Tax Abatement Plan Approved In Newark: PILOTs To Be Made Available

Newark, NJ – Seeking to spur development outside the Newark Downtown District, Newark Liberty Airport and the Newark Port, Mayor Ras Baraka approved a municipal law on Monday that creates five-year tax abatements for local business owners and residents.

According to city officials, the new ordinance will “spur development by holding real estate taxes steady until 2020 for multiple dwelling, commercial, and industrial redevelopment projects.”

In addition, the law will offer a varied tax-basis until 2020 for newly-constructed multiple dwelling, commercial or industrial properties “located in Newark neighborhoods outside of the Downtown District, the Newark Airport and the Newark Port,” city officials stated.

According to a city news release sent on Monday, “property owners of multiple dwelling, commercial or industrial properties within the designated neighborhoods that make improvements to their properties will not receive an increase in their tax assessment over the next five years.”

In addition, developers of multiple dwelling, commercial or industrial properties will receive a five-year tax assessment based on one of the following formulas, specified in N.J.S.A. 40A:21-9:

• Costs basis: 2 percent of construction costs of construction
• Gross-revenue basis: 15 percent of the project’s annual gross revenues
• Tax phase-in basis of zero percent payment in lieu of taxes for year one, 20 percent for year two, 40 percent for year three, 60 percent for year four and 80 percent for year five

The new ordinance will take effect for the 2016 tax year, city officials stated.

All tax exemptions and abatements will require final approval by the City Council, and qualifying categories for improvements will also require Council or tax assessor approval, according to a release.

A written application for the exemption or abatement must be filed within 30 calendar days of project and/or improvement completion, officials added.

Photo courtesy of the City of Newark