Atlantic City, NJ Article IV Long-Term Tax Incentives

[Adopted 8-9-2006 by Ord. No. 64-2006; amended in its entirety 11-19-2014 by Ord. No. 66-2014]

§ 231-36 Intent and purpose.

A. It is the desire of the City to encourage and enhance rehabilitation, development, and redevelopment within the City of Atlantic City by allowing tax relief incentives to qualifying projects. The City intends that the construction of the projected improvements encouraged by these tax incentives will add employment opportunities for local residents, contracting opportunities for local businesses, stabilize and contribute to the economic growth of the local economy, result in long-term increased revenue to the City and further the rehabilitation or redevelopment objectives of the City.

B. To undertake a detailed, critical and consistent evaluation of all applications for tax exemptions submitted by a qualified urban renewal entity in accordance with N.J.S.A. 40A:20-1 et seq., or a qualified housing sponsor in accordance with N.J.S.A. 55:14K-1 et seq.

C. To insure that before an application receives an affirmative recommendation from the City Tax Exemption Committee, the applicant will have demonstrated that the project will secure clear social and/or economic benefits for the residents of the City, all in accordance with the Long Term Tax Exemption Law, as amended (N.J.S.A. 40A:20-1 et seq.), or the New Jersey Housing and Mortgage Finance Agency Law of 1983, as amended (N.J.S.A. 55:14K-1 et seq.), the rules promulgated thereunder (N.J.A.C. 5:80-1 et seq.), and all applicable guidelines.

D. To set forth the minimal requirements that must be satisfied to obtain an affirmative recommendation from the City Tax Exemption Committee. It also sets forth the procedures to be followed by City officials to evaluate applications and to administer financial agreements after they are approved.

§ 231-37 Definitions.

The definitions set forth in N.J.S.A. 40A:20-1 et seq., are incorporated herein by reference and shall have the same meaning. When used in this chapter, the following terms shall be defined as indicated:

AFFORDABLE HOUSING

Housing affordable to persons of low or moderate-low income as defined pursuant to the Fair Housing Act, N.J.S.A. 52:27D-301 et seq.

ANNUAL GROSS REVENUE

The total annual gross rental or carrying charge and other income, including but not limited to state and federal rental subsidies of a housing sponsor from a housing project owned by the applicant seeking a tax exemption pursuant to N.J.S.A. 55:14K-37.

APPLICANT

The developer seeking a tax exemption for the construction of a project or with respect to HMFA financed housing projects, the improvement thereof.

APPLICATION

All information as the governing body may require to be submitted by an applicant seeking a tax exemption.

CERTIFICATE OF OCCUPANCY

Any certificate issued pursuant to N.J.S.A. 52:27D-133, whether temporary or permanent.

CERTIFIED AUDIT

A complete set of certified financial statements sufficient for the governing body to render an opinion on the applicant's annual financial statements and applicant's ability to complete the project. All audits shall be prepared in a manner consistent with the current standards of the Financial Accounting Standards Board and fully detail all items as required by any applicable law and regulation. The audit shall be certified as conforming with the standards of a certified public accountant who is licensed to practice in the State of New Jersey.

CITY

The Municipal Council of the City of Atlantic City.

DEVELOPER or SPONSOR or APPLICANT

The person or entity, and principals or partners thereof, who is seeking or receiving a long-term tax exemption, including an assignment or modification of an existing tax exemption or other modification of tax payment to the City, if any.

FINANCIAL AGREEMENT

The contract between the developer and the City, including all amendments and supplements thereto, by which a tax exemption is conferred and is consistent with all applicable law and regulation.

GROSS INCOME

Total annual revenue from the project before operating and nonoperating expenses are deducted.

GROSS REVENUE

Annual gross revenue or gross shelter rent or annual gross rents, as appropriate, and other income, for each urban renewal entity designated pursuant to N.J.S.A. 40A:20-1 et seq.

INCOME

All revenues as determined in accordance with generally accepted accounting principles.

LAW

The Long Term Tax Exemption Law, N.J.S.A. 40A:20-1 et seq., or the New Jersey Housing and Mortgage Finance Agency Law of 1983, as amended (N.J.S.A. 55:14K-1 et seq.).

PILOT PAYMENTS

Payments in lieu of taxes on improvements which have been granted after application to the City. Such pilot payments shall run with the land, similar to real estate taxes. Any application for a tax exemption on a project with an existing exemption shall constitute a second term tax exemption.

PROJECT

The real property and the improvements thereon which are the subject of the financial agreement.

PROPERTY

The real property and any improvements thereon which existed prior to the approval of the tax exemption.

SECOND TERM ABATEMENT

A real property or improvement with an existing abatement in which an applicant is seeking to create abatement and shall be considered a second term tax exemption for the purposes of this chapter.

TAX EXEMPTION

The substitution of an annual payment for the amount of taxes which would otherwise be due for improvements made to property under conventional property tax law under the provisions of the Long Term Tax Exemption Law, as amended (N.J.S.A. 40A:20:1 seq.), or the provisions of the New Jersey Housing and Mortgage Finance Agency Law of 1983, as amended (N.J.S.A. 55:14K-1 et seq.). Conventional property taxes levied on the value of land shall continue to be levied and due.

TOTAL PROJECT COST

A detailed statement of hard and soft costs associated with the project, certified by the developer and presented with the application for tax exemption, that shall include, but not be limited to, any and all estimated and/or actual costs disclosed or to be disclosed to the City's Department of Property Maintenance for the purpose of obtaining permits and/or other approvals. Such statement of total project cost shall be subject to certified audits as set forth herein.

§ 231-38 Administration of tax incentive agreements.

