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Tax Abatements

The City of Newark grants two types of Long-term Tax Abatements:

  1. Available to qualified commercial, industrial and residential development projects that incorporate as Urban Renewal Entities recognized by the State of New Jersey (authorized by N.J.S.A. 40A:20) and
  2. Available only to affordable housing projects financed by the New Jersey Housing and Mortgage Finance Agency (authorized by N.J.S.A. 55:14K).

In either case, the abatement is not a complete tax exemption. Instead of property taxes, successful applicants pay an Annual Service Charge, which is calculated according to a formula established by state law (for example, 10% of development entity’s annual gross revenue). Generally, Annual Service Charge payments are significantly lower than property taxes. They are also fixed by contract for the term of the abatement, providing additional certainty. However, developers are strongly advised to make an independent determination about whether pursuing the abatement would be in the best interests of the project.

In exchange for providing the abatement, the City requires that the project contributes to the City’s economic revitalization efforts, including workforce development, business development, affordable housing, and environmental sustainability.

 

Process for approval:

  1. Application is prepared by the Developer with assistance from staff in the Newark Department of Economic & Housing Development
  2. Developer and Economic & Housing Development staff negotiate and draft Financial Agreement with input from other City departments
  3. The Law Department reviews application and Financial Agreement, makes any required modifications
  4. The Mayor passes a recommendation to the Municipal Council
  5. The Municipal Council’s Tax Abatement Committee reviews the application and forwards it on the full Council with a recommendation
  6. The Municipal Council votes on the application (Most applications require two “readings” with the exception of projects receiving Housing Mortgage Finance Agency financing, which require only one “reading.” Timelines for approval will vary accordingly.)
  7. The final Financial Agreement is executed by all parties
  8. The City Clerk notifies the developer that executed Financial Agreement is on file
  9. Economic and Housing Development staff works with Developer to ensure compliance on provisions of Financial Agreement, including any payments to the Affordable Housing Trust Fund and annual submissions of financial statements and job reports
  10. Tax Collector begins billing Developer for Annual Service Charge rather than for property taxes once project has reached Substantial Completion

For the full PDF instructions to apply click: Instructions for Application

To Apply please fill out: Tax Exemption Application

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