The Senate Community and Urban Affairs Committee advanced legislation sponsored by its Chair Senator Troy Singleton and Senator Benjie Wimberly that would require towns to share a portion of the PILOT revenue with school districts or enter into an agreement with the entity receiving the PILOT to provide one or more special projects to the district.
The legislation aims to ensure that PILOT agreements entered into by municipalities do not negatively impact the financial stability of school districts.
“PILOT agreements are a useful tool for local governments, playing an important role in the reinvigoration of distressed communities and the development of much-needed housing,” said Senator Singleton. “At the same time, they often have the negative side effect of depriving local school districts of the revenue that would normally come from property taxes.
“This legislation would require towns to share a portion of those funds with their schools or provide other forms of assistance. This will ensure that these districts are more financially stable and able to pay for any students that result from these developments.”
The bill, S-1807, would require municipalities to share specific PILOTs with school districts, unless the city enters into an agreement with the school district and the entity receiving the PILOT to provide one or more special projects for the school district.
In addition, it would require municipalities to provide notice to the county, school districts and the Division of Local Government Services within the Department of Community Affairs when a municipality considers and approves a property tax exemption.
“PILOT agreements should help communities grow, not shortchange our schools,” said Senator Wimberly. “This legislation is about balance and accountability — making sure that when towns benefit from redevelopment, local school districts aren’t left struggling to educate the students who come with it.
“By requiring towns to share PILOT revenue or invest directly in school projects, we’re protecting school funding and putting students first.”
If the municipality, school district and entity receiving the PILOT seek to agree to provide special projects to the school district instead of remitting a portion of the PILOT, the superintendent or chief executive of the board of education of any school district of which the municipality is a constituent would lead negotiations on behalf of the board of education concerning the agreement.
The amount a city would be required to share with school districts, if the parties don’t opt for an alternative agreement, would depend on whether the relevant property is residential, nonresidential or mixed-use.
Specifically, for a residential property, the amount would be equal to the product of the number of school-age children who attend a public or regional school district that serves the municipality, as well as reside in the project, and the base per-pupil amount determined by the commissioner of education in the previous school year.
Alternatively, for nonresidential or mixed-use properties, this amount would be equivalent to 5% of the PILOT or an in-kind contribution of equal value. Additionally, the remitted portion of the PILOT to the school district would not be permitted to exceed the percentage of the amount of property taxes distributed to the school district.
When an amount is remitted to more than one school district, the amount would be divided among those districts in proportion to each district’s share of the total school tax levy in the municipality.
