Bill Text: NJ A211 | 2012-2013 | Regular Session | Introduced
Bill Title: Exempts from real property taxation during construction any building, or portion thereof, to be used for a property tax-exempt purpose.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2012-01-10 - Introduced, Referred to Assembly Housing and Local Government Committee [A211 Detail]
Download: New_Jersey-2012-A211-Introduced.html
STATE OF NEW JERSEY
215th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2012 SESSION
Sponsored by:
Assemblyman WAYNE P. DEANGELO
District 14 (Mercer and Middlesex)
SYNOPSIS
Exempts from real property taxation during construction any building, or portion thereof, to be used for a property tax-exempt purpose.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel
An Act concerning the exemption from taxation of certain real property and amending R.S.54:4-3.6.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. R.S.54:4-3.6 is amended to read as follows:
54:4-3.6. a. [The] Except as provided in
subsection b. of this section, the following property shall be exempt from
taxation under this chapter: all buildings actually used for colleges, schools,
academies or seminaries, provided that if any portion of such buildings are
leased to profit-making organizations or otherwise used for purposes which are
not themselves exempt from taxation, said portion shall be subject to taxation
and the remaining portion only shall be exempt; all buildings actually used for
historical societies, associations or exhibitions, when owned by the State,
county or any political subdivision thereof or when located on land owned by an
educational institution which derives its primary support from State revenue;
all buildings actually and exclusively used for public libraries, asylum or
schools for adults and children with intellectual disabilities; all buildings
used exclusively by any association or corporation formed for the purpose and
actually engaged in the work of preventing cruelty to animals; all buildings
actually and exclusively used and owned by volunteer first-aid squads, which
squads are or shall be incorporated as associations not for pecuniary profit;
all buildings actually used in the work of associations and corporations
organized exclusively for the moral and mental improvement of men, women and
children, provided that if any portion of a building used for that purpose is
leased to profit-making organizations or is otherwise used for purposes which
are not themselves exempt from taxation, that portion shall be subject to
taxation and the remaining portion only shall be exempt; all buildings actually
used in the work of associations and corporations organized exclusively for
religious purposes, including religious worship, or charitable purposes,
provided that if any portion of a building used for that purpose is leased to a
profit-making organization or is otherwise used for purposes which are not
themselves exempt from taxation, that portion shall be subject to taxation and
the remaining portion shall be exempt from taxation, and provided further that
if any portion of a building is used for a different exempt use by an exempt
entity, that portion shall also be exempt from taxation; all buildings actually
used in the work of associations and corporations organized exclusively for hospital
purposes, provided that if any portion of a building used for hospital
purposes is leased to profit-making organizations or otherwise used for
purposes which are not themselves exempt from taxation, that portion shall be
subject to taxation and the remaining portion only shall be exempt; all
buildings owned or held by an association or corporation created for the
purpose of holding the title to such buildings as are actually and exclusively
used in the work of two or more associations or corporations organized
exclusively for the moral and mental improvement of men, women and children;
all buildings owned by a corporation created under or otherwise subject to the
provisions of Title 15 of the Revised Statutes or Title 15A of the New Jersey
Statutes and actually and exclusively used in the work of one or more
associations or corporations organized exclusively for charitable or religious
purposes, which associations or corporations may or may not pay rent for the
use of the premises or the portions of the premises used by them; the
buildings, not exceeding two, actually occupied as a parsonage by the
officiating clergymen of any religious corporation of this State, together with
the accessory buildings located on the same premises; the land whereon any of the
buildings hereinbefore mentioned are erected, and which may be necessary for
the fair enjoyment thereof, and which is devoted to the purposes above
mentioned and to no other purpose and does not exceed five acres in extent; the
furniture and personal property in said buildings if used in and devoted to the
purposes above mentioned; all property owned and used by any nonprofit
corporation in connection with its curriculum, work, care, treatment and study
of men, women, or children with intellectual disabilities shall also be exempt
from taxation, provided that such corporation conducts and maintains research
or professional training facilities for the care and training of men, women, or
children with intellectual disabilities; provided, in case of all the foregoing,
the buildings, or the lands on which they stand, or the associations,
corporations or institutions using and occupying them as aforesaid, are not
conducted for profit, except that the exemption of the buildings and lands used
for charitable, benevolent or religious purposes shall extend to cases where
the charitable, benevolent or religious work therein carried on is supported
partly by fees and charges received from or on behalf of beneficiaries using or
occupying the buildings; provided the building is wholly controlled by and the
entire income therefrom is used for said charitable, benevolent or religious
purposes; and any tract of land purchased pursuant to subsection (n) of
section 21 of P.L.1971, c.199 (C.40A:12-21), and located within a city of the
first, second, third or fourth class, actually used for the cultivation and
sale of fresh fruits and vegetables and owned by a duly incorporated nonprofit
organization or association which includes among its principal purposes the
cultivation and sale of fresh fruits and vegetables, other than a political,
partisan, sectarian, denominational or religious organization or association.
