Bill Text: NJ A4068 | 2014-2015 | Regular Session | Introduced
Bill Title: Establishes appraisal method for taxation of watershed lands.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced - Dead) 2015-01-12 - Introduced, Referred to Assembly State and Local Government Committee [A4068 Detail]
Download: New_Jersey-2014-A4068-Introduced.html
Sponsored by:
Assemblywoman BETTYLOU DECROCE
District 26 (Essex, Morris and Passaic)
SYNOPSIS
Establishes appraisal method for taxation of watershed lands.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the taxation of property used for the protection of a public water supply, supplementing chapter 4 of Title 54 of the Revised Statutes, and amending R.S.54:4-3.3.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) The Legislature finds and declares that:
The protection of water supplies, especially public water supplies serving large segments of the State's population, is necessary to protect and promote the public health, safety, and welfare.
Protecting watershed lands is an important element in any governmental strategy to preserve the quality and quantity of public water supplies.
Various State and local initiatives, programs, and declarations of intent indicate a common objective that the sale and development of watershed lands, contributing to the protection of public water supplies, should be significantly restricted.
The courts of the State traditionally take into account governmental action that restricts the uses of land when determining the assessed value of real property for taxation in order to implement the State's policy that a parcel of real property be valued in the context of an arms-length sales transaction and in accordance with the requirements of Article VIII, section I, paragraph 1 of the State Constitution, requiring that property be assessed for taxation by uniforms rules and pursuant to the same standard of value.
The courts of the State have heretofore recognized that there are essentially three types of appraisal methods appropriate for the evaluation of real property for taxation--the sales comparison approach, capitalization of income, and replacement cost.
The courts, while cautioning that often more than one method may be needed or utilized in the appraisal of a parcel of real property, have also recognized that each of those three appraisal methods may be used as a primary, though not necessarily exclusive, approach for determining the value of a particular type of real property for taxation purposes.
It is appropriate to consider watershed lands in the same or similar manner as income producing property.
Whether or not watershed lands are owned by the State, a political subdivision of the State, such as a county or municipality, or a non-profit entity, and notwithstanding if the property is restricted from development, it is appropriate for the tax assessor to determine that the highest and best use of those lands is for the provision and sale of water and for the protection of the water supply, and to employ the appraisal method involving the capitalization of the actual or potential income from those watershed lands to determine the assessed valuation thereof for tax purposes.
2. (New section) As used in P.L. , c. (C. ) (pending before the Legislature as this bill):
"Tax assessor" means an individual appointed pursuant to N.J.S.40A:9-146 as the tax assessor of a municipality in which watershed lands are located.
"Watershed land" means any land that is held and utilized by the State, a public or commercial authority or commission, any county or municipality, county or municipal utilities authority, county or municipal commission, municipal water district, joint meeting, or other local government entity for the purposes of providing and protecting a public water supply.
3. (New section) a. In any case where limits or restrictions have been placed upon the sale or development of watershed lands, including watershed lands owned by a local government entity, by operation of law, rule, regulation, order of the State, county or municipal ordinance or resolution, or covenant expressing the intent of the owner of watershed lands to restrict the sale or development thereof, the tax assessor may determine that the highest and best use of those lands is for the provision and sale of water and for the protection of the water supply. In accordance with such a determination, the tax assessor, in determining the assessed valuation of the watershed lands for taxation purposes, may employ the capitalization of income approach as the primary appraisal method based upon the sale of water.
b. In deriving an appropriate economic rent equivalent of watershed lands for the purpose of capitalizing an income stream, the tax assessor may take into account income streams of comparable water supply operations, whether publicly or privately owned, including lands owned by a public utility, and regardless of the status thereof with respect to regulation by any State department, board, commission, agency, or entity. Such data may be used in determining the economic rent equivalent of watershed lands for which the owner fails to submit income data to the tax assessor pursuant to the requirements of subsection c. of this section.
c. Every owner of watershed lands shall, on or before September 1 of each year, submit to the tax assessor of the municipality in which those lands are located current and historical income data, as the tax assessor shall require, with respect to the provision and sale of water obtained from or protected by those watershed lands. The provisions of R.S.54:4-34 shall apply to watershed lands, whether or not the owner occupies or utilizes the property. The income generated by reservoirs in the watershed shall deem the watershed lands income producing properties. The revenue of the reservoirs that the watershed lands support shall be reported as income information.
