[Adopted 11-24-2008 by Ord. No. 20-2008;[1] as amended in its entirety 5-16-2011 by Ord. No. 13-2011; and as readopted 5-30-2023 by Ord. No. 11-2023]
The Five-Year Exemption and Abatement Law, N.J.S.A. 40A:21-1
et seq., was enacted to consolidate the various five-year tax exemption
and abatement statutes enacted pursuant to Article VIII, Section 1,
Paragraph 6 of the New Jersey Constitution. The purpose of this article
sets forth the procedures to be followed by the City in consideration
of all applications for the exemption from or abatement of property
taxes, and in the administration of all tax exemption and/or abatement
agreements as are authorized by the City Council consistent with and
pursuant to the Five-Year Exemption and Abatement Law, N.J.S.A. 40A:21-1
et seq., as amended and supplemented from time to time. The intent
of said property tax exemptions and abatements is to induce construction
and rehabilitation of residential, industrial and commercial facilities
and to stabilize the economic base of the City.
A.
ABATEMENT
AREA IN NEED OF REHABILITATION
ASSESSOR
COMMERCIAL OR INDUSTRIAL STRUCTURE
COMPLETION
CONDOMINIUM
CONSTRUCTION
CONVERSION
COOPERATIVE
COST
DWELLING
EXEMPTION
HORIZONTAL PROPERTY REGIME
IMPROVEMENT
MULTIPLE DWELLING
As used in this article, the following terms shall have the following
meanings unless the context clearly indicates that a different meaning
is intended:
That portion of the assessed value of a property as it existed
prior to construction, improvement or conversion of a building or
structure thereon, which is exempted from taxation pursuant to applicable
state law.
A portion or all of a municipality which has been determined
to be an area in need of rehabilitation or redevelopment pursuant
to the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 et
seq.
The officer of a taxing district charged with the duty of
assessing real property for the purpose of general taxation.
A structure or part thereof used for the manufacturing, processing
or assembling of material or manufactured products, or for research,
office, industrial, commercial, retail, recreational, hotel or motel
facilities, or warehousing purposes, or for any combination thereof.
The governing body must determine that said structure will tend to
maintain or provide gainful employment within the municipality, assist
in the economic development of the municipality, maintain or increase
the tax base of the municipality, and maintain or diversify or expand
commerce within the municipality. It shall not include any structure,
or part thereof, used or to be used by any business relocated from
another qualifying municipality.
Substantially ready for the intended use for which a building
or structure is constructed, improved or converted.
A property created or recorded as a condominium pursuant
to the Condominium Act, N.J.S.A. 46:8B-1 et seq.
The provision of a commercial or industrial structure, a
new dwelling or multiple dwelling, or the enlargement of the volume
of any such structures by more than 30%. However, it shall not mean
the conversion of an existing building or structure to another use.
The alteration or renovation of a nonresidential building
or structure, hotel or motel, or motor hotel or guesthouse in such
a manner as to convert the building or structure from its previous
use to use as a dwelling or multiple dwelling.
A housing corporation or association wherein the holder of
a share or membership interest thereof is entitled to possess and
occupy for dwelling purposes a house, apartment or other unit of housing
owned by the corporation or association, or to purchase a unit of
housing owned by the corporation or association.
When used with respect to abatement for dwellings or multiple
dwellings, only the cost or fair market value of direct labor and
materials used in improving a multiple dwelling, or of converting
another building or structure to a multiple dwelling, or of constructing
a dwelling, or of converting another building or structure to a dwelling.
The cost shall include any architectural, engineering and contractors'
fees associated therewith, as the owner of the property shall cause
to be certified to the governing body by an independent and qualified
architect after completion of the project.
A building or part of a building used, to be used, or held
for use as a home or residence, including accessory buildings located
on the same premises together with the land upon which such buildings
are erected and which may be necessary for the fair enjoyment of the
property, but it shall not mean any building or part of a building
defined as a multiple dwelling pursuant to the Hotel and Multiple
Dwelling Law, N.J.S.A. 55:13A-1 et seq.
That portion of the Assessor's full and true value of any
improvement, conversion or construction not regarded as increasing
the taxable value of a property pursuant to applicable state law.
A property submitted to a horizontal property regime pursuant
to the Horizontal Property Act, N.J.S.A. 46:8A-1 et seq.