The administration of long-term tax incentive agreements shall be governed by the provisions of N.J.S.A. 40A:20-1 et seq., subject to the following constraints and parameters:

A. City Tax Exemption Committee. There is hereby established the City Tax Exemption Committee. The members shall be the Chair of the Planning and Development Committee of Council, the Chair of the Revenue and Finance Committee, the Director of the Division of Planning and Development, Business Administrator, Tax Assessor, Tax Collector, Director of Revenue and Finance, Director of Public Works, and Solicitor, or their designees, and any other person the Mayor or the governing body may deem appropriate. The purpose of the Committee is to meet informally to provide information to the Mayor to enable him to formulate a recommendation to the City Council as to whether or not an application should be approved or denied in accordance with the standards set forth herein below.

B. Form of application. All qualified applicants, before proceeding with any project, shall provide the City with an application in the manner and form as required by all applicable law and regulation, as may be amended from time to time, and such application shall include, at minimum, the following:

(1) ALTA/ACSM land title survey for the property for which the tax exemption is sought that shall be in accordance with the then current Accuracy Standards for Land Title Surveys (accuracy standards), as adopted from time to time by the National Society of Professional Surveyors and the American Land Title Association and incorporated herein by reference, including, but not limited to, the following:

(a) A record description of the property to be surveyed or, in the case of an original survey, the record description of the parent parcel that contains the property to be surveyed. Complete copies of the record description of the property (or, in the case of an original survey, the parent parcel), any record easements benefitting the property; the record easements or servitudes and covenants burdening the property ("record documents"); documents of record referred to in the record documents; and any other documents containing desired appropriate information affecting the property being surveyed and to which the survey shall make reference shall be provided to the surveyor for notation on the plat or map of survey;

(b) The name, address, telephone number, and signature of the professional land surveyor who performed the survey, his or her official seal and registration number, the date the survey was completed, the dates of all of the surveyor's revisions and the caption "ALTA/ACSM Land Title Survey";

(c) A survey boundary drawn to a convenient scale, with that scale clearly indicated. A graphic scale, shown in feet or meters, or both, shall be included. A North arrow shall be shown, and, when practicable, the plat or map of the survey shall be oriented so that North is at the top of the drawing. Symbols or abbreviations used shall be identified on the face of the plat or map by use of a legend or other means. If necessary for clarity, supplementary or exaggerated diagrams shall be presented accurately on the plat or map. The plat or map shall be a minimum size of 8 1/2 by 11 inches;

(d) All data necessary to indicate the mathematical dimensions and relationships of the boundary represented, with angles given directly or by bearings, and with the length and radius of each curve, together with elements necessary to mathematically define each curve. The point of beginning of the surveyor's description shall be shown as well as the remote point of beginning, if different. A bearing base shall refer to some well-fixed line, so that the bearings may be easily reestablished. The North arrow shall be referenced to its bearing base, and should that bearing base differ from record title, that difference shall be noted;

(e) Both the record and measured bearings, angles, and distances shall be clearly indicated. If the record description fails to form a mathematically closed figure, the surveyor shall so indicate;

(f) Tax Map block and lot numbers, adjoining lot owners, a vicinity map, corresponding street addresses and all current Tax Map information; and

(g) Any such other information the governing body shall require.

(2) A general statement of the nature of the project, e.g., affordable housing, market-rate, commercial, industrial, residential, senior housing, single-family, multiple dwelling, etc.

(a) If the project contains commercial or industrial structures, a description of any lease agreement between the applicant and past, present and proposed occupants and a rent roll listing such occupants; or

(b) If the project contains dwelling structures, a description detailing the number and types of dwelling units, common elements or general common elements, and a statement of the proposed initial rentals or sales prices of the dwelling units according to type.

(3) A statement of the reasons for seeking a tax exemption and a description of the benefits to be realized by the City if a tax exemption is granted.

(4) A statement justifying the requested term or duration of the tax exemption being sought.

(5) A detailed description of the improvements to be made to the property, including architectural and site plans, and an estimate of the total cost of the project certified by a qualified architect or engineer.

(6) A statement disclosing the uses and sources of capital to be utilized in funding the project, which shall set forth, among other things, pecuniary and ownership interests and obligations associated with such funding sources, certified by the applicant.

(7) A fiscal plan and cash flow statement for the project outlining, among other things, purchase price of the site and improvements, detailed mortgage payouts, construction loan payouts, and any other payout associated with the sale and prior owner, the schedule of annual gross revenue, the estimated expenditures for operation and maintenance, payments for interest, amortization of debt and reserves, and payments to the municipality, each such item certified by the applicant.

(8) A detailed construction and/or improvement schedule indicating the date of project commencement and completion and significant milestones.

(9) A statement as to the fair market value of the property as of the date of the filing of the application and a statement of estimated fair market value after completion of the project.

(10) A statement of the tax levy on the property for the year in which the application is filed. In the case of tax-exempt property, the projected tax levy shall be stated as if the property had not been tax exempt.

(11) The status of all municipal taxes, fees and charges due and payable to the City arising from or imposed on the property or any other property within the City that is owned by the developer or any principal of the developer or anyone with a pecuniary, ownership or other interest in the project.

(12) Disclosure statements as to all parties, including parent and subsidiary companies, having any interest in the property or the project or any other contracts or financial agreements then in force and effect in which any of those parties have any interest.

(13) A certification by the developer that construction and/or improvements of the project have not and will not commence prior to the final approval and full execution of the financial agreement and for projects commencing prior to October 1, 2014, a certification that the developer, before proceeding with the project, has made a written application to the municipality in compliance with the Long Term Tax Exemption Law, including N.J.S.A. 40A:20-8.

