Economic Stimulus Act of 2009

The Legislature and the Governor recently enacted a number of laws designed to minimize the impact of current conditions on New Jersey businesses and residents, including legislation providing incentives to create jobs and make business investments in this State.

The Economic Stimulus Act of 2009 authorizes developers to enter into agreements in qualifying economic redevelopment and growth grant incentive areas which means Planning Area 1 (Metropolitan), Planning Area 2 (Suburban), or a center as designated by the State Planning Commission; a transit village, as determined by the Commissioner of Transportation; and federally owned land approved for closure under a federal Base Realignment Closing Commission action. The redevelopment incentive grant agreement specifies the amount of the incentive grant to be awarded the developer, the frequency of payments, and the length of time, which shall not exceed 20 years, during which that reimbursement shall be granted. In no event shall the combined amount of the reimbursements under redevelopment incentive grant agreements with the State or municipality exceed 20 percent of the total cost of the project, exclusive of publicly-owned infrastructure. Up to 75 percent of the incremental local and state revenues generated and collected from the project  may be pledged towards the incentive grant.

The Act is intended to finance the project financing gap which means the part of the total redevelopment project cost, including return on investment, that remains to be financed after all other sources of capital have been accounted for, including, but not limited to, developer contributed capital, which shall not be less than 20 percent of the total project cost, and investor or financial entity capital or loans for which the developer, after making all good faith efforts to raise additional capital, certifies that additional capital cannot be raised from other sources. This Act is a tremendous incentive to developers in the targeted areas and is similar to laws we have used to help finance major casino expansions in New Jersey.

Free Rent Provision May Extend Term of Lease

Free rent is customarily given by a Landlord to a Tenant as an incentive to lease a particular space. Besides the obvious benefit to Tenant, Landlord also benefits by being able to list the lease on the rent roll starting on the day the lease begins, even if no rent is being collected. But does free rent extend the term of a lease? According to a recent New Jersey Appellate decision, it does.

In R.A.M. Holding Corp. v. Hoboken No. 1 Blimpie, Inc., No. L-1267-08 (N.J. Super. Ct. App. Div. July 24, 2009 ), Landlord and Tenant negotiated a 10 year lease commencing on September 1, 1997 and terminating on August 31, 2007. Because of necessary renovations, Landlord offered to abate rent for the first two months and the parties executed a rider to that effect. The rider also provided for an option to extend the term for an additional five years provided notice was given within 60 days of the date of termination. Tenant gave notice to Landlord that it intended to extend the lease on October 2, 2007, after the original lease term would have terminated. Landlord commenced dispossess proceedings, claiming that the lease had already terminated on August 31, prior to the notice of extension.

 

The court found in favor of Tenant, and held that the rider provision giving Tenant two months of free rent actually amended the term of the lease and extended the date of termination to November 31, 2007, which in turn granted Tenant an additional 60 days to give notice of Tenant’s decision to extend the lease.

 

While not all free rent provisions will extend the term of a lease, Landlords should ensure that the language of any lease or rider specifically states that any free rent incentive given is to be taken during the lease term and state the particular date on which the lease is to terminate.

Applications for Farmland Assessment DUE AUGUST 1st

The New Jersey Farmland Assessment Act of 1964 (N.J.S.A. 54:4-23.2) (“Farmland Assessment Act”) permits farmland and woodland of not less than five acres in area that is actively devoted to agricultural or horticultural use to be assessed at its productivity value, rather than the fair market value.  

The practical effect of a farmland assessment is that qualifying property owners will pay significantly less in property taxes versus the property taxes that would be levied based on the fair market value of the property. Far too often a seemingly compliant farmland property does not qualify for a Farmland Assessment because the owner did not adhere to the stringent filing and qualification criteria necessary to qualify.  Among the many criteria is a requirement that the land must be actively devoted to agricultural or horticultural uses for at least two years prior to the tax year in which the assessment is sought. Also, property owners must file annually for Farmland Assessment by completing a Form FA-1 with the municipal tax assessor prior to the August 1st deadline.  Note that an approved Farmland Assessment does not automatically renew from year to year but requires the property owner to file every year for the Assessment

Interestingly, the property owner seeking the assessment need not be the actual farmer or cultivator of the land. The Farmland Assessment Act permits an owner to rent the qualifying farmland to a farmer to cultivate agriculture and horticulture consistent with the Farmland Assessment Act. However, the use of the land for agriculture or horticultural purposes must not be haphazard even if it produces enough income to satisfy the gross sales requirement of the Farmland Assessment Act. 


The New Jersey Department of Agriculture publishes an informational guide to Farmland Assessments. See
http://www.state.nj.us/agriculture/
FarmlandAssessmentGuide.pdf
or call the Department of Agriculture at (609) 984-2503.