A modernization, rehabilitation, renovation, alteration or
repair which produces a physical change in an existing building or
structure that improves the safety, sanitation or attractiveness of
the building or structure as a place for human habitation or work
and which does not change its permanent use. In the case of a multiple
dwelling, it includes only improvements which affect common areas
or elements or three or more dwelling units within the multiple dwelling.
In the case of a multiple dwelling or commercial or industrial structure,
it shall not include ordinary painting, repairs and replacement of
maintenance items or an enlargement of the volume of an existing structure
by more than 30%. In no case shall it include the repair of fire or
other damage to a property for which payment of a claim was received
by any person from an insurance company at any time during the three-year
period immediately preceding the filing of an application for tax
exemption and abatement.
A building or structure meeting the definition of multiple
dwelling set forth in the Hotel and Multiple Dwelling Law, N.J.S.A.
55:13A-1 et seq. It means, for the purpose of improvement or construction,
the general common elements and common elements of a condominium,
a cooperative or a horizontal property regime.
B.
Any other words and phrases used in this article and not defined
above shall have the meanings set forth in N.J.S.A. 40A:21-3.
A.
Improvements to dwellings.
(1)
In determining the value of real property for purposes of an exemption from taxation of improvements to dwellings, the first $15,000 in assessor's full and true value of improvements for each dwelling unit primarily and directly affected by the improvement in any dwelling more than 20 years old shall be regarded as not increasing the value of the property for a period of five years, notwithstanding that the value of the property to which the improvements are made is increased thereby. During the exemption period, the assessment on the property shall not be less than the assessment thereon existing immediately prior to the improvements, unless an abatement is granted pursuant to Subsection A(2) of this section or there is damage to the dwelling through action of the elements sufficient to warrant a reduction.
(2)
Abatements for improvements to dwellings. In addition to providing
for an exemption for improvements to dwellings, an abatement may also
be provided of some portion of the assessed value of property receiving
the exemption as it existed immediately prior to the improvements,
as follows:
(a)
The annual amount of the abatement granted to any single property
shall be up to 30% of the annual amount of the exemption granted for
a total period of up to five years.
B.
Construction of new dwellings and conversion to dwellings.
(1)
In determining the value of real property for purposes of an exemption
from taxation of some portion of the assessed valuation of construction
of new dwellings or conversions of buildings and structures, including
unutilized public buildings to dwelling use, up to 25% of the Assessor's
full and true value for each new construction or conversion alteration
unit made shall be regarded as not increasing the value of the property
for a total period of up to five years, notwithstanding that the value
of the property upon which the new construction or conversion occurs
is increased thereby.
(2)
Abatements for construction of new dwellings and conversion to dwellings.
In addition to providing for an exemption of some portion of the assessed
valuation of construction of new dwellings or conversions of buildings
and structures, an abatement may also be provided of some portion
of the assessed value of the property receiving the exemption as it
existed immediately prior to the construction or conversion alteration
as follows:
(a)
The annual amount of the abatement granted to any single property
shall be up to 30% of the total cost of the construction or conversion
alteration for a total period of up to five years.
A.
In determining the value of real property for purposes of an exemption from taxation of improvements to multiple dwellings or of conversions of other buildings and structures, including unutilized public buildings, to multiple-dwelling use, or both, up to the Assessor's full and true value of the improvements or conversion alterations shall not be regarded as increasing the value of the property for a period of five years, notwithstanding that the value of the property to which the improvements or conversion alterations are made is increased thereby. During the exemption period, the assessment on the property shall not be less than the assessment thereon existing immediately prior to the improvements or conversion alterations, unless an abatement is granted pursuant to Subsection B of this section or there is damage to the multiple dwelling through action of the elements sufficient to warrant a reduction.
B.
Abatements for improvements to or conversion to multiple dwellings.
In addition to providing an exemption of some portion of the assessed
value of improvement or conversion alteration to a multiple dwelling
as it existed immediately prior to the improvement or conversion alteration,
an abatement may also be provided of some portion of the assessed
value of property receiving the exemption as it existed immediately
prior to the improvement or conversion alteration, as follows:
(1)
The annual amount of the abatement granted shall be up to 20% of
the total cost of the improvement or conversion alteration, and the
total number of abatements granted to any single property shall not
exceed the total cost of the improvement or conversion alteration.
