By Ivan Kaplan & Stephen Pagano, Becker Meisel
A little-known New Jersey law gives
those municipalities that have been
determined by the state to be lacking in
basic medical service providers (Health
Enterprise Zones or HEZs) the opportunity
to offer commercial property owners
and redevelopers powerful new
incentives – substantial property and
income tax breaks- when marketing
properties located in, or within five
miles of, an HEZ to applicable tenants.
Enacted in 2004, the law is sometimes
called Chapter 139 or the Health
Enterprise Zone Act.
First, it gives a primary care dental or
medical practice located in or within 5
miles of an HEZ the ability to deduct
from its taxable income an amount
equal to payments received by the practice
in Medicaid funds, provided that at
least half of the income earned by the
practice is paid in Medicaid funds. For
most practices located in an HEZ, this
should not prove to be a difficult
threshold to reach.
The act also grants to municipalities
located in an HEZ the ability to authorize
a property tax exemption for that portion
of a building used to house a medical
or dental primary care practice.
Property owners must rebate to that
tenant an amount equal to the exemption,
either in a lump sum or through
discounted rental payments. In other
words, at no additional cost to the
owner, the owner or redeveloper can
offer substantial financial incentives to
a prospective medical practice tenant,
subject to the following caveat: Not a
single municipality has enacted an ordinance
to grant these property tax
breaks since the act took effect in June
2005.
Currently, Newark appears to be the
only city government that even has such
a proposed reresolution before it. This
is too potentially powerful an incentive
to let go to waste. The benefits to the
city, including medical services, and to
the practitioner, such as significant
financial breaks, would seem to call for
a much more concerted effort to convince
applicable municipalities to act.
In addition to Newark, cities with-more
than 30,000 residents that are designated
as HEZs include Atlantic City,
Camden, Jersey City, Irvington, New
Brunswick, Paterson, Perth Amboy and
Trenton. Municipalities with populations
ranging from 5,000 to 29,999 include
Asbury Park, Burlington, Freehold,
Gloucester and Salem.
Cont'd next page >>
|
