A Look at Municipal Reimbursement Something in Return

Double taxation is a term often referred to by residents of private communities to describe having to pay property taxes to their town in addition to the monthly maintenance fees they pay to their community association for services like snowplowing and recycling. When a condominium community provides services to its residents that the local municipality would normally pay for, it raises the question of reimbursement to the association for what can potentially seem like an unfair arrangement.

Potential for Inequality

To many both inside and outside homeowners associations and planned communities, it makes sense that association members should be exempt from paying—or get reimbursed for—the services they don't require from the municipality. Ironically, as a selling point to townships, developers sometimes tell local government officials that one benefit to letting them build a private community within a township or municipality is that the town can collect additional tax dollars from new residents without having to provide services to them as the services would be association-provided, according to Michael Karpoff, an attorney with Hill Wallack in Princeton.

But "as more and more communities were built," Karpoff says, "the residents got upset about that because they realized they were paying property taxes to the municipality for the services, but they weren't actually getting the services."

Various lawsuits and debates throughout the state eventually led to legislation that requires municipalities to provide qualified private communities in New Jersey with some of the services that "regular" homeowners receive.

But a private community may have desires and expectations that go beyond what a town currently provides, so they still collect maintenance fees and hire contractors to handle those extra or enhanced services. The Municipal Services Act, enacted in 1993, requires municipalities to reimburse private communities within or adjacent to the townships that pay for certain services. These services include snow and ice removal, electricity costs for street lighting and street collection of recyclables and leaves. Before 1993, there was no reimbursement to communities for these services.

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3 Comments

  • The law states clearly the town has to reimbursement is not based on their average cost, but what it would cost the town to provide the service to the private communities. Your own statement that the community roads are difficult because they are smaller, winding, and have more curves, (also usually many more intersections than township roads) means the cost would be higher on community roads than township. Our community has 68 intersections in 11 miles, and we are at a higher elevation than 50% of the town. So our roads are more difficult, meaning more costly. We go out to bid and pay a flat rate per hour, the town has to pay municipal wages and benefits and overtime. Our community provides a much more economical service than the township can.
  • Anyone have recent success getting municipal reimbursment for garbage collection in condo? Any new law(s) passed?
  • I live in Marlton N.J. My HOA takes our reimbursement money from the Township and the Condo Owners never see it. Is this allowed?