The abatement shall be for a total period of up to five years.
A.
Exemptions for improvements to commercial or industrial structures.
In determining the value of real property for purposes of an exemption
from taxation of improvements to commercial or industrial structures,
up to the Assessor's full and true value of the improvements shall
not be regarded as increasing the value of the property for a period
of five years, notwithstanding that the value of the property to which
the improvements or conversion alterations are made is increased thereby.
During the exemption period, the assessment on the property shall
not be less than the assessment thereon existing immediately prior
to the improvements or conversion alterations, unless there is damage
to the multiple dwelling through action of the elements sufficient
to warrant a reduction.
B.
Authorization of exemptions on a case-by-case basis. Exemptions for
improvements to commercial or industrial structures shall only be
authorized on a case-by-case basis after review, evaluation and approval
of each application by the City Council.
A.
Application procedure for Five-Year Exemption and Abatement Law.
(1)
No exemption or abatement shall be granted pursuant to the Five-Year
Exemption and Abatement Law except upon written application filed
with and approved by the Assessor. Every application shall be on a
form prescribed by the Director of the Division of Taxation in the
Department of the Treasury of the State of New Jersey. Such form shall
be on file in the City of East Orange Tax Assessor's office. The form
shall be filed with the Assessor within 30 days, including Saturdays
and Sundays, following the completion of the improvement, conversion,
alteration or construction. The Assessor shall provide a copy of any
completed and approved application for new construction or conversion
alteration to the Tax Collector.
(2)
Every application for exemption for existing structures which does
not increase the volume of the structure by more than 30% and which
is filed within the time specified shall be approved and allowed by
the Assessor to the degree that the application is consistent with
the provisions of this article, and provided that the improvements
for which the application is made qualifies as an improvement pursuant
to the provision of this article. Each such determination by the Assessor
shall be made no later than 60 days of the filing of the application.
The granting of such exemption shall be recorded and made a permanent
part of the official tax records of the City, which record shall contain
a notice of the termination date thereof.
B.
Applications for exemptions and abatements on new construction of
dwellings, commercial or industrial structures or multiple dwellings
pursuant to N.J.S.A. 40A:21-9.
(1)
Applicants for tax exemption and abatement for new construction of
commercial or industrial structures or multiple dwellings shall provide
the Assessor with 12 copies of an application setting forth:
(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
City 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)
If the project is a commercial or industrial structure, a description
of any lease agreements between the applicant and proposed users of
the project, and a history and description of the users' businesses.
(i)
If the project is a multiple dwelling, a description of the
number and types of dwelling units to be provided, a description of
the common elements or general common elements, and a statement of
the proposed initial rentals or sales prices of the dwelling units
according to type and of any rental lease or resale restrictions to
apply to the dwellings units respecting low- or moderate-income housing.
(j)
Such other pertinent information as the governing body may require.
(2)
The application shall be distributed to and reviewed by the Mayor's
Tax Exemption and Abatement Committee, consisting of the City Council
Finance Committee, City Administrator, Tax Assessor, Tax Collector,
Director of Finance, Director of Policy, Planning and Development,
Director of Public Works, Director of Property Maintenance and Corporation
Counsel or their designees, within 45 days of receipt thereof.
Upon review, evaluation and approval of an application submitted in accordance with § 247-6B, the City shall enter into written agreements with the applicants for the exemption or exemption and abatement of local real property taxes for construction of commercial or industrial structures or multiple dwellings, or both. The agreement shall provide for the applicant to pay to the City in lieu of full property tax payments an amount annually to be computed by one, but in no case a combination, of the formulas set forth in N.J.S.A. 40A:21-10 and shall comply with the conditions set forth in N.J.S.A. 40A:21-11.
A.
Failure to meet qualifying conditions. 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, then the tax which would have otherwise been payable
for each tax year shall become due and payable from the property owner
as if no exemption and abatement had been granted. The City through
the Assessor shall notify the property owner and Tax Collector forthwith,
and the Tax Collector shall, within 15 days thereof, notify the owner
of the property of the amount of taxes due. However, with respect
to the disposal of the property, where it is determined that the new
owner of the property will continue to use the property pursuant to
the conditions which qualified the property, no tax shall be due,
the exemption and the abatement shall continue, and the agreement
shall remain in effect.
