City of East Orange, NJ
Essex County
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Table of Contents
Table of Contents
[Adopted 11-24-2008 by Ord. No. 20-2008;[1] amended in its entirety 5-16-2011 by Ord. No. 13-2011]
[1]
Editor's Note: This ordinance also repealed former Ch. 247, Tax Exemptions and Abatements, adopted 6-12-1995 by Ord. No. 7-1995, which ordinance was originally adopted as Ch. 247A, but was renumbered as Ch. 247, Art. I, to fit into the organizational structure of the Code.
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. 
As used in this article, the following terms shall have the following meanings unless the context clearly indicates that a different meaning is intended:
ABATEMENT
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.
AREA IN NEED OF REHABILITATION
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.
ASSESSOR
The officer of a taxing district charged with the duty of assessing real property for the purpose of general taxation.
COMMERCIAL OR INDUSTRIAL STRUCTURE
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.
COMPLETION
Substantially ready for the intended use for which a building or structure is constructed, improved or converted.
CONDOMINIUM
A property created or recorded as a condominium pursuant to the Condominium Act, N.J.S.A. 46:8B-1 et seq.
CONSTRUCTION
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.
CONVERSION
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.
COOPERATIVE
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.
COST
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.
DWELLING
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.
EXEMPTION
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.
HORIZONTAL PROPERTY REGIME
A property submitted to a horizontal property regime pursuant to the Horizontal Property Act, N.J.S.A. 46:8A-1 et seq.
IMPROVEMENT
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.
MULTIPLE DWELLING
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.
(3) 
Each application for new construction or conversion alteration shall also contain the items set forth in § 247-6B.
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.
C. 
Failure to comply with Subsections A or B above may be cause for termination of the abatement agreement.
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.