The foregoing exemption shall apply only where the association, corporation or
institution claiming the exemption owns the property in question and is
incorporated or organized under the laws of this State and authorized to carry
out the purposes on account of which the exemption is claimed or where an
educational institution, as provided herein, has leased said property to a
historical society or association or to a corporation organized for such
purposes and created under or otherwise subject to the provisions of Title 15
of the Revised Statutes or Title 15A of the New Jersey Statutes.
As used in this section "hospital purposes" includes health care facilities for the elderly, such as nursing homes; residential health care facilities; assisted living residences; facilities with a Class C license pursuant to P.L.1979, c.496 (C.55:13B-1 et al.), the "Rooming and Boarding House Act of 1979"; similar facilities that provide medical, nursing or personal care services to their residents; and that portion of the central administrative or service facility of a continuing care retirement community that is reasonably allocable as a health care facility for the elderly.
b. On and after January 1, 2008, any building, or any part of a building, to be used for any purpose set forth in subsection a. of this section shall be exempt from taxation as real property during the construction thereof.
For each tax year during the construction of any such building, the tax assessor of the municipality in which the building under construction is situate shall assess the building that is under construction as of October 1 of the pretax year, and shall list that assessment as a partial assessment on the exempt list.
If, at the time of its occupancy, the building, or any part of the building, is not used for a purpose set forth in subsection a. of this section, the building, or any part of the building, shall be subject to taxation for the current tax year and thereafter, and for each previous tax year, not to exceed three tax years, for which there was a partial assessment on the property. The property taxes due and owing for the previous tax years shall be calculated by multiplying the partial assessment attributable to the building, or any part thereof, that is not used for any purpose set forth in subsection a. of this section for each of the tax years by the total tax rate of the municipality in which the building is situate for those tax years.
(cf: P.L.2011, c.35, s.4)
2. This act shall take effect immediately and shall be apply to all buildings for which construction was commenced on and after January 1, 2008.
STATEMENT
This bill would require that, on and after January 1, 2008, any building to be used for any property tax-exempt purpose must be exempt from taxation as real property during the construction thereof.
Under the provisions of the bill, for each tax year during the construction of any such building, the tax assessor of the municipality in which the building under construction is situate must assess the building that is under construction as of October 1 of the pretax year, and must list that assessment as a partial assessment on the municipality's exempt list. If, at the time of its occupancy, the building, or any part of the building, is not used for a property tax-exempt purpose, the building, or the relevant portion of the building, would then be subject to taxation for the current tax year and thereafter, and also for the previous tax years, not to exceed three tax years, during which it was under construction.
The bill requires that property taxes due and owing for the previous tax years, not to exceed three tax years, during which the building was under construction would be calculated by multiplying the partial assessment for each of those tax years, by the total tax rate of the municipality for each of those tax years.
The provisions of this bill address an issue that has recently raised concerns within the non-profit and charitable communities. Under the language of N.J.S.A.54:4-3.6, the buildings and land exempt from property taxation under the statute must be actually used for the tax-exempt purpose; a building under construction, because it is unfinished, cannot be used for such a purpose. Effectively, this statutory language authorizes municipalities to assess and levy property taxes against the value of the building under construction until such time as the construction is completed and the building is used for the non-profit or charitable use. For many years, municipalities, realizing that these buildings would be taxable as real property for only brief periods of time (during the construction process only), did not assess property taxes against these unfinished buildings.
However, recently, efforts have been made by a municipality to assess property taxes against the value of a major hospital undergoing construction in central New Jersey, although, to date, no such taxes have been paid by the hospital. This municipality's effort is supported by New Jersey Tax Court decisions.
In Hillcrest Health Service System, Inc. v. Hackensack City, 18 N.J. Tax 38, (1998) where a subsidiary of the plaintiff operated a hospital in Hackensack, the New Jersey Tax Court determined that a property tax exemption, available to a new building constructed for a property tax-exempt use, would not be available to the owner of that building until the building was actually used for the tax-exempt purpose: ". . . . exemption requires an actual use of property for exempt purposes and not merely an intended or projected use. Even where the character of the building under construction and its adaptation to an exempt use are evident, an exemption does not attach until actual use commences." Id. at 47.
These efforts to tax as real property those buildings being constructed for a property tax-exempt purpose have raised concerns and alarm in non-profit and charitable circles, because an unforeseen property tax assessment would represent an additional cost to the non-profit or charitable entity constructing the building. The taxation of partially constructed buildings under these circumstances also would be a temporary measure, because as soon as the construction is completed and the building is occupied by the tax-exempt entity for the tax-exempt purpose, the building would be tax-exempt, and no property taxes could be collected thereon.
It is the intent of the sponsor that the provisions of this bill will provide certainty to the non-profit and charitable community by exempting from taxation as real property buildings under construction by those entities that are intended to be used for the tax-exempt purposes of those entities, while offering municipalities the ability to recoup back property taxes if in fact, after construction is completed, such a building is used for a non-tax exempt purpose, or is leased or sold to a non tax-exempt entity for its own use.
