PARSIPPANY — Legislation advancing in Trenton could change how future redevelopment projects using Payments in Lieu of Taxes (PILOTs) support local school districts — but it would not affect any PILOT agreements already in place.
The New Jersey Senate Community and Urban Affairs Committee recently advanced Senate Bill S-1807, sponsored by Senators Troy Singleton and Benjie Wimberly. The bill would require municipalities entering into new PILOT agreements to either share a portion of the revenue with their local school districts or enter into an agreement with the developer to fund school-related projects.
Importantly for Parsippany and other municipalities, the legislation is prospective only. Existing PILOT agreements would remain unchanged and would not be reopened or renegotiated under the bill.
What the Bill Would Do
Under S-1807, when a municipality considers and approves a new property tax exemption, it would be required to:
- Share a portion of the PILOT revenue with the school district or
- Reach an agreement with the developer to provide direct, in-kind support or special projects benefiting the school district
The legislation is intended to address concerns that PILOT agreements, while encouraging redevelopment, can divert revenue that would otherwise support local schools.
How Revenue Sharing Would Work
If municipalities choose to remit funds rather than pursue an alternative agreement, the amount shared would depend on the type of development:
- Residential projects:
The contribution would be based on the number of school-aged children living in the project multiplied by the state’s per-pupil funding amount. - Nonresidential or mixed-use projects:
The required contribution would equal five percent of the PILOT payment, or an in-kind contribution of equal value.
In all cases, the amount shared with school districts could not exceed the percentage they would normally receive from property tax revenue.
Added Transparency Requirements
The bill also includes new notification requirements. Municipalities would be required to provide notice to county officials, local school districts, and the New Jersey Division of Local Government Services when a property tax exemption is being considered and approved.
Why It Matters Locally
Supporters of the legislation say the goal is balance — encouraging redevelopment while ensuring school districts remain financially stable, particularly in communities experiencing growth tied to new housing.
For Parsippany residents, the key takeaway is that existing PILOT agreements are unaffected, but future projects could include new mechanisms to ensure local schools benefit alongside redevelopment.
The bill must still advance through the full legislative process before becoming law.
