S2595

An Act establishing a municipal aid program to compensate municipalities for the property tax impact of corporate disinvestment, supplementing Title 52, and making an appropriation.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the “Corporate Disinvestment Property Tax Relief Act.”

2. As used in this act:

“Departure” means the closure of a business, which may include a winding down period of not more than three years. A business shall be deemed closed notwithstanding the retention of necessary personnel to maintain equipment and structures and to provide environmental remediation of the site.

“Director” means the Director of the Division of Local Government Services in the Department of Community Affairs.

“Eligible municipality” means a municipality that, on or after January 1, 2012, has a decrease in its property tax base due to a reduction in the assessed valuation of a major business ratable as a result of the departure of a business. A municipality shall cease to be an eligible municipality beginning any tax year in which the value of the overall equalized property tax base returns to an amount that equals or exceeds 95 percent of the value of the overall equalized property tax base in the tax year prior to the decrease in the assessed valuation of the major business ratable as a result of the departure of a business.

“Fund” means the “Corporate Disinvestment Property Tax Relief Fund” in the General Fund established by subsection b. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).

“Major business ratable” means one or more related parcels of taxable property, classified as commercial or industrial and utilized by the business property owner as its corporate headquarters, which, on the effective date of this act or in either of the two preceding tax years, comprises the largest assessed valuation of any one or more related line items of taxable property in the municipality, equals or exceeds 10 percent of the tax base of the municipality, equals or exceeds $200,000,000 in aggregate assessed valuation, or employs not less than 1,000 employees on the taxable property.

“Qualified aid amount” means an amount equal to the current tax rate for school and municipal purposes in an eligible municipality, multiplied by the difference between the equalized assessed valuation of the major business ratable in the current tax year and the equalized assessed valuation of the major business ratable in the tax year prior to the decrease in the valuation of the major business ratable as a result of the departure of a business. This amount shall decrease in proportion to any subsequent increase in value of the overall equalized property tax base of an eligible municipality.

3. a. The director shall establish a “Corporate Disinvestment Property Tax Relief Act” aid program.

b. The “Corporate Disinvestment Property Tax Relief Fund” is established in the General Fund as a special nonlapsing fund for the purpose of providing “Corporate Disinvestment Property Tax Relief Act” aid to eligible municipalities. The director shall serve as the administrator of the fund.

c. The governing body of an eligible municipality may apply to the director for “Corporate Disinvestment Property Tax Relief Act” aid. The application shall be made on a form and shall be accompanied by documentation as prescribed by the director.

d. The director shall approve an application for “Corporate Disinvestment Property Tax Relief Act” aid upon finding that the applicant meets all the qualifications of an eligible municipality.

e. The director shall annually submit to the Governor and to the President of the Senate and the Speaker of the General Assembly a statement of “Corporate Disinvestment Property Tax Relief Act” aid to be appropriated to the fund. The amount shall equal the total of the qualified aid amounts for each approved eligible municipality.

f. The director shall, upon warrant of the Director of the Division of Budget and Accounting, annually distribute “Corporate Disinvestment Property Tax Relief Act” aid allocated to the fund. Each approved eligible municipality shall receive a distribution equal to the qualified aid amount for that municipality. If insufficient monies are allocated to the fund, then each eligible municipality shall receive its proportional share of the available aid monies in the fund.

4. The assessed valuation of a major business ratable following a departure of a business shall be determined through a reassessment by the municipal tax assessor pursuant to R.S.54:4-23 or an appeal to the county board of taxation by a taxpayer or taxing district pursuant to R.S.54:3-21 et seq.

5. All “Corporate Disinvestment Property Tax Relief Act” aid shall be used solely and exclusively by each eligible municipality for the purposes of reducing the amount the municipality is required to raise by its local property tax levy for school and municipal purposes, in the same proportions as the tax rates for school and municipal purposes bear to the total tax rate of the municipality. The director shall certify that each eligible municipality receiving “Corporate Disinvestment Property Tax Relief Act” aid has complied with this section. If the director finds that “Corporate Disinvestment Property Tax Relief Act” aid is not used by a municipality solely and exclusively to reduce the amount required to be raised by local property tax levy for school and municipal purposes, the director shall direct that the municipal governing body make corrections to its budget.

6. Notwithstanding any provisions of the “Local Budget Law,” N.J.S.40A:4-1 et seq., an eligible municipality that receives “Corporate Disinvestment Property Tax Relief Act” aid may anticipate the receipt of the amount of that aid as shall be certified to it by the director, and may file any amendment or corrections in its local budget as may be required to properly reflect that aid.

7. The director shall promulgate rules and regulations in accordance with the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.) to effectuate the provisions of this act.

8. There is appropriated from the Property Tax Relief Fund to the “Corporate Disinvestment Property Tax Relief Fund” the sum of $5,000,000 to effectuate the purposes of this act.

9. This act shall take effect immediately.

STATEMENT

This bill would establish the “Corporate Disinvestment Property Tax Relief Act” municipal aid program to alleviate the property tax impact of the departure of a major business from the municipality.

When a major business leaves a municipality, the community not only suffers from the loss of jobs, but also from the sudden loss of property tax revenue that may follow a reassessment of the taxable property that is no longer occupied by the business. This bill would help alleviate the sudden shock to the property tax base caused by a decrease in the assessed valuation of the former property of the departing major business by providing aid to compensate for the lost property tax revenues until the overall tax base has sufficiently recovered. This aid would help the municipality meet its budgetary needs while also helping to maintain property tax levels.

A municipality would be eligible to receive this aid if it has a decrease in its property tax base as a result of a reduction in the assessed valuation of a major business ratable due to the departure of a business. The assessed valuation of a major business ratable following a departure of a business would be determined through a reassessment by the municipal tax assessor or an appeal by the taxpayer or taxing district. A taxable property would qualify as a major business ratable if it is classified as commercial or industrial and is utilized by the property owner as its corporate headquarters, and if, on the effective date of the program or in either of the preceding two years, it: (1) comprises the largest assessed valuation of any line item of ratable in the municipality; (2) equals or exceeds 10 percent of the tax base of the municipality; (3) equals or exceeds $200,000,000 in aggregate assessed valuation; or (4) employs not less than 1,000 employees on the taxable property.

To receive this aid, an eligible municipality would be required to apply to the Director of the Division of Local Government Services. The director would be required to approve an application upon finding that the above qualifications have been met.

An approved eligible municipality would annually receive a distribution in an amount equal to the current tax rate for school and municipal purposes in the eligible municipality, multiplied by the difference between the equalized assessed valuation of the major business ratable in the current tax year and the equalized assessed valuation of the major business ratable in the tax year prior to the decrease in the valuation of the major business ratable as a result of the departure of a business. The director would reduce the amount to be distributed in proportion to any subsequent increase in the value of the overall equalized property tax base. The director would cease the distribution of aid to an eligible municipality beginning any tax year in which the value of the overall equalized property tax base returns to an amount that equals or exceeds 95 percent of the value of the overall equalized property tax base in the tax year prior to the decrease in the valuation of the major business ratable due to the departure of a business. The bill would establish the “Corporate Disinvestment Property Tax Relief Fund” in the General Fund as a special nonlapsing fund out of which the aid would be distributed to eligible municipalities.

An eligible municipality receiving this aid would be required to use the aid to reduce the local property tax levy for school and municipal purposes.

The bill would also appropriate $5 million to fund distributions of “Corporate Disinvestment Property Tax Relief Act” aid.