A5567

An Act concerning the use of certain long-term financial agreements in the construction of age-restricted residential housing and supplementing Title 40A of the New Jersey Statutes.

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

1. a. The governing body of a municipality shall not enter into a financial agreement under the “Long-Term Tax Exemption Law,” P.L.1991, c.431 (C.40A:20-1 et seq.) for the construction of an age-restricted residential housing community unless every State property tax relief program authorizes payments to senior citizens who make payments in lieu of property taxes instead of paying ad valorem property taxes.

b. As used in this section:

“Age-restricted residential housing community” means a community that complies with the definition of “housing for older persons,” as provided in 42 U.S.C. s.3607, for that community, as set forth in section 100.301 of Title 24, Code of Federal Regulations.

“Property tax relief program” means any State program that provides property tax relief to senior citizen homeowners.

2. This act shall take effect immediately.

STATEMENT

This bill would prohibit municipalities from entering into financial agreements under the “Long-Term Tax Exemption Law,” P.L.1991, c.431 (C.40A:20-1 et seq.) for the construction of an age-restricted residential housing community unless every State property tax relief program authorizes payments to senior citizens who make payments in lieu of property taxes instead of paying ad valorem property taxes.

Properties developed under the “Long Term Tax Exemption Law” are property tax-exempt for an extended period of time – generally, 30 years. Therefore, the owners of these properties do not pay property taxes. Instead, the owners of these properties make annual payments in lieu of property taxes (PILOT) to the municipalities in which they are located. Unfortunately, a property owner who owns property that has been developed using a financial agreement under the “Long-Term Tax Exemption Law” is not able to qualify for certain property tax relief programs provided by the State, many of which are limited to senior citizen homeowners living on fixed incomes. The inability of senior citizens living on fixed incomes to qualify for property tax relief in a State that has historically been known for its high property taxes is inherently unfair and burdensome on these older homeowners and needs to be addressed. The amount of the PILOT payment depends on the language of the financial agreement under which it was constructed, and a PILOT payment may be just as much as a property tax payment. It is imperative that the burden of a large PILOT payment on the monthly budget of a senior homeowner be acknowledged, and that property tax assistance be provided.

One recently-enacted property tax relief program, the Stay NJ Act, specifically extends eligibility to senior citizen homeowners making PILOT payments. However, the Affordable New Jersey Communities for Homeowners and Renters (ANCHOR) Property Tax Relief Program, the homestead property tax reimbursement program (colloquially referred to as the “senior freeze” program), the $250 property tax reimbursement available to low-income senior citizens and persons with disabilities, the $250 veterans’ property tax deduction available to honorably discharged veterans and their surviving spouses, and the property tax exemption available to honorably discharged veterans who have suffered a 100 percent permanent and total service-connected disability do not authorize payments to property owners who pay PILOT payments instead of property taxes.

The purpose of this bill is to protect senior homeowners from the financial harm of ineligibility to receive property tax relief when they purchase a home for which they will be liable for the payment of a PILOT, not property taxes.