New Jersey-2014-A4004-Amended

An Act concerning incentives to build new housing in Atlantic City and supplementing P.L.1983, c.530 (C.55:14K-1 et seq.).

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

1. This act shall be known and may be referred to as the "Atlantic City Growth Tax Credit Program."

2. The Legislature finds and declares:

a. The City of Atlantic City was recognized as a unique area in New Jersey when casino gaming was authorized by a Statewide public question approved in 1976.

b. For several decades casino gaming flourished in Atlantic City and supported much of the city's economy and property tax base.

c. With the development of casino gaming competition from every nearby state, the revenues from Atlantic City casino gaming began falling in 2007, resulting in a rapid devaluation of casino gaming property.

d. The devaluation of casino properties resulted in lower assessments for property tax purposes, thereby shifting the municipal property tax burden onto other Atlantic City property taxpayers and the county property tax burden onto other Atlantic County municipalities.

e. Nearly three-quarters of the residents of Atlantic City are tenants, meaning that the population of homeowners is relatively small.

f. The shifting of the property tax burden from the gaming and other commercial sector onto the residential sector causes a substantial hardship especially for homeowners.

g. One way to ameliorate the burden of rapidly rising property taxes on homeowners is to expand the pool of residential property taxpayers.

h. Atlantic City is plagued by an abundance of abandoned and vacant properties on which little or no property taxes are collected.

i. It is a worthwhile goal to increase home ownership in Atlantic City to a level where at least half of residents are homeowners.

j. The New Jersey Housing and Mortgage Finance Agency, under subsection t. of section 5 of P.L.1983, c.530 (C.55:14K-5) has been specifically charged with assessing and addressing the housing needs in Atlantic City when planning its programs.

k. It is in the public interest to reverse the erosion of Atlantic City's residential property tax base by providing incentives to private developers in order to encourage the construction of housing that will attract new homeowners to Atlantic City and thereby increase its residential property tax base.

3. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):

"Agency" means the New Jersey Housing and Mortgage Finance Agency.

"Allowed costs" means eligible developers' costs for land acquisition, demolition, capital improvements, engineering fees, and architectural fees to build an eligible project in the City of Atlantic City, as reviewed and approved by the agency.

"Credit" means the tax credit against business or income taxes permitted under the "Atlantic City Growth Tax Credit Program." "Director" means the Director of the Division of Taxation in the Department of the Treasury.

"Eligible developer" means a developer intending to build an eligible project within the boundaries of the City of Atlantic City.

"Eligible project" means a project to be located within the boundaries of the City of Atlantic City and (1) consisting of, or including at least, eight newly constructed units, contiguous or otherwise, of residential housing, which may be single-family homes, townhouses, condominiums, duplexes, or any combination thereof; (2) that is at least 80 percent owner-occupied with no more than 20 percent of the housing units leased as market-rate rental housing; (3) that is no more than eight stories in height; and (4) for which an eligible developer controls, or has contracted to control, all of the property within the project prior to applying for a tax credit under section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

4. a. The New Jersey Housing and Mortgage Finance Agency, in cooperation with the Director of the Division of Taxation in the Department of the Treasury, shall establish the "Atlantic City Growth Tax Credit Program" for the purpose of providing eligible developers with a tax credit ¹[of up] equal¹ to 80 percent of the eligible developer's ¹allowed¹ costs for land acquisition, ¹demolition,¹ capital improvements, engineering fees, and architectural fees to build eligible projects in the City of Atlantic City.

b. (1) An eligible developer shall apply for a tax credit for allowed costs related to an eligible project on forms promulgated by the agency.