(14) The developer's estimate of the number, classes and type of temporary jobs to be created by the project during the term of its construction and the number, classes and type of permanent jobs to be created by the project within one year after its completion. The application shall set forth the project employment plan of the developer and a certification by the developer that such plan complies with the City's employment policy as delineated.

(15) A certification by the developer that the project meets the requirements of the laws of this state for consideration for tax exemption. Where those laws require the property to have been declared blighted by the City and a redevelopment plan to have been adopted by the City or to be an area in need of rehabilitation, the developer shall further certify that the proposed project complies with the redevelopment plan as adopted.

(16) A certification by the developer that he or she has made diligent inquiry to confirm the accuracy of all information contained in the application and that the information is true and correct to the developer's knowledge. The certification shall contain the original signature of the developer notarized or witnessed. In the case of a corporation, the developer shall submit a notarized corporate resolution, with the seal of the corporation and the signature of the secretary of the corporation, authorizing the signatory to bind the corporation or similar bona fide evidence of authorization. In the case of a partnership, the developer shall submit a copy of the partnership agreement, certified to be in full force and effect, authorizing the signatory to bind the partnership or other similar bona fide evidence of authorization.

(17) A financial agreement, prepared by the applicant, which shall be presented in such form as required by applicable law and regulation and as approved by the Corporation Counsel.

(18) Payment of the applicable nonrefundable fee as set forth in § 241-38D of this chapter for review of such application.

(19) Such other documents or pertinent information as the Committee deems necessary or appropriate.

C. Submission of application. One original and 15 copies of the application shall be submitted to the Director of Planning and Development, either in person or by certified mail, at his or her office.

D. Fee schedule.

(1) The review fee shall be equal to:

(a) Up to $50,000: 1% of the total cost of improvement.

(b) From $50,001 to $150,000: 1.2% of the total cost of improvement.

(c) From $150,001 to $300,000: 1.4% of the total cost of improvement.

(d) From $300.001 to $500,000: 1.6% of the total cost of improvement.

(e) For projects where the total estimated cost of improvement is $500,001 and above: $10,000.

(2) The resubmission fee for conditionally rejected applications shall be 50% of the initial review fee set forth in § 241-38D.

(3) The review fee for a second application shall be as set forth in § 241-38D.

§ 231-39 Consideration and recommendation of application.

A. Distribution of application. Upon receipt of the application and payment of all applicable fees, the Director of Planning and Development shall forward one copy of the application to each member of the Revenue and Finance Committee, one copy to the Business Administrator, Director of Revenue and Finance, Director of Public Works, Tax Assessor, and Tax Collector, two copies to the City Solicitor and a copy to any other person the Mayor or the governing body may deem appropriate.

B. Legal review.

(1) Within 30 days of receipt of the application from the Director of Planning and Development, the City Solicitor shall make a determination as to the completeness and properness of the application. An application shall be deemed complete and proper if it is presented in the proper form, satisfies the requirements of applicable statutes, regulation and ordinances.

(2) In those cases where an application is deemed improper, the City Solicitor shall note the deficiencies to the City Tax Exemption Committee for their consideration.

C. General review (City Tax Exemption Committee). Upon receipt of an application, the Director of Planning and Development shall schedule a meeting of the City Tax Exemption Committee to conduct a complete review of the project application. At his or her discretion, the Director may invite the developer and direct such other City employees, or persons deemed necessary or appropriate, to assist the Committee in the discharge of its duties. The Director may enlist a professional consultant, in accordance with the applicable law for awarding public contracts, to assist the Committee in its review of the application to determine what annual service charge or escalation is appropriate. In its review, the Committee shall consider the following:

(1) Whether the project will result in the construction of housing (On all new constructions, the maximum allowable affordable units is 20% and will be determined based on the project financials.) or job-generating commercial development on site or off site.

(2) Whether the payment of contribution to the City of Atlantic City is in accordance with the purpose of this chapter.

(3) The amount of taxes and other relevant expenses in comparable markets likely to be considered by the developer.

(4) A comparison of the estimated amount of the service charge payment due under the tax exemption with the conventional taxes that the City would net, assuming that a project of similar quality and size would likely be constructed by the developer.

(5) An estimate of the cost of providing municipal services to the project.

(6) The extent to which the project complies with the City's developmental goals as expressed in its zoning ordinances, its master plan and applicable redevelopment plans; and the degree of economic necessity for tax exemption; or the extent to which the improvements to the project will enhance the health and welfare of the residents of the City of Atlantic City.

(7) The relative benefits of the project, including the inherent benefit of a project that will construct housing that will improve the customer base for business located within the City of Atlantic City, and the number of jobs, both temporary and permanent, likely to be created by the project.

(8) The importance of the tax exemption in achieving the timely development of the project and influencing probable occupants to locate to the project.

(9) The property assessment and the amount of taxes levied on each block and lot of the real property included within the project in both the year in which the application was filed and the immediately preceding year. In the case of property which is or had been tax exempt, a calculation will be made of the assessed value and the amount of taxes which would have been levied had the property not been tax exempt.

(10) The current status of payments due for property taxes and/or municipal charges or liens of any type arising from real property included within the project or from any other property owned by the developer.

(11) The current status of any financial agreement then in effect to which the developer is a party or a principal thereof is a party.

(12) The current status of any fines or payments due from the developer in Municipal Court; payments due for water and/or sewer services provided to the real property included within the project or any other real property owned by the developer or the principals thereof; and payments due for any activity conducted on the real property within the project and on any other property owned by the developer.

(13) Whether the developer is a qualified urban renewal entity pursuant to N.J.S.A. 40:20-5 et seq.

