A New Jersey Senate committee on Tuesday approved legislation that would create a new tax credit program to encourage the development of owner-occupied housing in Atlantic City as the municipality works to diversify its tax base and recover from a rash of casino closings.
The New Jersey Senate Budget and Appropriations Committee backed the formation of the Atlantic City Growth Tax Credit Program in a 11-2 vote, though the bill drew concerns from Democrats who suggested projects elsewhere in the state should have a shot at the incentives and Republicans who disagreed with the size of the credits.
The program would fall under the umbrella of the New Jersey Housing and Mortgage Finance Agency and provide developers of nonrental housing in Atlantic City with gross income tax credits of up to 80 percent of their costs for land acquisition, capital improvements, engineering fees and architectural fees.
Projects covered under the bill, S2654, couldn’t be more than eight stores and would have to include at least eight newly constructed residential units. At least 80 percent of the project’s units would have to be owner occupied.
During Tuesday’s hearing, Committee Chairman Paul Sarlo, D-Bergen, said he supported the proposal but added that other New Jersey municipalities such as Paterson and Passaic could also benefit from such a program.
“It should be expanded,” Sarlo said. “We all want to help Atlantic City, but I get frustrated sometimes.” (Credit Bergan Record).
The size of the proposed tax credit didn’t sit well with other lawmakers. State Sen. Sam Thompson, R-Middlesex, called the incentive excessive, while state Sen. Jennifer Beck, R-Monmouth, urged her colleagues to take a harder look at the potential cost.
“I think there should be some type of tax credit, but I just feel like that encompasses a very big number and should be revisited,” Beck said. (Credit Bergan Record).
The bill was previously advanced by the Senate Economic Growth Committee in January. Sponsors of the measure include state Sens. Jim Whelan, D-Atlantic, and Robert Singer, R-Ocean.
Nearly three-quarters of Atlantic City’s residents are tenants, according to the bill. Meanwhile, homeowners are facing a serious hardship as the city’s property tax burden shifts from its gaming sector and other commercial businesses, the bill says. Expanding the city’s pool of residential property taxpayers would help lessen that burden, according to the bill.
The HMFA would stop accepting new applications for the program by either Jan. 1, 2020, or when the city’s proportion of homeowners to renters has evened out to at least 50 percent.
Twelve casinos in Atlantic City made up 70 percent of annual property taxes as of 2013, but a flood of closures has left the city with eight operating casinos and a tax base that has fallen from $20.5 billion in 2010 to $7.3 billion, according to a March report from the city’s state-appointed emergency manager, Kevin Lavin.
Casino tax appeals have only added to that strain. The city has taken on $186 million in debt to repay casino tax reassessments for 2010-13, but there were $126 million in resolved tax appeals that didn’t have bonding behind them, the report said.