Some citizens have suggested that Berkeley Heights and any other New Jersey municipality can and should grant “tax breaks” or “tax credits” in the hopes of enticing businesses downtown. However, the law is clear and it does NOT allow municipalities to give “tax credits” to businesses.
Article VIII of the New Jersey State Constitution, Section 1 states, “Property shall be assessed for taxation under general laws and by uniform rules.” Subsection 2 states that any exemption from taxation can only be granted by general law of the legislature. Article VIII also lists the only recognized tax exemptions and those include Payment in Lieu of Taxes (PILOTs) under redevelopment. Unless authorized under Article VIII, no other tax exemption or tax break is permitted under N.J. law.
So, as your Mayor, I would love to give “tax credits” to current and future businesses located here but it is NOT permissible by law. Thankfully, municipalities such as Berkeley Heights can give developers a tax benefit by using a PILOT. A PILOT offers reduced taxes to developers but directs the lion’s share of tax receipts to municipal coffers rather than to the county and schools.
Berkeley Heights is, in fact, using a PILOT on certain redevelopment properties to offer a tax benefit to developers as well as give a benefit to taxpayers. Under a PILOT, the Township will receive 95% of all the tax payments made on those properties. Without a PILOT, the municipality only receives 18% of the tax payment. To date, Berkeley Heights has reached PILOT agreements with Stratton House (the former Kings property) and with the developers of the Locust Avenue over age 55 housing project. We are now in negotiations for the Hamilton Avenue Project and expect to consider PILOTs for other development properties.
If you are interested in more information on PILOTs, refer to this presentation posted to the Township website under the “Redevelopment” tab or contact John Bussiculo at 464-2700 x 2232.