Tax Exemptions and RABs
Closely tied to the Redevelopment Practice Area, are tax exemptions and Redevelopment Area Bonds (RABs). These are financial tools that can greatly enhance the financials for a project in a blighted area since they have the ability to lower an owner’s or tenant’s tax liability over a period of time. They also have the ability to lower operating costs and/or contribute to the capital stack for a given project. These powers, however, are constitutional powers and require careful consideration for both their structuring and implementation.
NP Law has developed a particular expertise in the areas of tax exemptions, specifically structuring, analyzing, implementing and leveraging them. In New Jersey, there are two types of tax exemptions that may be available in the redevelopment or rehabilitation setting. One is available for a 5 year term only and the other is available for up to 30 years. NP Law can help you determine whether your project could be eligible for one of these tax exemptions, structure the appropriate tax exemption and help implement same with the local government.
Tax exemptions are powerful tools on their own, but they can be leveraged to further support more complex financing, including RABs. Tax exemptions can also be paired with other forms of financing as part of a more comprehensive financing structure for larger projects.
Among Our Services:
- Due diligence and review of redevelopment authority.
- Preparation of applications and coordination with local counsel.
- Attendance and presentation at meetings.
- Analysis and review of financing impacts for all parties, including default scenarios.
- Preparation, negotiation and closing of all financing documents and instruments.
- Elberon: The firm has worked with the Elberon family of companies with the structuring and approvals of tax exemptions in the City of Elizabeth which have been instrumental in the development and expansion of critical warehousing facilities in the region. The Firm has represented the Elberon family of companies in preparing and negotiating payments in lieu of taxes applications with the City that serve to lower the operational costs of each project and allow each development to remain competitive in an active market.
- Bayonne/Silklofts: The Maidenform factory in the City of Bayonne was once a symbol of its strong industrial history. At the height of its operations, the factory employed 1,300 employees. In 2009 a new owner decided to transform the closed factory into 85 luxury residential units. With the assistance of local property tax exemptions from the City of Bayonne, the owner was able to open the building to new residents in 2014. The project boasts exposed brick and high ceilings, studios, one-bedroom and two-bedroom units with a courtyard that includes a community pizza oven. Jong Nee worked with the City and the owner to negotiate the terms of a long term tax exemption to help lower the cost of operating the project and to make the project competitive with neighboring markets.
- L+M Development: The firm has represented L+M Development and its affiliates seeking tax exemptions through the Long Term Tax Exemption Law, N.J.S.A. 40A:20-1 et seq., and through the New Jersey Housing Mortgage Financing Agency Law, N.J.S.A 55:14K-1 et seq. The firm has assisted L+M through the procedural structuring and negotiation of payments in lieu of taxes and Financial Agreements and has ushered each application through to completion and approval to further the development mission of the client.
- Hoboken/PILOT Review: Our attorneys have assisted the City of Hoboken with the interpretation and implementation of Financial Agreements and tax exemptions for a variety of projects in the City, ranging from affordable housing projects supported by federal Section 8 vouchers, to commercial projects that permit mixed use development.