On Monday the Senate Community and Urbans Affairs committee amended and released legislation that would require municipalities to share certain payments in lieu of taxes (PILOTs) with school districts and inform counties, school districts, and the Department of Community Affairs of certain information related to property tax exemption and abatements. The League strongly opposes S-3915 due to the likely adverse impact on economic development.
The amendments include:
- Requires the mayor or chief executive officer and urban renewal entity within five business days of receipt of a PILOT application to notify the school district(s) board of education and school superintendent of the application and the urban renewal entity and municipality’s desire to enter into good faith negotiations for an agreement.
- The superintendent or chief executive officer of the board(s) of education shall lead the negotiations on behalf of the board(s) concerning the agreement with the municipality and urban renewal entity. The board(s) must approve by resolution within 90 days to enter into an agreement. If an agreement is not entered into within 90 days, the municipality must continue to process the application.
- Requires the municipality to copy the county and schools of the mayors’ recommendations to the governing body on the application. The county and schools will have 10 days to submit recommendations to the agreement. The municipality is required to give “due consideration” to the submitted recommendations.
- Requires the urban renewal entity within 90 days of the close of its fiscal year to certify to the municipality the number of school-age children residing in the approved project who are attending a public school. Copies of this certification must be submitted to the Department of Community Affairs, who must post the certification on its website.
- Permits the use of PILOT funds solely and exclusively to reduce the amount to be raised through property taxes instead of mandating the use of PILOT funds to reduce the amount to be raised through property taxes.
- Provides the Commissioner of Education, in consultation with Division of Local Government Services, rulemaking authority for the calculation and distribution of PILOT funds to the schools.
The reallocation of PILOT payments will require an increase in total PILOT payments so that the municipality, which provides the bulk of public services, can maintain services. Not only will this be an administrative challenge it will also have a critical adverse impact on the economics of redevelopment projects, especially those projects that require greater assistance due to environmental contamination, site conditions or extreme blight, or which have smaller returns, for example, the construction of affordable housing. In authorizing PILOT agreements, municipalities determine that a project would not be built without the PILOT. A significant increase in the amount of PILOT a project pays reduces the possibility that the project will be built at all.
We continue to be concerned that the provisions of S-3915, as amended, will significantly weaken the ability of municipalities to spur redevelopment in blighted areas through the use of PILOTs.
Payments in lieu of taxes (PILOTs) are the single most powerful tool available to municipalities to encourage businesses and developers to make improvements to property or to locate a project in a distressed or blighted area.
Please reach out to your Senator and urge them to vote “no” on S-3915.
Contact: Lori Buckelew, Deputy Executive Director, lbuckelew@njlm.org, 609-695-3481, x112.