This bill proposes to allow certain municipalities in New Jersey to implement a land-based property tax system, where improvements (such as buildings) are taxed at a lower rate than the land itself. This system aims to discourage land speculation and promote the redevelopment of vacant urban land, drawing on successful examples from neighboring states like Pennsylvania. The bill specifies that municipalities currently designated as urban enterprise zones can adopt this system immediately, while other municipalities may apply for approval to do so after a seven-year period. The Director of the Division of Taxation will establish rules and standards for these applications, ensuring that approval is not granted if the municipality's developable lands are primarily used for preserving open space or environmentally sensitive areas.

Additionally, the bill allows for the gradual phasing in of the adjusted tax rates, enabling municipalities to manage the transition effectively. It also provides the option for municipalities to revert to a single-rate property tax system if desired, with a similar phased approach for adjusting rates. Importantly, the bill will only take effect following a constitutional amendment approved by voters, which would authorize municipalities to adopt this differentiated property tax system.