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S1807 SCU Statement 2/5/26
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.