Are PILOTs good or bad?

From ROI-NJ:

Is fixing PILOT regulations a way to fix school funding?

Marc Pfeiffer, assistant director at Rutgers University’s Bloustein Local Government Research Center, said the last time payments in lieu of taxes were addressed in the state was 1992.

The timing for another look couldn’t be better.

Pfeiffer was part of the Legislature’s Economic and Fiscal Policy Review Committee, which released a series of recommendations to improve the New Jersey economy Thursday in Trenton.

Pfeiffer said reworking PILOTs to make sure they support local funding, could have big impact on spurring economic development.

Pfeiffer had some recommendations regarding how to handle PILOT revenues:

Have a more transparent process in municipalities to understand add-ons to the levy cap to justify expenses of PILOTs and new assessments;

Share some of the revenue from PILOTs with school districts, which currently receive funding only from the land tax; meanwhile, the county and local governments share the PILOT revenue in a 5-95 percent split, respectively.

PILOTs have been a hot topic because residents often feel they are being cheated out of the economic benefit of a new commercial ratable on the scene, and school districts feel they are being cheated out of more revenue that municipalities are benefiting from.

This split increasingly has become a point of contention in places such as Edison, which has seen an ongoing presence of school board members and municipal meetings demanding a portion of the PILOT revenues.

Pfeiffer said it’s time to start the discussion.

“In today’s redevelopment environment, with all the other incentives that we now provide to businesses, and new incentives to come — more specifically on that is the federal Opportunity Zones, which we think are going to be a game-changer down the road — what is the place for payment in lieu of taxes as part of a new redevelopment?” he said.

Michael Bruno, and attorney with Giordano, Halleran & Ciesla, said at the July event that the political leanings of the municipality often determine where the greatest pushback comes from.

“It depends on the political bend of the municipality,” he said. “Financially, it almost always comes out that it’s a better deal for the municipality. You can almost always negotiate a deal where they are going to end up with more money than they would under conventional terms. That’s why municipalities like it so much.”

This entry was posted in New Development, New Jersey Real Estate, Politics, Property Taxes. Bookmark the permalink.

37 Responses to Are PILOTs good or bad?

  1. chicagofinance says:


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  3. 3b says:

    What exactly is a pilot?

  4. The Original NJ ExPat says:

    I don’t know how pilot schools work in NJ, but I can give you a little bit of background of how they are different from other public schools in Massachusetts.

    1. A Pilot school is a public school, not to be confused with a charter school.
    2. Pilot schools get to take their entire school budget and spend it pretty much as they please. Your garden variety public schools have their budget pigeon-holed into line bookkeeping items, i.e. you have to spend this much on books, this much on supplies, this much on whatever else. I’m not sure of all of the particulars but I *believe* Pilot schools get to manage their budget more to the school’s individual needs. If you have a budget for 3 lunch room monitors, but you really only need two, you can use that money elsewhere. Obvious good and bad there, for sure.
    3. This is the big one, in my book. Pilot schools receive concessions from the teachers union wherein they may have to work longer hours, less time off during the school day, etc. Our daughters early learning center, where grades K0, K1, K2, and 1st grade (3-6 year olds) were taught and school begat at 7:30AM, teachers had to be there earlier. Surround care meant that your kid could stay there until 5PM and they were bused both ways in yellow school buses. I *believe* union teachers had to stay until 3:15PM, so that’s something like an 8 hour day for teachers (the horror!). The teachers know about these concessions ahead of time before they sign on to teach at a pilot school.

  5. The Original NJ ExPat says:

    What the teachers did get, at least in the K0-K1 grades (3 and 4 year olds, which were combined in 22 seat classes) was two aides per class in addition to the union teacher, which were basically baby sitters. At K1 I think they got a senior aide in the classroom, and probably a union track teacher’s aide in the 1st grade class. I used to be on the board, so I should remember these things, but it was a long time ago. I’m surprised they never lost anybody on Museum and Circus class trips, 160 kids or so, all under the age of 6. BTW, the demographic split was pretty even, White, Black, Hispanic, Asian – about 25% each.

  6. Juice Box says:

    Pretty much every new “luxury” development in Hoboken is a 30-year payment in lieu of taxes (PILOT). They have even extended the PILOTs that have expired beyond 30 years for some of the older buildings, and it helps big time that Hoboken is also an Abbott district. Remeber PILOT payments do go to the school district at all.

    PILOT payments mean lower taxes for those “luxury” units.

  7. Juice Box says:

    Correction PILOT payments DO NOT go to the school district.

  8. 3b says:

    Ex/ Juice. Thanks for the explanations.

  9. 3b says:

    In other news as per NY Post August 11th a record number of Americans are defaulting on their credit cards auto loans too are a problem. Highest record since 1995.

  10. Juice Box says:

    3b -Vegas syndrome. People always tell you how fun their fancy vacation was, but they don’t tell you how much money it cost.

  11. The Original NJ ExPat says:

    5% of them do. Methinks they want more.

    Correction PILOT payments DO NOT go to the school district.

  12. Fast Eddie says:

    House around the corner listed two weeks ago… sold sign went on yesterday. They don’t seem to last long. The neighborhood has a lot of young families!

  13. The Original NJ ExPat says:

    Eddie – Property requires flood insurance?

  14. Grim says:

    PILOTs let municipalities call the shots, and they generally result in little to no taxes going to the County or the School District.

  15. 3b says:

    Fast I guess it depends on how you define young!

  16. 3b says:

    Juice very true!

  17. The Original NJ ExPat says:

    LOL. