Tax Abatement

The Attorneys in Scarinci Hollenbeck’s tax abatement practice has a strong track record of finding effective solutions to assist our clients in navigating complex tax abatement programs governed by New Jersey’s Long Term Tax Exemption Law. This level of expertise is essential since cities have complete discretion in deciding whether or not to grant a long term tax exemption or for how much and how long, and inasmuch as these decisions are often controversial, it is critical to work with a firm that understands the issues and has a record of success.

The New Jersey Long Term Tax Exemption statute permits municipalities to grant tax exemptions to limited dividend entities that undertake redevelopment projects, and low and moderate-income housing projects in Urban Enterprise Zones or other areas in need of redevelopment. The technical term for an abatement tax is “Payment In Lieu Of Taxes” or “PILOT.” Obtaining a tax abatement can be essential to the financial success of a proposed development, particularly when competitors have already obtained such abatements. Moreover, the decision of whether or not to grant an abatement is a legislative act by the governing body.

Abatements also have cash flow benefits, with payments graduated to provide the greatest relief upfront, and cash flow predictability, with taxes set at a fixed percentage after substantial completion of the project. Additional programs provide qualified projects an exemption from sales tax on capital improvements, adding 7% directly to their bottom line of any project.

We offer assistance in all phases of the abatement procedure, including evaluating available programs and hands-on guidance with all phases of the process, including creating and registering qualified entities with the Department of Community Affairs, drafting abatement applications, negotiating financial agreements and project labor agreements, and advising on compliance issues. We handle exemptions and abatements for new construction, reclassification of real property, as well as eminent domain/condemnation matters.