Understanding Residential Tax Abatements in Ventnor

Tax abatements are offered to encourage development, particularly in distressed areas, where property is vacant or underused, or is a property in need of significant improvement and investment. The idea is to turn that property into a property that has a higher value, because of new construction, and which will generate more tax revenue. Abatements are not unique to the City of Ventnor. They are a standardized tool used to encourage investments throughout cities. Ventnor did not invent it.

Thirty percent (30%) of the new construction is abated. Seventy percent (70%) of the new construction is not abated. This is done for a 5-year period. Many people get confused by abatements and assume the entire property (100%) is abated. This is not correct. Only 30% is abated.

Land is NEVER abated. The assessed value of the land is 100% taxable.

The following bullets provide a good summary of abatements:

• A 5-year phase-in: For 5 years, 70% of the new construction is taxed. Thirty percent of the new construction is not taxed.
• 100% of the land is taxed: Property owners continue to pay the full taxes on the land throughout the 5-year abatement period; meaning there is no abatement on the assessed value of the land.
• The abatement applies to the improvement only: It applies only to the new value created by the new construction.
• The goal: To encourage investment that expands the tax base and creates additional long-term revenue that can help pay for services and major improvements such as roads, parks, the boardwalk, and other city improvements and needs.

A tax abatement is not a giveaway. It is intended to make some projects financially attractive that might otherwise not happen, particularly when a property is vacant, underused or in need of significant investment. The idea is to turn that property into a more productive, higher-value asset that generates additional tax revenue and eventually after a short 5-year period becomes 100% taxable.

With an abatement, greater tax revenue is realized from the new construction than a property with no new construction.

The following diagram provides an example comparing an older property and a new property and the resulting taxable value.