(14) Whether there are any outstanding property maintenance violations, the amount of all violations of any property owned by either the developer or principal and length of time for the remediation of such violations.

D. Application evaluation report. The City Tax Exemption Committee, through the Director of the Department of Planning and Development and the Director of Revenue and Finance, shall submit a report setting forth its recommendation as to approval or disapproval to the Mayor and City Council within 90 days from the date of receipt. The report shall also include a detailed explanation as to the analysis conducted in arriving at the recommendation.

E. Mayoral review.

(1) Upon receipt of the report from the City Tax Exemption Committee, the Mayor shall review the recommended action to be taken in regard to that application. The Mayor shall determine whether to recommend the approval of the application and its attachments to City Council, or to recommend the rejection of the application as not being in the best interests of the City. Where the application has been deemed improper by the Solicitor, the Mayor shall determine whether the deficiencies can be remedied and, if so, may direct the developer and/or the appropriate municipal official as to the actions required. If the deficiencies cannot be remedied or if the application is deemed not in the best interests of the City, the Mayor may recommend the rejection of the application without condition.

(2) In those cases where the Mayor recommends that the developer be afforded the opportunity to correct specific deficiencies, the application may be reconsidered by resubmitting a corrected application to the Director of Planning and Development along with any applicable resubmission fees, after which the approval process outlined herein in this chapter shall be conducted.

(3) In those cases where the Mayor recommends rejection of an application without condition and that recommendation has been ratified by the City Council, the rejected application will not be reconsidered and the developer, if so desired, shall reapply to the Director of Planning and Development by filing a new application and making payment of any applicable fee.

(4) The recommendation of the Mayor to the City Council, whether for acceptance or rejection, shall occur within a maximum of 60 calendar days after the date of the receipt of the report.

F. City Council consideration.

(1) No tax exemption shall be approved or financial agreement executed unless the City Council has determined that the tax exemption is in the City's best interest.

(2) The City Council may approve, reject or direct the application be returned to the developer for correction or change. An application rejected conditionally may be resubmitted to the Director of Planning and Development with a resubmission fee. An application rejected unconditionally may only be resubmitted as a new application with payment of the applicable review fee.

G. Enabling legislation. If deemed proper and following review by the City Tax Exemption Committee and the Mayor, the Solicitor shall prepare a resolution or ordinance in the form necessary to authorize the long-term tax exemption and attach the form of the proposed financial agreement, subject to such modification as the Solicitor deems appropriate or necessary (and in the case of affordable or senior or special housing projects, approval of the financial agreement and its additional modification is also subject to the approval the New Jersey Housing and Mortgage Finance Agency). The resolution or ordinance shall be signed by the Solicitor as to form and legality and submitted, together with the form of the financial agreement, the original application, the recommendation of the City Tax Exemption Committee and the recommendation of the Mayor, to the City Council for consideration.

§ 231-40 Financial agreement.

A. Form. A financial agreement shall be in the form appropriate to the nature of the tax exemption and the nature of the development as submitted to the City Tax Exemption Committee, and with respect to eligible housing projects financed by the New Jersey Housing and Mortgage Finance Agency (NJHMFA), in such form acceptable to the City and HMFA. Such financial agreement shall, at a minimum:

(1) Identify the property by block, lot and metes and bounds.

(2) Describe the nature and size of the improvements to be constructed.

(3) Include a detailed construction schedule, which must require the commencement of construction no later than one year from the date the tax exemption is approved.

(4) Establish a schedule incorporating the annual service or escalation charge in accordance with N.J.S.A. 40A:20-12 et seq., to be paid to the City over the term of the exemption period with a statement that the charge shall not decrease during the term of the tax exemption, notwithstanding any audit(s) of actual gross revenue or project costs indicating a reduction in the actual revenue or costs from that amount estimated in the application, and with respect to eligible housing projects financed by HMFA, such charge may equal an amount not less than 7% and not more than 20% of the annual gross revenue from each housing project situated on such real property for each year of operation thereof following the substantial completion thereof.

(5) State the duration or term of the financial agreement:

(a) The term of the tax exemption for eligible housing projects financed by the HMFA shall not extend beyond the date on which the initial HMFA mortgage is paid in full, which may not exceed 50 years.

(b) The term for other tax exemptions shall not be more than 30 years from the completion of the project or each phase thereof.

(6) Identify the following grounds for termination:

(a) With respect to all tax exemptions approved pursuant to this chapter:

[1] Failure to commence or complete construction on schedule.

[2] Failure to pay any municipal charges due, including, but not limited to, the service charge.

[3] Failure to timely submit certified audits of total project cost or gross revenue and the financial operations of the project.

[4] Any other breach of a material condition, in the sole and absolute discretion of the City.

[5] Refinance of the initial mortgage agreement as stated in the financial agreement and application.

[6] Failure to disclose a change in use of the project during the term of the tax exemption.

[7] Failure to disclose additional income derived from any source related to the project.

[8] Failure to maintain the habitability of the property in accordance with applicable laws of the City of Atlantic City and the State of New Jersey.

[9] Failure to maintain safe and secured housing in accordance with the City of Atlantic City regulations which impact the quality-of-life issues.

[10] Failure to arrange an annual inspection with the Director Planning and Development to conduct interviews with the occupants as to the maintenance of the project.

[11] Failure to permit any and all inspections of the project by the City's Licensing and Inspections Department, the State Department of Community Affairs or the Housing, Mortgage and Finance Agency.

(b) Additional grounds for termination with respect to tax exemptions approved pursuant to this chapter for eligible housing projects financed by the HMFA:

[1] Failure of the applicant or its successors and assigns and the project to remain subject to the provisions of N.J.S.A. 55:14K-1 et seq., as amended from time to time.

