TRENTON – Aiming to ensure municipal bodies are giving greater consideration to the long-term costs and benefits of financial agreements in which a long term tax exemption is proposed, the Senate Community and Urban Affairs Committee advanced legislation sponsored by Senator Troy Singleton that would require a process of cost-benefit analyses before a municipal governing body can approve or disapprove an application for a long term tax exemption.

“The granting of long term tax exemptions are a useful tool for local governments, allowing them to make an unfeasible project feasible, build more affordable housing, and reinvigorate distressed communities,” said Senator Singleton (D-Burlington), Chair of the Senate Community and Urban Affairs Committee. “Despite their usefulness, it is important for a municipality to truly examine the impact on their finances, and carefully weigh the potential benefits and the costs. Requiring such analyses be conducted beforehand will make municipalities better prepared to make such a decision, and benefit the financial stability of our local governments in the long term.”

The bill, S-4069, would require an urban renewal entity’s application for a long term property tax exemption to contain a cost-benefit analysis of the project’s impact on the finances of the municipality, county, school district, and other taxing districts within which the project is located. In consideration of the role of such long-term tax exemptions for enabling the construction of affordable housing, this requirement would not apply to inclusionary developments. The mayor or chief executive officer of the municipality would additionally be required to produce an independent cost-benefit analysis, and both would be required to be submitted to the governing body of a municipality before the approval or disapproval of the application. In a resolution approving or disapproving an application, a municipality would also be required to include specific findings which address the net impact of the project on the finances of the affected local governments.

The Department of Community Affairs (DCA) would be tasked with publishing a database of long term tax exemptions, sorted by municipality, on its website. Municipalities would be required to submit pertinent information about each long term tax exemption that is granted to the DCA to maintain this database. Finally, the bill would additionally require that municipalities submit a copy of any tax agreement awarding a five-year property tax exemption or abatement to county officials within 10 days of execution of the agreement.

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