Category: Transactional Real Estate and Leasing

The New Jersey State Comptroller released a report Wednesday entitled “A Programmatic Examination of Municipal Tax Abatements.” The Comptroller’s report is critical of both five year abatements and long term abatements granted by municipalities and was being widely reported in the press yesterday. Referring to five year abatements (NJSA 40A-21-1 et seq.) and long term abatements (NJSA 40A-20-1 et seq.), the Comptroller’s report finds “numerous weaknesses in the regulation, implementation and oversight of these programs” including: PILOTs paid to municipalities are at the expense of counties, school districts and other taxpayers; there is lack of transparency and centralization of information about abatement agreements; criteria and processes for evaluating potential abatement agreements are weak; directly affected stakeholders are not adequately involved in the decision making process; municipal follow up on abatement terms and benefits is lacking; redevelopment areas in which abatements are granted are not periodically reviewed to account for neighborhood changes or improvement; municipalities often fail to use abatements to bring in the type of redevelopment that would address community needs or bring appropriate improvement; and the State does not closely monitor the use of abatements or offer significant guidance to municipalities on how to interpret relevant statutes or implement abatement programs.