Manzo bills to reform tax abatements, exemptions clean Assembly committee

MANZO BILLS TO REFORM TAX ABATEMENTS, EXEMPTIONS
CLEAR ASSEMBLY COMMITTEE
Measures Would Help Jersey City Taxpayers, Property Owners

(TRENTON) - Two bills Assemblyman Louis Manzo sponsored to give municipalities like Jersey City an enhanced ability to spur redevelopment of blighted, vacant lots and ensure taxpayer accountability in tax abatement agreements were released today by an Assembly panel.

"These tax abatement reforms will give places like Jersey City an ability to create powerful new tools to combat blight while ensuring that local property taxpayers don't get financially squeezed," said Manzo (D-Hudson). "In Jersey City, where nearly 25 percent of property is tax abated, there is a massive need to pull in the reins on runaway abatements."

One measure (A-1275) would revamp state law governing long-term tax exemptions to enhance municipal and state oversight.  Due to the way municipal and school aid figures are calculated, an over-reliance on long-term tax exemptions can lead to decreased state funding and inadvertently push more of a municipalities' property tax burden onto middle and working class households.

Manzo's bill would amend the state's "Long Term Tax Exemption Law" to:

• Reduce the duration of the tax exemption period from 35 consecutive years to 10 cumulative years;
• Require the state Treasurer to approve any longer term exemption, not to exceed 20 cumulative years, when needed to secure project financing;
• Prohibit the transfer of the tax exemption to a purchaser of the project, unless the purchaser applies for, and is granted, a continuation of the tax exemption by the municipality;
• Require a municipality to adopt a comprehensive oversight and enforcement program, including penalties, to encourage full compliance with the terms of a financial agreement;
• Empower the state Treasurer to supervise municipal oversight responsibilities and apply penalties to non-compliant municipalities; and
• Allow a surcharge to be assessed on each financial agreement for the funding of the municipal and state oversight functions created by the provisions of the bill.

"Tax exemptions can be a vital tool to reenergizing our cities, but we must ensure they do not cause more problems than they can cure," said Manzo. "These reforms are necessary to ensure that cities are not fiscally handcuffed by policies that lead to new development, but have the harsh side-effect of pushing more of the property tax burden onto working families."

The other Manzo bill (A-1262) would authorize urban aid-eligible municipalities - including Jersey City - to adopt by ordinance programs to encourage the development of vacant properties by declaring them "vacant areas in need of rehabilitation."

The program would require a municipal tax assessor to assess all "vacant areas in need of rehabilitation" by October 1 of the year of the enabling ordinance's adoption and every following five years until the property is developed.  The ordinance would provide for a tax abatement on any structure built on a designated vacant lot for the balance of the current tax year and the two tax years after construction; the abatement would be equal to the difference between the amount of taxes paid before and after the first assessment ordered by the ordinance.

"It has become an all-to-common practice for land speculators to purchase property for future development but never actually begin construction," said Manzo.  "While such practices may be lucrative for landowners, they are detrimental to the economic and social well being of our cities.  Carefully crafted tax incentives can reverse this problem."

The bills were released by the Assembly Housing and Local Government Committee by identical votes of 3-1 with one abstention.  They now head to the Assembly Appropriations Committee for further considerations.

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