The bill, known as the "Urban Municipality Vacant Land Reassessment and Abatement Act," was discussed at the May 6 morning session of the state Senate. It would allow developers to get lower taxes for three years after they built on vacant properties, since their new development will cause their property taxes to rise eventually anyway.
Technically, the act would authorize municipalities to adopt ordinances designating undeveloped properties as "vacant areas in need of rehabilitation." Once that occurs, an assessment of vacant properties will take place on the Oct. 1 following the adoption of the ordinance.
A "maintenance reassessment" will occur of each property in vacant areas every five years until that vacant property is developed.
Since development and maintenance on these properties would cause their assessed value - and thus, their property taxes - to rise, the city wants to give them a temporary reduction as an incentive to complete development.
Each landowner would start paying, in lieu of regular property taxes, only the amount of the difference between the original taxes he was paying and the final taxes he would pay according to the new assessed value of the land.
After three years, the property owner would have to start paying regular taxes, which the city, county and schools will benefit from.
Buildings constructed on a vacant area would be eligible for an abatement only covering the tax year of construction and the two tax years after that.
The bill was introduced in the State Assembly on Feb. 9 by Assemblymen Louis Manzo and Anthony Chiappone (both from the 31st District). Cunningham and State Senator Ronald Rice (D-28th Dist.) then introduced the bill in March in the State Senate for a first reading, which was followed by a second reading on May 6.
The idea behind the bill
Assemblyman Louis Manzo said last week that he introduced the bill in February as part of recent initiatives to offer property tax relief to homeowners in the state. Recently, Manzo introduced in the State Assembly the NJ SMART Homestead Rebate Act, which would offer rebates to offset 90 percent of public school property taxes and establish a gross income tax surcharge to fund the rebates.
The new bill came because Manzo noticed the inequity between taxation of properties with structures upon them and abandoned properties.
Manzo estimates that vacant properties occupy one-fifth of Jersey City and that the city is losing billions of dollars in tax revenues that it would receive if the land was developed.
Manzo added that it also would be a benefit to the property owners, homeowners and taxpayers since there would be tax abatements on buildings and structures over a three-year period that would encourage development, thus adding value to a property and getting a property owner to pay their fair share in taxes.
"This bill will significantly drop county taxes, and it will generate more tax revenue with others not bearing the burdens of taxes," said Manzo.
State Sen. Ronald Rice, a co-sponsor of the bill with State Senator Cunningham, represents the 28th District (which covers Newark, Belleville, Bloomfield and Irvington). Rice said last week that he joined in sponsoring the bill in the Senate since it appeals to him as a native of a large municipality such as Newark.
"99.9 percent of the owners are no longer in the city but they are waiting for a windfall," said Rice. "They are holding the whole city back, yet they are the same people who say that they would never live in Newark, Jersey City, Camden and Trenton."
Rice pointed out that this bill would also place all property owners on equal ground in the eyes of the law. "You live in a house and there's a crack in your window. Code enforcement would issue a summons or a fine," said Rice, "but your neighbor's house that's boarded up and in worse shape than yours, and you can't force them to fix it up."
Rice also said that those living near a vacant lot are usually redlined, or discriminated against by insurance agencies in terms of buying home insurance.
The status of the bill
Manzo and Rice both have said that this bill is what is called permissive legislation, which would give municipalities the option of implementing the ordinance to spur the development of vacant properties.
On the Assembly side of the state legislature, Manzo said that it should be put before Assembly Housing and Local Government Committee for further discussion, or committee action. From there, there will be a second reading of the bill, followed by a third reading, then a vote by the Assembly. If that vote is successful, then it will go to the Senate. Unless there are any amendments to the bill, once both Houses approve the bill, the governor may sign the bill, conditionally veto the bill (the governor accepts the bill but only if changes are made) or just outright veto the bill.
Afterward, the bill becomes law upon the governor's signature or within 45 days if no action is taken.
State Sen. Rice said that he doesn't see a problem in the bill being passed through both houses, since the state's Division of Community Affairs is fully informed of this bill and has briefed Gov. Jim McGreevey on it.
"We have to move all bills by June 30 of this year, or before a new legislative session starts in January 2006," said Rice, who is trying to get this legislation fast-tracked through the Senate. Manzo said that he would be having a discussion in the near future with Speaker of the Assembly Albio Sires about pushing through the legislature.