[2] Failure of any successor or assign to the developer in the event of a sale, transfer or conveyance of the project by the developer or a change in the organizational structure of the developer to qualify under N.J.S.A. 55:14K-1 et seq., or any other state law applicable at the time of the assignment of the financial agreement and to be obligated under the HMFA mortgage.

(7) Require that any change in the ownership of the project that would materially change the terms of the financial agreement shall be void unless disclosed to and approved by the City Council in advance of such change. A request for a change in ownership shall be accompanied by the payment of 1% of the sales price of the project which ordinarily shall mean the purchase price stated in the deed.

(8) Require the developer to submit certified audits of total project cost by the project architect and a certified public accountant, an annual audit of gross revenues; the annual financial operations of the project. In addition, if deemed necessary by the City, require the developer to pay the City costs to reaudit total project cost, annual gross revenue, or financial operations of the project.

(9) Require the timely submission of certified audits of total project cost or gross revenue and of the annual financial operations of the project.

(10) Require timely payment of all municipal taxes, administrative fees and other charges arising out of the financial agreement or in any way connected to the affected property.

(11) Require the developer to execute an Atlantic City First Employment and Contracting Agreement which compels the developer to utilize best efforts to hire City residents, minorities and women. The form of the Atlantic City First Employment and Contracting Agreement, which shall be placed on file in the office of the City Clerk, may be amended from time to time.

(12) State that the term of the tax exemption for the entire project shall commence upon the issuance of a certificate of occupancy for any part or the whole of the project and that the obligation to pay the service charge as estimated in the application, including interest, commences on such date, whether or not the developer receives a bill therefor.

(13) State that the service charge shall be billed and collected in the same manner as taxes and that any arrearage shall accrue at that rate of interest charged for delinquent real estate taxes.

(14) State that an annual administrative fee equal to 2% of the service charge shall be levied by the City and collected in the same manner as the service charge.

(15) Require the payment of a new application fee for any future modifications to the tax exemption or the financial agreement, except as provided for in § 248-7R.

(16) State that the City, through the office of the Tax Assessor, shall conduct a mandatory review (during the exemption period) of the financial agreement and other financial documents, including but not limited to certified audit reports and income pro forma in the first quarter following the fifth year, and every five-year time period from that date, to determine whether the project can remain financially feasible if the payment in lieu of taxes to the City is increased.

(17) State that the parties agree to modify the financial agreement to increase the amount of the payment in lieu of taxes if determined upon review pursuant to § 231-40A(16) that the project can remain financially feasible.

(18) Include such other terms and conditions as the City or HMFA shall deem appropriate or necessary.

B. Execution and distribution of financial agreement.

(1) Execution of financial agreements. Upon authorization by the City Council, the City Clerk shall circulate five original copies of the financial agreement for execution by all parties. No financial agreement, including financial agreements for HMFA financed housing projects, shall be considered to be in force and effect unless and until it has been fully executed by the developer, the Mayor and City Clerk.

(2) Distribution of executed financial agreements. Once a financial agreement has been fully executed, the City Clerk shall retain an original and distribute two originals to the developer, one original to the Solicitor, one original to the Business Administrator and a copy to the Tax Assessor, the Tax Collector, and the Director of Planning and Development. The City Clerk's executed copy shall be placed on permanent file within that office where it shall be available for examination by the public during regular business hours.

C. Oversight and billing. During the construction period, the Director of the Department of Revenue and Finance, Tax Collector, and Construction Official shall each be responsible to oversee some aspect of the financial agreement as outlined below.

(1) Permits and inspection. Upon receipt of an executed financial agreement, the Construction Official shall cause permits to be issued upon application by the developer and shall cause inspections of all work activity to be conducted in the manner provided by the City ordinances. The Construction Official shall notify the Tax Assessor and Director of the Department of Revenue and Finance of any failure by the developer to properly apply for permits, to begin construction or to complete construction within the period set forth in the financial agreement. The Construction Official shall send the Tax Assessor and Director of the Department of Revenue and Finance a copy of each permit as it is issued.

(2) Quarterly report to Tax Assessor. From the date of the execution of a financial agreement until the issuance of the permanent certificate of occupancy for the entire project, the Construction Official shall report to the Tax Assessor and Director of the Department of Revenue and Finance each quarter as to the status of permit and construction activity on the project. Upon the total or partial completion of construction, the Construction Official shall issue a certificate of occupancy in the appropriate form, and shall send a copy of each such certificate to the Tax Assessor and Director of the Department of Revenue and Finance. The Construction Official in the quarterly reports will incorporate the term "substantially complete" on the certificates of occupancy when the event occurs. In the event the certificate of occupancy is issued for part of a building, the Construction Code Official shall specifically identify that portion of the building affected.

(3) Assessments and taxes. Upon receipt of a certificate of occupancy for the project or a part thereof, the Tax Assessor shall adjust the assessment status to exempt for as much or all of the improvements as are reflected in the certificate. Upon receipt of the certificate of occupancy for the entire project or a part thereof, the Tax Assessor shall exempt the assessment for all improvements covered by the certificate during such time as the financial agreement remains in effect. Land shall remain conventionally taxed throughout the entire term of the financial agreement. At any time that the Tax Assessor causes the assessment on the project to be moved, in whole or in part, from taxable to exempt status, he or she shall immediately and directly notify the Director of the Department of Revenue and Finance and Tax Collector, in writing, to insure the prompt commencement of the service charge billing.

