NJ Senate Passes Long Term Tax Exemption Bill

The New Jersey Senate recently passed legislation that would make significant changes to the state’s long term tax exemption law. Notably, the bill would require applicants and municipalities to prepare cost-benefit analyses regarding the impact of a proposed long term property tax exemption.

NJ Senate Passes Long Term Tax Exemption Bill

The bill (S-1991) would specifically require a payment in lieu of taxes (PILOT) application to include a cost-benefit analysis and for the mayor or other chief executive officer of the municipality to produce an independent cost-benefit analysis to be submitted along with the application to the municipal governing body before it can decide on the exemption.  The bill would also require municipalities to include in any resolution approving or disapproving of a project for which a long term tax exemption is sought specific findings about the net impact of the project on the finances of the affected local governments, including the municipality, county, and school district.

According to the statement accompanying S- 1991, the goal is to “ensure that municipalities 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, and would allow the public to do the same by making the required cost-benefit analyses and findings part of the public record.”

Senate Floor Amendments

The Senate made several changes to bill prior to final passage. Specifically, the final bill requires cost-benefit analyses and financial impact findings be posted on the Internet website of the granting municipality. If the municipality does not have a website, this information would have to be provided for public inspection on the Internet website of the Department of Community Affairs (DCA).

The floor amendments would also require municipalities that grant new long term property tax exemptions to provide pertinent information about each approved project to DCA, which would post 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.

The New Jersey League of Municipalities opposes the proposed PILOT program changes, stating that they “will increase the municipal cost of processing such applications and limit municipal discretion in determining the relevant factors in the decision making process.” The State Assembly will now consider the bill. We will continue to monitor the progress of the legislation and post updates as they become available.

For more information about the tax exemption bill or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

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