SENATE COMMUNITY AND URBAN AFFAIRS COMMITTEE
STATEMENT TO
SENATE, No. 1807
with committee amendments
STATE OF NEW JERSEY
DATED: FEBRUARY 5, 2026
The Senate Community and Urban Affairs Committee reports favorably and with committee amendments Senate Bill No. 1807.
As amended and reported, this bill revises various aspects of the laws governing property tax exemptions. Specifically, the bill requires municipalities to share certain payments in lieu of property taxes (PILOTs) with school districts, unless the project is 100 percent affordable senior housing or the municipality enters into an agreement with an urban renewal entity, as defined in section 3 of P.L.1991, c.431 (C.40A:20-3), and school district or district, including a regional school district (school district) to provide one or more special projects. The bill also requires notice to be provided to the county, school districts, and Department of Community Affairs (DCA) when a municipality considers and approves a property tax exemption, and when a municipality decides to enter into negotiations for an agreement with a school district and urban renewal entity.
Under the bill, any revenue derived from an annual service charge pursuant to the PILOT is required to be used solely and exclusively by the municipality, county or school district for the purpose of reducing the amount that is required to be raised through the local property tax levy by the municipality for municipal purposes, by the county for county purposes, and by the school district for school district purposes, as appropriate. Additionally, the bill requires that municipalities remit certain portions of these PILOTs to the school districts that serve the municipality, unless the municipality has entered into an agreement with an urban renewal entity and school districts to provide one or more special projects. Any amount paid to a school district as a percentage of an annual service charge is required to be deducted from the school district levy.
For a residential property, the municipality is to be required to provide those school districts with an amount equal to the product of: (1) the number of school-age children who attend a public school or regional school district that serves the municipality, and who reside in the project; and (2) the base per pupil amount determined by the Commissioner of Education for the previous school year pursuant to section 7 of P.L.2007, c.260 (C.18A:7F-49). Alternatively, this amount is to equal five percent of the PILOT, or an in-kind contribution equal in value to that amount, if the long-term tax exemption concerns nonresidential or mixed-use property. However, the amount remitted to a regional school district is required to be distributed to reflect the equalized valuation that would have been contributed by the property subject to a tax exemption to the regional school district’s cost apportionment formula absent the tax exemption and calculated to ensure that constituent municipalities of the regional school district that did not approve the financial agreement do not experience an increase in their proportionate share of the regional school district’s costs solely as a result of the tax exemption granted by another constituent municipality. When an amount is remitted to more than one school district, the amount is to be divided amongst those districts in proportion to each district’s share of the total school tax levy in the municipality.
The bill also provides that when an urban renewal entity applies for a long-term property tax exemption, the entity would be required to provide copies of the application to the county, school districts, and the Director of the Division of Local Government Services (DLGS) in the DCA. The DLGS is to be required to post this application on the Internet website of the DCA.
Under current law, the mayor of a municipality is required to submit recommendations to the municipal governing body within 60 days of receiving an application from an urban renewal entity for a long-term tax exemption. The bill requires these recommendations to be simultaneously submitted to the county and the local school districts that serve the municipality. Thereafter, representatives of the county and school districts are to be permitted to submit recommendations to the governing body within 10 days of receiving the mayor’s recommendations.
Prior and in addition to submitting the recommendations, within five business days of receipt of the application, the bill requires the mayor, and the urban renewal entity, to notify the board of education and superintendent of any school district, including a regional school district, that is coextensive with the municipality, or of which the municipality is a constituent, of the urban renewal entity or municipality’s desire to enter into good faith negotiations for an agreement to provide one or more special projects for the school district under the PILOT agreement.
A municipality, which elects to enter into an agreement with the urban renewal entity and the school district to provide one or more special projects for the school district that the municipality, urban renewal entity, and school district agree upon, is to enter into an agreement within certain timeframes enumerated in the bill.
The bill specifies that the superintendent of any school district that is coextensive with the municipality, or of which the municipality is a constituent, is to lead negotiations on behalf of the board of education concerning the agreement with the municipality and urban renewal entity. The board of education is to approve or deny the agreement by resolution within 90 days of the date the notification is received concerning the municipality’s desire to enter into negotiations for an agreement to provide one or more special projects for the school district. If an agreement is not entered within 90 days, the municipality is to continue to process the PILOT application.
The bill also requires a municipality to provide the DLGS and the school districts with a copy of an ordinance and financial agreement approving a long-term tax exemption. Currently, a municipality is required to only provide the county these documents. The bill also requires the DCA to post the ordinance and financial agreement on the DCA’s website. Similarly, the bill requires a municipality to provide the DLGS with a copy of an ordinance that effectuates a five-year property tax abatement, and requires the DLGS to post this ordinance on the website of the DCA.
After an application for a long-term property tax exemption is approved, current law requires the urban renewal entity to submit an annual audit to the municipality. Under the bill, this annual audit is to be required to certify the number of school-age children attending public school who are residing in the approved project. The bill also requires an urban renewal entity to provide copies of the audit to the Director of the DLGS for publication on the DCA’s website.
The bill specifies that the remitted portion of the PILOT received by a school district is not to exceed the percentage of the amount of property taxes, which are distributed to a given school district.
If the municipality fails to remit payment to the school district, the bill permits the unpaid balance thereof and interest, at the rate of one percent per month accrued thereon, together with attorneys' fees and court costs, to be recovered by the school district from the municipality in an action filed in a court of competent jurisdiction. The bill specifies that a municipal finance officer certificate may be subject to revocation or suspension for willful or intentional failure, neglect, or refusal to remit payment to the school district.
The bill additionally directs the Commissioner of Education, in consultation with the Director of the Division of Local Government Services, to promulgate rules and regulations for the calculation and distribution of payments from a municipality to a regional school district.
This bill was prefiled for introduction in the 2026-2027 session pending technical review. As reported, the bill includes the changes required by technical review, which has been performed.
COMMITTEE AMENDMENTS:
The committee amended the bill to: (1) specify that the superintendent of a school district is to lead negotiations on behalf of the board of education concerning the agreement with the municipality and the urban renewal entity by removing the provision that the chief executive of the board of education may do so; (2) clarify that the school district tax levy is required to be reduced by the amount of revenue received from a PILOT; and (3) specify that the remittance requirements pertaining to school districts are not to be applicable to 100 percent low and moderate income housing projects dedicated to housing 100 percent senior citizen occupants, who are persons 62 years of age or older and who qualify as low and moderate income households.