(4) Billing, collection and audit. Upon receipt of a fully executed financial agreement, the Director of the Department of Revenue and Finance and Tax Collector shall note in his or her records the execution of the financial agreement and those dates by which construction is to commence and be completed. The Director of the Department of Revenue and Finance shall thereafter continue to levy conventional taxes and collect payment therefor on the property until the occurrence of the following:

(a) In the event that a certificate of occupancy is issued for the entire project or any part thereof, the Tax Collector shall immediately cease to levy or collect taxes on the portion of the assessed value covered by the certificate. The Director of the Department of Finance shall instead bill the developer for the estimated amount of payment in lieu of taxes due as indicated in the application and financial agreement. Taxes on the value of the land shall continue to be levied and collected.

(b) Upon the issuance of the final certificate of occupancy for the entire project or any part thereof, the developer shall submit within 30 days to the Director of the Department of Revenue and Finance two copies of total project costs certified by the project architect and two copies of an audited statement of total project cost certified by a certified public accountant.

(c) The Director of the Department of Revenue and Finance shall review the certified audit of total project cost and make a determination as to the acceptability of the audit. If the audit is deemed unacceptable by the City, it shall be reaudited by the City with all fees to be paid by the developer. The Director of the Department of Revenue and Finance shall bill the developer for the cost of the audit. Once the audit is accepted, if its findings cause any change in the basis to be used in the determination of the payment in lieu of taxes, the Director of the Department of Revenue and Finance shall file a notice of final certified project cost (notice) with the City Clerk and send a copy to the Solicitor, the Tax Assessor, and developer as an addendum to the financial agreement.

(d) Upon the filing of the notice, the Director of the Department of Revenue and Finance shall bill the developer for the cost of the audit and for any adjustments necessitated by the audit. Failure to file the notice, however, shall not bar the collection of the audited service charge.

D. Violation of financial agreement. In the event that the developer fails to commence construction or to complete construction within the time required by the financial agreement, or fails to make payments due to the City as required by the financial agreement, or otherwise fails to meet any other material condition of the financial agreement, the Director of the Department of Revenue and Finance shall notify the Solicitor. The Solicitor shall undertake those steps necessary to terminate the financial agreement and shall advise the Tax Assessor, the Tax Collector and the Director of Planning and Development of the actions to be taken in regard to the levying and collection of taxes and payments in lieu of taxes. The Solicitor shall prepare such notices or resolutions as are necessary or appropriate to authorize the termination of the financial agreement.

§ 231-41 Administration of agreements after project completion.

After the completion of construction and issuance of the final certificate of occupancy, the project shall continue to operate within the terms of the financial agreement until its termination. The Director of the Department of Revenue and Finance shall administer the financial agreement throughout this period, according to the following procedures:

A. Billing and payment.

(1) The Tax Collector shall bill the developer each quarter. If the service charge is calculated as a percentage of project cost, the bill shall reflect both the taxes due on the value of all land included within the project and the service charge payments due on the improvements required by the financial agreement. If the service charge is calculated as a percentage of annual gross revenue, the quarterly bills shall be estimated in an amount equal to the actual amounts due in the previous year. In such case, the developer shall make an additional payment within 90 days after the close of the fiscal year, and such payment shall be the difference between the estimated billing and the adjusted annual service charge, based upon the actual financial performance of the project, including any excess profits due and owing in accordance with N.J.S.A. 40A:20-1 et seq. The additional payment by the developer shall be submitted, along with a certified audit of annual gross revenue calculated under the Law and the financial agreement.

(2) Regardless of the date of a bill or whether the bill is sent or received, a bill for a service charge shall be deemed to have been issued on the first day of each calendar quarter following the substantial completion of the project and to be due and payable within 30 calendar days thereafter. All payments which are not paid as of the date due shall be subject to the same charges for penalties and interest then in effect for delinquent property taxes.

(3) In the event the estimate of the annual service charge exceeds the actual service charge due based upon final total project cost or actual annual gross revenue, the developer shall not be entitled to any credit against any past service charges due and owing, but only a credit, without interest, against subsequent service charges.

(4) The Tax Collector or the Director of Revenue and Finance shall accept all payments and maintain books of account as to each financial agreement. Except where otherwise required by law, the Director of the Department of Revenue and Finance, in coordination with the Tax Collector, if appropriate, shall apply payments received to amounts due in the following order: amounts due for penalties and interest on taxes; amounts due for payments of taxes; amounts due for penalties and interest for service charge payments; amounts due for service charge payments. The developer shall make timely payments of taxes and annual service charges directly to the Director of the Department of Revenue and Finance and/or the Tax Collector, as instructed.

(5) In addition to the payment of the annual service charge, all developers shall pay an annual administrative fee to the City. The annual administrative fee shall be 2% of the annual service charge and shall be due no later than December 31 of each year and paid and collected in the same manner as the service charge.

B. Annual audits.

(1) As required by law or the financial agreement, the developer shall submit an annual certified audit prepared by a certified public accountant of the financial performance of the project. The audit shall be submitted each year within 90 days after the end of the fiscal year of the project to the Director of the Department of Revenue and Finance with a copy to the City Clerk and Director of Planning and Development. In addition to the submission of the annual certified audit, the developer shall submit a statement by a certified public accountant attesting to the percentage of excess profits, if any, pursuant to the provisions of N.J.S.A. 40A:20-15 and 40A:20-16. The Director of the Department of Revenue and Finance shall review the audit and make a determination as to any required increase in the service charge payment and the payment of the excess profit, if any. The developer shall utilize the City's figures in calculating excess profits.