(2) The agency shall review an application and shall approve it if it finds that the developer and project are eligible under ¹[section 3 of]¹ P.L. , c. (C. ) (pending before the Legislature as this bill). The agency may require an eligible developer to submit additional information that it deems necessary for its determination.

c. (1) (a) Upon the completion of an eligible project, an eligible developer shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) ¹or the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., as applicable,¹ in an amount equal to 80 percent of the eligible developer's ¹allowed¹ costs paid or incurred for land acquisition, ¹demolition,¹ capital improvements, engineering fees, and architectural fees to build eligible projects in the City of Atlantic City during the privilege period ¹or taxable year¹. Any unused credit may be carried forward for use in any of the next seven privilege periods ¹or taxable years¹ following the privilege period ¹or taxable year¹ for which the credit is initially allowed. Credits shall be transferable in accordance with regulations adopted by the Division of Taxation in the Department of the Treasury pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill ¹)¹.

(b) The total tax credits awarded to an eligible developer under this section shall be in an amount equal to 80 percent of the eligible developer's ¹allowed¹ costs paid or incurred for land acquisition, ¹demolition,¹ capital improvements, engineering fees, and architectural fees to build eligible projects in the City of Atlantic City during the privilege period ¹or taxable year¹. Any unused credit may be carried forward for use in any of the next seven privilege periods ¹or taxable years¹ following the privilege period ¹or taxable year¹ for which the credit is initially allowed.

(c) Except as otherwise provided in this section, the order of priority of the application of the credit allowed pursuant to this subsection and any other credits allowed by law shall be as prescribed by the director.

(2) (a) An eligible developer that is classified as a partnership for federal income tax purposes shall not be allowed a credit ¹under this section¹ directly, but the amount of credit of a taxpayer with respect to a distributive share of entity income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the eligible developer entity that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the entity for its taxable year ending within or with the taxpayer's taxable year.

(b) A New Jersey S Corporation shall not be allowed a credit ¹under this section¹ directly, but the amount of credit of a taxpayer with respect to a pro rata share of S Corporation income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the New Jersey S Corporation that is equal to the taxpayer's share, whether or not distributed, of the total pro rata share of S Corporation income of the New Jersey S Corporation for its privilege period ending within or with the taxpayer's taxable year.

d. The agency may revoke tax credits awarded pursuant to this section if it finds that a developer no longer meets the requirements of being an eligible developer.

e. The ¹["Atlantic City Tax Credit Growth Program"] agency¹ shall ¹[expire] not accept applications for eligibility under the program after January 1, 2020, or after the date¹ upon ¹[a determination by] which¹ the agency ¹determines¹ that the proportion of renters to homeowners in the City of Atlantic City has declined to ¹at least¹ 50 percent ¹, whichever date occurs first¹.

f. A decision on any application permits or approvals required under the "Coastal Area Facility Review Act," P.L.1973, c.185 (C.13:19-1 et seq.) for eligible projects under this section shall be considered by the reviewing authority within 30 days of the receipt of the application.

g. The agency shall provide low interest mortgage opportunities to the buyer of a unit developed under the "Atlantic City Growth Tax Credit Program" in a manner consistent with regulations adopted pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill).

5. No more than 180 days from the date of the enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), the ¹New Jersey Housing and Mortgage Finance Agency, in consultation with the¹ Division of Taxation in the Department of the Treasury shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations as may be necessary for the implementation of P.L. , c. (C. ) (pending before the Legislature as this bill). ¹The division shall also adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations concerning the transferability of tax credits pursuant to subparagraph (a) of paragraph (1) of subsection c. of section 4 of P.L. ,c. (C. ) (pending before the Legislature as this bill).¹

6. On or before June 1, 2019, the ¹New Jersey Housing and Mortgage Finance Agency, in consultation with the¹ Director of the Division of Taxation in the Department of the Treasury, in accordance with section 2 of P.L.1991, c.164 (C.52:14-19.1), shall deliver a report to the Legislature concerning the results of the Atlantic City Growth Tax Credit Program established pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill). The report provided to the Legislature shall include a description of all credit awards made under the program and the current status of each project. The report shall also include recommendations concerning the continuation or dissolution of the "Atlantic City Growth Tax Credit Program."

7. This act shall take effect immediately ¹[and shall expire on January 1, 2020]¹.