McCarter & English's attorneys have years of experience negotiating long-term property tax abatements for improvements constructed as part of a redevelopment plan. Municipalities often approve these abatements in order to encourage redevelopment.
Governed by the Long Term Tax Exemption Law (LTTE Law), the process requires the negotiation and execution of a financial agreement between the redeveloper and municipality setting forth requirements for payments to be made in lieu of taxes. Although the municipality receives replacement revenue from these payments – and a partial payment to the county is required – the tax abatement provides an exemption from property taxes on the improvement for as long as thirty years.
As a result, this arrangement can provide an economic incentive for redevelopment without impairing municipal finances. The LTTE Law can be coupled with the RAB Law to provide reduced payments in lieu of tax. The overall thrust of these statutory provisions is to vest municipalities with substantial control and authority over the terms of any tax abatement. McCarter & English's Redevelopment Team attorneys are skilled in negotiating with municipalities and have used creative planning under the LTTE Law and the RAB Law to assist developers in receiving the tax incentives they need.
In addition, McCarter & English's attorneys are experienced in negotiating a variety of tax incentives with local governments and the State of New Jersey. These include corporate tax credits, business retention and relocation credits, and sales and use tax urban enterprise zone qualification. The Economic Opportunity Act of 2013 consolidates five financial incentive programs previously available in New Jersey into two economic development tools. There is a new Grow NJ program which centralizes New Jersey’s business attraction and retention incentives in the form of tax credits for employers that create or retain jobs. Additionally, the new Economic Redevelopment Grant Program (ERG) provides financing incentives of up to 20% of qualified redevelopment project costs and up to 30% in certain designated growth zones.