Bill Text: NJ S2254 | 2010-2011 | Regular Session | Introduced
Bill Title: Requires municipality to report all long and short-term financial and tax agreements to DCA; makes reporting a condition for receipt of special Municipal Aid.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2010-09-13 - Introduced in the Senate, Referred to Senate Community and Urban Affairs Committee [S2254 Detail]
Download: New_Jersey-2010-S2254-Introduced.html
Sponsored by:
Senator THOMAS H. KEAN, JR.
District 21 (Essex, Morris, Somerset and Union)
SYNOPSIS
Requires municipality to report all long and short-term financial and tax agreements to DCA; makes reporting a condition for receipt of Special Municipal Aid.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning municipal financial and tax agreements and amending P.L.1991, c.431, P.L.1991, c.441, and P.L.1987, c.75.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. 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.
Upon the adoption of a financial agreement pursuant to P.L.1991, c.431 (C.40A:20-1 et seq.), a certified copy of the ordinance of the governing body approving the tax exemption and the financial agreement with the urban renewal entity shall forthwith be transmitted to the Director of the Division of Local Government Services. The division shall list information from the transmitted financial agreements on a dedicated page of its Internet site, by owner, block and lot, assessment, amount if taxed under the general tax rate, amount of property taxes actually billed and payable, and amount of any payment in lieu of taxes.
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 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.
a. The duration of the exemption for urban renewal entities shall be as follows: for all projects, a term 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.
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 shall remit a portion of that revenue to the county 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 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% in the case of a low and moderate income housing project, nor less than 10% 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 2% in the case of a low and moderate income housing project, and shall not be less than 2% 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 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% 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% 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% 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% 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, or less than 35 years from the execution of the financial 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.
Each municipality which 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 5 percent of the annual service charge to the county upon receipt of that charge in accordance with the provisions of this section.
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.
d. The municipal assessor shall annually provide to the Director of the Division of Local Government Services in the Department of Community Affairs information regarding every long-term tax agreement in effect within the municipality so that the director can list that information on a dedicated page of the division's Internet website by owner, block and lot, term of agreement, assessment, amount if taxed under the general tax rate, amount of property taxes actually billed and payable, and amount of any payment in lieu of taxes.
(cf: P.L.2003, c.125, s.11)
2. 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 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 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. The director shall provide copies of all short-term tax agreements to the Division of Taxation in the Department of the Treasury.
e. The municipal assessor shall annually provide to the Director of the Division of Taxation in the Department of the Treasury information regarding every short-term tax agreement in effect within the municipality so that the director can list that information on a dedicated page of the division's Internet website by owner, block and lot, term of agreement, assessment, amount if taxed under the general tax rate, and amount of property taxes actually billed and payable.
(cf: P.L.2007, c.268, s.4)
3. Section 5 of P.L.1987, c.75 (C.52:27D-118.28) is amended to read as follows:
5. Whenever the director, during the exercise of the director's duty under the provisions of the "Local Budget Law," N.J.S.40A:4-1 et seq., to examine each local budget, or upon the basis of any other information and data available to the director, shall find that an eligible municipality is experiencing fiscal distress and may require assistance under P.L.1987, c.75 (C.52:27D-118.24 et seq.), the director shall notify the Local Finance Board of the director's finding. The director's finding of fiscal distress in an eligible municipality may be based on the municipality's tax rate, cash deficit, insufficient percentage of tax collections, insufficient collection of other revenues, over-anticipation of the revenues of prior years, non-liquidation of interfund transfers, reliance on emergency authorizations, continual rollover of tax anticipation notes, or other factors indicating a constrained ability to raise sufficient revenues to meet its budgetary requirements.
At a time and place determined by the director, the governing body of the eligible municipality, and any other interested parties the director may deem appropriate, shall meet to review the implementation of the provisions of P.L.1987, c.75 (C.52:27D-118.24 et seq.). The review shall include, but not be limited to:
a. The director's assessment of the difference between the eligible municipality's revenue needs for the current local budget year and its revenue raising capacity for the current local budget year;
b. The actions the governing body of the eligible municipality intends to take in the current local budget year to meet the municipality's revenue needs; [and]
c. The actions the governing body intends to take to expand the eligible municipality's local revenue generating capacity for subsequent local budget years; and
d. The director's confirmation that copies of all financial and tax agreements entered into by the municipality pursuant to section 9 of P.L.1991, c.431 (C.40A:20-9) and sections 9 through 12 of P.L.1991, c.441 (C.40A:21-9 through 40A:12-12) have been provided to the director, arranged by owner, block and lot, term of agreement, assessment amount if taxed under the general tax rate, amount of property taxes actually billed and payable, and amount of any payment in lieu of taxes.
After the review has taken place, the director shall notify the board of the findings of the review and shall recommend to the board actions necessary to be taken by the municipality, which may include the provision of short-term financial aid.
(cf: P.L.1999, c.156, s.3)
4. This act shall take effect immediately.
STATEMENT
This bill provides that upon the adoption of a financial agreement pursuant to the "Long Term Tax Exemption Law," P.L.1991, c.431 (C.40A:20-1 et seq.), or the "Five-Year Exemption and Abatement Law," P.L.1991, c.441 (C.40A:21-1 et seq.), the Division of Local Government Services in the Department of Community Affairs shall list information about each tax exemption agreement, updated with annual reports by municipal assessors, on a dedicated page of its Internet website, by owner, block and lot, term of agreement, assessment, amount if taxed under the general tax rate, amount of property taxes actually billed and payable, and amount of any payment in lieu of taxes.
The bill provides that when the Director of the Division of Local Government Services in the Department of Community Affairs reviews the implementation of the provisions of the "Special Municipal Aid Act," P.L.1987, c.75 (C.52:27D-118.24 et seq.), the director shall confirm that copies of all financial and tax agreements entered into by the municipality have been submitted. Under the bill, a municipality that has not complied with the reporting requirements of this bill would not be eligible to receive aid under the "Special Municipal Aid Act."
