January 1, 1900

During periods of economic downswing, municipalities often seek ways to attract business development and investment. Difficulties caused by economic decline are compounded in municipalities where once thriving business districts have become less desirable due to structural dilapidation, poor maintenance, obsolete buildings, vacant industrial and manufacturing plants and other conditions. Older business districts may be further plagued by irregular lot sizes and faulty street arrangement or design. However, many municipalities are choosing to redevelop downtrodden business districts through laws that permit tax incentives for investors who relocate into their communities.

Plans for revitalization of distressed areas often include streetscape overhauls, lot consolidation, street and lot reorganizations, uniform signage requirements and relocation of telephone lines and poles. These plans provide road maps for more accessible and efficient business districts and enhance the aesthetic value of the community. Such benefits generate greater investment and development.

Steps to Redevelopment

The start-up of a redevelopment project, though, is usually the most difficult task faced by a municipality because few businesses are willing to be the first to reinvest in an area that has become distressed. A municipality that takes advantage of the "Local Redevelopment Law" and adopts an aggressive redevelopment plan, however, can encourage investors by providing substantial incentives.

In order to adopt such a plan, the governing body must, in conjunction with the planning board and upon public hearing, make a finding that a particular area contains conditions requiring redevelopment. Such conditions may include any of the following: buildings that are substandard, unsafe, unsanitary, dilapidated or obsolete; abandoned buildings that were previously used for commercial, industrial or manufacturing purposes; municipal-owned land that has remained unimproved for numerous years and is unlikely to be developed through private capital; buildings or land detrimental to the safety, health, morale or welfare of a community due to the poor conditions; under-utilized buildings; or areas destroyed or substantially harmed by various causes, such as fire, storm, cyclone, tornado, earthquake or other casualty.

Once a redevelopment area is delineated, the municipality may adopt by ordinance a redevelopment plan that provides for the planning, development, redevelopment and/or rehabilitation of the area. A redevelopment plan should define the appropriate land uses, building requirements, population densities, traffic flow, public transportation, utilities, recreation areas and community facilities. The plan should also identify any land that is proposed to be acquired in order to implement the goals of redevelopment. In addition, it should demonstrate its relationship to both the municipal and county master plans and the State plan.

Benefits Include Possible Tax Incentives

After adoption of a redevelopment plan, the municipality may invite investors to undertake redevelopment projects within the area while offering substantial tax incentives. Such tax breaks may include five-year tax exemptions and/or abatements, or 30-year tax exemptions for qualified developers. A municipality that has adopted a redevelopment plan also has increased legal capacity to acquire property within the delineated area and increased flexibility to sell property within the area without having to adhere to the traditional public bidding strictures, as long as such acquisitions and sales further the redevelopment goals of the community.

There are many mutual benefits that can be reaped by both a municipality and a developer where an aggressive redevelopment plan has been adopted. Most importantly, the new businesses can realize substantial tax savings while revitalizing a business district and returning previously nonproductive properties to the municipal tax rolls. A revitalized business district will lead to additional investment and increased desirability of a community, which any struggling municipality would welcome with open arms.