(2) The audit and the determination of the Director of the Department of Revenue and Finance shall be submitted to the City's designated auditors for their review. If the determination of the Director of the Department of Revenue and Finance is acceptable, it shall be used as the basis to bill for any increases due and owing. If the determination or the audit is not acceptable, the Director of the Department of Revenue and Finance shall notify the developer, and the developer shall be responsible to remedy the deficiencies noted and to resubmit a corrected audit for review. As part of this annual audit process, the developer shall be responsible for the payment of all costs incurred by the City to reaudit or review the audit. Such costs will be in the actual amount incurred by the City. The cost shall be billed by the Director of the Department of Revenue and Finance as part of the annual service charge and shall be paid and collected in the same manner as the service charge.

C. Noncompliance.

(1) During the term of the financial agreement, if the developer fails to comply with the requirements for the submission of audits and/or timely payments of amounts due, the Director of the Department of Revenue and Finance, in coordination with the Tax Collector, if appropriate, shall enforce the terms of the financial agreement. The enforcement procedures which follow shall not constitute the City's sole or exclusive remedies, but rather shall be used in addition to such other remedies as may be permitted under any law and by the terms of the financial agreement.

(a) In the case where any payment due to the City pursuant to the financial agreement, whether arising from real property taxes or service charge payments, audit or administrative fees or water or sewer charges, is in arrears for a period of three months or more, the Director of the Department of Revenue and Finance shall notify the developer that unless the total amount due, including penalties and interest and subsequent charges, is paid in full within a period of 30 days from the date of the notification, the financial agreement shall be terminated. If the developer fails to comply with such notice, the Director of the Department of Revenue and Finance shall notify the Solicitor and recommend that a resolution be prepared, if necessary, terminating the financial agreement. The Director of the Department of Revenue and Finance shall also notify the Tax Collector and Tax Assessor.

(b) If a financial agreement is terminated in this manner, the developer shall have 30 calendar days to seek reinstatement of the financial agreement. Reinstatement shall be permitted only if all amounts due and owing have been paid in full within 30 calendar days. In that case, the Director of the Department of Revenue and Finance shall recommend that the Solicitor prepare a resolution to restore the financial agreement for the remainder of its original term. It shall be the responsibility of the developer to pay a restoration fee to the City.

(2) It shall be the responsibility of the City Clerk to file and distribute approved copies of all resolutions or ordinances adopted to rescind or restore financial agreements which arise pursuant to this subsection, doing so in the same manner as set forth in § 231-40B(2) for the original executed financial agreements.

(3) In the event of any nonpayment, in addition to the above remedies, the developer, in signing the financial agreement, agrees that the City shall have the same rights to place liens and foreclose against the project as though the nonpayment of the service charges were delinquent property taxes.

(4) If an audit required to be submitted pursuant to the financial agreement is not submitted when due or is incomplete for three months or more from the date due, the Director of the Department of Revenue and Finance shall notify the developer that unless the audit is submitted in proper form within 30 days from the date of notification, the financial agreement shall be terminated. If the developer fails to comply with the requirements of the notice, the Director of the Department of Revenue and Finance shall request the Solicitor to prepare a resolution terminating the financial agreement, and after its adoption shall thereafter treat the property as conventionally taxed.

(a) If the financial agreement is terminated in this manner, the remaining procedure shall be the same as set forth in Subsection C(1)(a) and (3) above. The City may, however, as its option, choose not to exercise its rights of termination of the financial agreement for failure to submit an audit. Instead, the City may cause an audit to be conducted by qualified personnel under the City's direction and use that audit as the basis for billing as if it had been submitted by the developer. The cost of the audit shall be paid by the developer and billed and collected in the same manner as the service charges. Should the City invoke this option, the City shall not in any way be barred or limited from exercising any other right to terminate the financial agreement at any subsequent time.

(5) If the developer fails to comply with any other material provision of the financial agreement, the Director of the Department of Revenue and Finance shall notify the Solicitor of the defect in the performance of the developer. The Solicitor shall thereupon take those steps necessary to enforce the terms of the financial agreement.

D. Revaluation. In the event of a revaluation in the City of Atlantic City, the City Tax Exemption Committee reserves the right to review all existing financial agreements and modify the terms where applicable to provide the most benefit to the City of Atlantic City.

§ 231-42 Termination of long-term tax exemptions.

A. All exemptions granted pursuant to the provisions of this chapter, N.J.S.A. 55:14K-1 et seq., and N.J.S.A. 40A:20-1 et seq., shall terminate at the time prescribed and in accordance with the terms set forth in the financial agreement. Upon the termination of the exemption granted pursuant to the provisions of this chapter, N.J.S.A. 55:14K-1 et seq., and N.J.S.A. 40A:20-1 et seq., the project, all affected parcels, land and all improvements made thereto shall be assessed and subject to taxation as are other taxable properties in the City.

B. After the date of termination, all restrictions and limitations upon the sponsor or the urban renewal entity shall terminate and be at an end upon the entity's rendering of its final accounting to the City.

§ 231-43 Second term tax exemption application.

A. The applicant must formally apply not more than one year and not less than six months prior to the end of the initial term of the tax exemption; a second term tax exemption is possible only for affordable housing projects with an existing exemption at the time of adoption of this article to enable the continued maintenance of existing affordable housing stock in the City of Atlantic City.

B. A second term tax exemption may be granted if necessary for refinancing of an existing affordable housing project, where such an exemption is required by the New Jersey Housing Mortgage Finance Agency (HMFA) or its successor agency in order for the refinancing to occur. Additionally, a second term tax exemption may be granted if necessary for refinancing of an existing affordable housing project funded with low-income housing tax credits, where such an exemption is required by the lender.

