[Adopted 10-23-2003 by Ord. No. 13-03]
The governing body of the Borough of Clayton is hereby authorized
to enter into tax agreements for an exemption and abatement from taxation
of improvements and new construction of commercial structures and
industrial structures in accordance with the procedures set forth
in this article.
Applicants for tax exemption and abatement for improvements
and/or new construction of commercial structures and industrial structures
pursuant to this article shall provide the governing body of the Borough
of Clayton with an application setting forth the following information:
A.
A general description of a project for which exemption and abatement
is sought.
B.
A legal description of all real estate necessary for the project.
C.
Plans, drawings and other documents as may be required by the governing
body to demonstrate the structure and design of the project.
D.
A description of the number, classes and type of employees to be
employed at the project site within two years of completion of the
project.
E.
A statement of the reasons for seeking tax exemption and abatement
on the project and a description of the benefits to be realized by
the applicant if a tax agreement is granted.
F.
Estimates of the cost of completing such project.
G.
A statement showing the real property taxes currently being assessed
at the project site; estimated tax payments that would be made annually
by the applicant on the project during the period of the agreement;
and estimated tax payments that would be made by the applicant on
the project during the first full year following the termination of
the tax agreement.
H.
A description of any lease agreement between the applicant and proposed
users of the project and a history and description of the user's businesses.
I.
Such other pertinent information as the governing body may require
on a case-to-case basis.
The governing body of the Borough of Clayton may enter into
a written agreement with an applicant for the exemption and abatement
of local property taxes. The agreement shall provide for the applicant
to pay the municipality in lieu of full property taxes an amount equal
to a percentage of taxes otherwise due according to any one, but in
no case a combination, of the following formulas authorized by N.J.S.A.
40A:21-10:
A.
Cost basis. The agreement may provide for the applicant to pay to
the municipality in lieu of full property tax payments an amount equal
to 2% of the cost of the project or improvement. For the purposes
of the agreement, the "cost of the project" means only the cost or
fair market value of director labor and all materials used in the
construction, expansion or rehabilitation of all buildings, structures
and facilities at the project site, including the costs, if any, of
land acquisition and land preparation, provision of access roads,
utilities, drainage facilities and parking facilities, together with
architectural, engineering, legal surveying, testing and contractors'
fees associated with the project, which the applicant shall cause
to be certified and verified to the governing body by an independent
and qualified architect following the completion of the project.
B.
Gross revenue basis. The agreement may provide for the applicant
to pay to the municipality in lieu of full property tax payments an
amount annually equal to 15% of the annual gross revenues from the
project. For the purposes of the agreement, "annual gross revenues"
means the total annual gross rental and other income payable to the
owner of the project from the project. If, in any leasing, any real
estate taxes or assessments on property included in the project, any
premiums for fire or other insurance on or concerning property included
in the project, or any operating or maintenance expenses ordinarily
paid by the landlord are to be paid by the tenant, then those payments
shall be computed and deemed to be part of the rent and shall be included
in the annual gross revenue. The tax agreement shall establish the
method of computing the revenues and may establish a method of arbitration
by which either the landlord or tenant may dispute the amount of payments
so included in the annual gross revenue.[1]
C.
Tax phase-in basis. The agreement may provide for the applicant to
pay to the municipality in lieu of full property tax payments an amount
equal to a percentage of taxes otherwise due, according to the following
schedule:
(1)
In the first full tax year after completion, no payment in lieu of
taxes otherwise due.
(2)
In the second tax year, an amount not less than 20% of taxes otherwise
due.
(3)
In the third tax year, an amount not less than 40% of taxes otherwise
due.
(4)
In the fourth tax year, an amount not less than 60% of taxes otherwise
due.
(5)
In the fifth tax year, an amount not less than 80% of taxes otherwise
due.
A.
The Assessor shall determine on October 1 of the year following the
date of the completion of an improvement, conversion or construction
the true taxable value thereof. Except for projects subject to a tax
agreement pursuant to this article, the amount of the tax to be paid
for the first full tax year following completion shall be based on
the assessed valuation of the property for the previous year, minus
the amount of the abatement and/or exemption, if any, allowed pursuant
to this article, plus any portion of the assessed valuation of the
improvement, conversion or construction not allowed an exemption pursuant
to this article.
B.
All tax agreements entered into pursuant to this article shall be
in effect for no more than the five full tax years next following
the date of completion of the project. This article shall not preclude
the governing body from entering into a financial agreement for a
tax exemption and/or abatement pursuant to the Long Term Tax Exemption
Law[1] or any other statute authorizing a tax exemption and/or
abatement for a period longer than five years.[2]
C.
As a condition to granting an exemption or abatement, a property
owner shall be required to waive the filing of any tax appeal for
the subject property for the life of the exemption/abatement.
The Clerk of the Borough of Clayton, pursuant to N.J.S.A. 40A:21-11
shall forward a copy of all tax agreements entered into pursuant to
this article to the Director of the Division of Local Government Services
in the Department of Community Affairs within 30 days of the date
of execution.
If during any tax year prior to the termination of the tax agreement
the property owner ceases to operate or disposes of the property or
fails to meet the conditions for qualifying for the abatement, the
local property taxes due for all the prior years subject to abatement
and for the current year shall be payable as if no exemption or abatement
had been granted. The Tax Collector of the Borough of Clayton shall
notify the property owner within 15 days of the date of disqualification
of the amount of taxes due. In the event that the subject property
has been transferred to a new owner and it is determined that the
new owner will continue to use the property pursuant to the qualifying
conditions, no tax shall be due, the exemption and abatement shall
continue and the agreement shall remain in effect.
The Borough of Clayton hereby determines that an additional
improvement, conversion or construction completed on a property already
granted a previous exemption or abatement pursuant to this article
during the period in which the previous exemption or abatement is
in effect shall qualify for an additional exemption or abatement.
The additional improvement, conversion or construction shall be considered
as separate for purposes of calculating the exemption and abatement,
except that the assessed value of any previous improvement, conversion
or construction shall be added to the assessed valuation as it was
prior to that improvement, conversion or construction for the purpose
of determining the assessed value of the property for which any additional
abatement is to be subtracted.
No exemption or abatement shall be granted or tax agreement
entered into pursuant to this article for any property for which property
taxes and/or other municipal charges are delinquent or remain unpaid
or for which penalties for nonpayment of taxes are due. As a condition
to granting an exemption or abatement, a property owner shall be required
to waive the filing of any tax appeal for the subject property for
the life of the exemption/abatement.
Every application submitted pursuant to this article shall be
on a form prescribed by the Director of the Division of Taxation and
shall be filed with the Tax Assessor of the Borough of Clayton, as
a condition to approval, within 30 days, including Saturdays and Sundays,
following the completion of the improvements, conversion or construction.
At the termination of an agreement for tax abatement or exemption
authorized pursuant to this article, the project shall be subject
to all applicable real property taxes, as provided by state laws and
regulations and local ordinances, provided that nothing herein shall
be deemed to prohibit the project or improvement at the termination
of the agreement for tax exemption or abatement from qualifying for
and receiving the full benefits of any other tax preference provided
by law.
This article shall take effect immediately following final passage,
adoption and publication according to law and, upon adoption, authorizes
the Borough of Clayton to grant exemptions and abatements to commence
and take effect in the 2003 tax year and thereafter.