4. R.S.54:4-3.3 is amended to read as follows:
54:4-3.3. Except as otherwise provided by article 1 of this chapter (s.54:4-1 et seq.), the property of the State of New Jersey; and the property of the respective counties, school districts and taxing districts used for public purposes, or for the preservation or exhibit of historical data, records or property; school district property which is leased to a nonprofit organization which is exempt from taxation under R.S.54:4-3.6, for use by that organization in its exempt functions; school district property which is leased to another board of education or governmental agency; and property acquired by any municipality through tax title foreclosure or by deed in lieu of foreclosure, if not used for private purpose, shall be exempt from taxation under this chapter, but this exemption shall not include real property bought in for debts or on foreclosure of mortgages given to secure loans out of public funds or out of money in court, which property shall be taxed unless devoted to public use. The lands of counties, municipalities, and other municipal and public agencies of this State used for the purpose and for the protection of a public water supply shall be subject to taxation by the respective taxing districts where situated, at the taxable value thereof, [without regard to any buildings or other improvements thereon, in the same manner and to the same extent as the lands of private persons, but all other property so used shall be exempt from taxation] which shall include the value of the land based on the land's highest and best use as part of an integrated water supply and consistent with section 4 of P.L.1940, c.5 (C.54:30A-52). The land's valuation shall not be reduced as a result of the "Highlands Water Protection and Planning Act," P.L.2004, c.120 (C.13:20-1 et seq.), payments of watershed moratorium offset aid pursuant to section 1 of P.L.1999, c.225 (C.58:29-8), or government easements that restrict the use of watershed lands for the purposes of providing and protecting a public water supply. Property, the title to which is in the Morris Canal and Banking Company, in trust for the State, shall, so long as the title is so vested, be deemed to be the property of the State within the meaning of any tax law.
(cf: P.L.1983, c.262, s.1)
5. This act shall take effect immediately, and shall be applicable to assessments and taxes for the next tax year beginning on January 1; provided that the next tax year begins not fewer than 90 days next following enactment.
STATEMENT
This bill would establish an appraisal method for the taxation of watershed lands. Watershed lands are lands held and utilized by the State, a public or commercial authority or commission, any county or municipality, county or municipal utilities authority, county or municipal commission, municipal water district, joint meeting, or other local government entity for the purpose of providing and protecting a public water supply.
Under this bill, the tax assessor of a municipality containing watershed lands may determine that the highest and best use of those lands is for the provision and sale of water and for the protection of the water supply. The bill applies to watershed lands, including watershed lands owned by a local government entity, regardless of whether limits or restrictions have been placed upon their sale or development by operation of law, rule, regulation, order of the State, county or municipal ordinance or resolution, or covenant expressing the intent of the owner of watershed lands to restrict the sale or development thereof. Upon determining that the highest and best use of watershed lands is for the provision and sale of water and for the protection of the water supply, the tax assessor is authorized to employ the capitalization of income approach as the primary appraisal method.
The bill further provides that, in deriving an appropriate economic rent equivalent of watershed lands for the purpose of capitalizing an income stream for the sale of water, the tax assessor may take into account the market income streams of comparable water supplies. Such data may also be used in determining the economic rent equivalent of watershed lands for which the owner fails to submit income data to the tax assessor pursuant to the requirements of this bill. The bill requires every owner of watershed lands to submit to the tax assessor of the municipality in which those lands are located current and historical income data with respect to the provision and sale of water obtained from or protected by the watershed lands on or before September 1. Additionally, a tax assessor may require an owner to provide a full and true account his real property and the income therefrom, pursuant to R.S.54:4-34.
