourages municipal governing bodies to give greater consideration to the costs and benefits likely to flow from their approval of a financial agreement that awards a long term tax exemption to an urban renewal entity. Additionally, the bill would require municipalities to provide information to certain county government officials when entering into tax agreements awarding a five-year tax exemption or abatement. The bill would also require the Department of Community Affairs (DCA) to create and maintain a database on its Internet website that displays information about long term tax exemptions that have been awarded by municipalities.

The bill requires an urban renewal entity’s application for a long term property tax exemption to contain a cost-benefit analysis of the project’s impact on the finances of the municipality, county, school district, and other taxing districts, within which the project is located. Under the bill, the mayor or other chief executive officer of the municipality is required to produce an independent cost-benefit analysis, and is required to submit both cost-benefit analyses to the municipal governing body at the time of submission of the urban renewal entity’s application to the municipal governing body for the governing body’s approval or disapproval of the application. The bill also requires a municipal governing body to include specific findings in a resolution approving or disapproving an application for a long term property tax exemption, which address the net impact of the project on the finances of the affected local governments, including the municipality, county, and school district.

This bill requires municipalities to consider and evaluate whether an investment in a redevelopment project through the grant of a long term property tax exemption will generate satisfactory revenue returns to the municipality, as well as the financial impacts to counties, school districts, and other local governments. Under the bill, the cost-benefit analyses and financial impact findings required for grants of long term property tax exemptions would have to be published on the Internet website of the granting municipality, excluding project specific information deemed to be proprietary by the parties involved. If the municipality does not have a website, this information would have to be provided for public inspection on the Internet website of DCA. This bill would also require the cost-benefit analyses and findings to be part of the public record. The cost-benefit analysis would not be required for an inclusionary development, as defined pursuant to subsection f. of section 4 of P.L.1985, c.222 (C.52:27D-304), that is part of a municipality’s compliance certification or a pending request for a compliance certification pursuant to the "Fair Housing Act," P.L.1985, c.222 (C.52:27D-301 et al.).

The bill requires municipalities that grant new long term property tax exemptions to provide pertinent information about each approved project to DCA. The bill directs DCA to publish that information, along with existing long term property tax exemption information retrieved from plain language budget summaries submitted to DCA, in a database, sorted by municipality, on its Internet website.

Finally, the bill amends the "Five-Year Exemption and Abatement Law" to require a municipality to forward a copy of a tax agreement awarding a five-year property tax exemption or abatement to the chief financial officer of the county and the county counsel, within 10 days of execution of the agreement. The bill also requires a municipal governing body to provide those county officials with the annual report of the total amount of real property taxes exempted and the total amount abated within the municipality. Current law requires municipalities to annually report this information to certain State government officials.