C. A second term tax exemption may only be granted with an annual payment structure that is greater than the annual payment structure provided in the first term tax exemption and if the terms in the aggregate do not exceed the maximum allowed by statute. The term of the exemption shall not exceed the length of the first mortgage created by the second term tax exemption.

D. All applications for a second term tax exemption shall be subject to the following criteria:

(1) The application must be filed in the same manner as set forth in § 231-38B of this chapter, with the applicable second term application fee.

(2) The applicant must provide an in-depth analysis to the City of Atlantic City supporting the benefit of granting second term tax exemption.

(3) The applicant must prove granting the second term tax exemption will improve the quality of life for the occupants of the project and the quality of life for the City of Atlantic City.

(4) The applicant must not have any building violations during the initial term of the tax exemption; if so, such violation(s) must have been corrected within 30 days, a reasonable time frame, of the occurrence; failure to do so will automatically terminate the request for second term tax exemption; a reasonable time frame for remediation of building violations shall be determined by the applicable public officer.

(5) The applicant must not have any late payments during the initial term of the tax exemption.

(6) The applicant must continue to meet the requirements of all applicable state laws, rules and regulations.

(7) The application must be submitted before the end of the term of the first tax exemption.

(8) The applicant's history of late payments during the initial term of the tax exemption shall be evaluated and may constitute a bar regarding the new application.

§ 231-44 Review of second term tax exemption application.

Upon receipt of the application, the Director of Planning and Development shall distribute copies in the same manner as set forth in § 231-39A. The Solicitor shall then review the application and make a determination pursuant to § 231-39B. Subsequent to the Solicitor's review, the City Tax Exemption Committee shall have 60 days to review the application in accordance with § 231-39C of this chapter and upon arriving at a recommendation, forward a report to the Mayor and governing body. Thereafter, the Mayor shall have a maximum of 60 days to review the report pursuant to § 231-39E(4). Upon receipt of recommendation from the Mayor, the City Council shall have 45 days to approve or reject the second term tax exemption request or direct the application be returned to the developer for correction or change. Rejection may be conditional or unconditional. An application that is conditionally rejected may be resubmitted with the applicable resubmission fee. An application that is unconditionally rejected may only be submitted as a new application with payment of the applicable fee. The applicant shall not be eligible for additional tax exemptions beyond approval of a second term tax exemption.

§ 231-45 Form of financial agreement for second term tax exemption.

The financial agreement shall be in the appropriate form as provided in § 231-40 of this chapter.

§ 231-46 Term of second term tax exemption.

With respect to tax exemptions, the developer may be eligible for a second term tax exemption which shall not be more than 50 years in aggregate from the date of approval of the first term tax exemption with respect to eligible housing projects financed by the New Jersey Housing and Mortgage Finance Agency (NJHMFA) or another lender.

§ 231-47 Filing.

This chapter shall be kept on file in the office of the City Clerk, Director of the Department of Revenue and Finance, and the office of the Tax Collector. Copies will be made available to the public and all municipal employees upon request for the appropriate fee, if applicable.

§ 231-48 Atlantic City First Employment and Contracting Agreement.

A. Purpose. The City wishes to assure continuing employment opportunities for City residents and business opportunities for local businesses, especially minority-owned local businesses, with developers doing business in the City who are the recipients of tax incentives. The City has determined to accomplish that goal by requiring the recipient of a tax incentive to act with best efforts, as defined in the Atlantic City First Employment and Contracting Agreement, and discharge its obligations under the agreement to the extent mandated by state and federal law.

B. Every financial agreement entered into in conjunction with the Long-Term Tax Incentive Program, as described in § 231-37 above, shall contain a requirement that the developing entity and the City also enter into an Atlantic City First Employment and Contracting Agreement, a form of which shall be available in the City Solicitor's office, that shall require, at a minimum:

(1) The following goals:

(a) Employment. The recipient shall use its best efforts to achieve the goal of a work force representing 50% City residents, 50% of whom are residents who are minorities; and

(b) Business contracting. The recipient shall use its best efforts to achieve the goal of awarding 50% of the dollar amount of its contracts to local businesses, which term shall include professional service vendors and vendors of goods, 50% of which shall be minority-owned local businesses.

(2) The following reporting requirements:

(a) The recipient will cause the contractor to complete and submit monthly project manning reports to the Project Employment and Contracting Monitor in the City by the seventh day of the month following the month during which the work is performed for the duration of the construction of the project.

(b) The report will accurately reflect the total work hours in each construction trade or craft and the number of hours worked by City residents, including a list of minority resident workers in each trade or craft, and will list separately the work hours performed by employees of the contractor and each of its subcontractors.

(c) The recipient is responsible for maintaining or causing the contractor to maintain records supporting the reported work hours of its contractors or subcontractors.

(d) The recipient will submit written monthly purchasing reports that will include a list of all contracts awarded for professional services or vendors of goods and the dollar amounts of these contracts. The reports will specify the number and dollar amount of contracts awarded to local businesses and minority-owned local businesses.

(e) In addition to the above reports, the recipient shall furnish such reports or other documents to the City as the City may request from time to time in order to carry out the purposes of the agreement.

(3) The following compliance remedies:

(a) Failure to file initial manning reports or pre-contracting notification (business contracting): an increase of 50% in the annual payment in lieu of taxes;

(b) Failure to submit compliance statement (construction jobs) or solicit bids (business contracting): an increase of 1% in the annual payment in lieu of taxes;

(c) Failure to allow record or workplace access or submit any other required reports (all categories): an increase of 1/4% in the annual payment in lieu of taxes; and

(d) The use of the local or local minority business' masthead for labor or work supplied by a nonlocal or local minority vendor: an increase of 1/8% in the annual payment in lieu of taxes.