B.
Termination. At the termination of a tax agreement, a project shall
be subject to all applicable real property taxes as provided by state
law and regulations and local ordinances, but nothing herein shall
prohibit a project, at the termination of an agreement, from qualifying
for and receiving the full benefits of any other tax preferences provided
by law.
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 tax
agreement, pursuant to N.J.S.A. 40A:21-9 through 40A:21-12, the amount
of tax to be paid for the first full tax year in which the project
is completed shall be based on the assessed valuation of the property
for the current tax year, minus the amount of the abatement, if any,
allowed pursuant to the Five-Year Exemption and Abatement Law and
prorated, plus any portion of the assessed valuation of the improvement,
conversion or construction not allowed an exemption pursuant to the
Five-Year Exemption and Abatement Law, also prorated. Subject to the
provisions of this article, the property shall continue to be treated
in the appropriate manner for each of the four tax years subsequent
to the original determination by the Assessor and shall be prorated
for the final tax year in which the exemption or abatement expires.
This article provides that an additional improvement, conversion
or construction completed on a property granted a previous exemption
or abatement pursuant to this article and the Five-Year Exemption
and Abatement Law during the period in which such previous exemption
or abatement is in effect shall be qualified for an exemption, or
exemption and abatement, just as if such property had not received
a previous exemption or abatement. In such case, the additional improvement,
conversion or construction shall be considered as separate for the
purposes of calculating exemptions and abatements, pursuant to the
Five-Year Exemption and Abatement Law, 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,
alteration or construction for the purpose of determining the assessed
valuation of the property from which any additional abatement is to
be subtracted.
No exemption or abatement shall be granted or tax agreement
entered into pursuant to this article and the Five-Year Exemption
and Abatement Law with respect to any property for which property
taxes are delinquent or remain unpaid or for which penalties for nonpayment
of taxes are due. For purposes of this section, the existence of a
tax installment agreement shall not be considered. All taxes, penalties
and interest due and owing must be paid in full upon application.
The exemption and abatement of real property taxes provided
by the City pursuant to this article and the Five-Year Exemption and
Abatement Law shall apply to property taxes levied for municipal purposes,
school purposes, county government purposes and for the purposes of
funding any other property tax exemptions or abatements.
No application for tax exemption or abatement shall be accepted
by the municipality unless accompanied by full payment of the required
application fee as designated by the City.
A.
All projects subject to tax agreements 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.
B.
All improvements, conversions or construction contemplated by this
article shall, during construction and at completion, conform with
all statutory and municipal requirements relating to construction,
land, buildings and the use thereof.
Applications for exemptions and abatements from taxation may
be filed to take initial effect for the first full tax year commencing
after the tax year in which this article is adopted and for the tax
years thereafter as set forth herein. No application for exemptions
or exemptions and abatements shall be filed to take initial effect
for the 11th full tax year or thereafter, unless this article is readopted
by ordinance of the governing body.
The Five-Year Exemption and Abatement Law and this article may
be amended from time to time. Amendments to same shall not affect
any exemption, abatement or tax agreement previously granted and in
force prior to the amendment.
The City, with the assistance of the Mayor and the Assessor,
shall report, on or before October 1 of each year, to the Director
of the Division of Local Government Services in the Department of
Community Affairs and to the Director of the Division of Taxation
in the Department of the Treasury the total amount of real property
taxes exempted and the total amount abated within the City in the
current tax year for each of the following:
A.
Improvements of dwellings;
B.
Construction of dwellings;
C.
Improvements and conversions of multiple dwellings;
D.
Improvements of commercial or industrial structures;
E.
Construction of multiple dwellings under tax agreements; and
F.
Construction of commercial or industrial structures under tax agreements.
A.
The Tax Collector shall include the appropriate notice in the mailing
of annual property tax bills to each owner of a dwelling located in
an area in which exemptions, or exemptions and abatements, may be
allowed pursuant to this article during the first year following the
adoption of this article.
B.
In the case of § 247-17E and F as set forth above, the report shall state instead the total amount of payments made in lieu of taxes according to each formula utilized by the City, and the difference between that total amount and the total amount of real property taxes which would have been paid on the project had the tax agreement not been in effect, for the current tax year.
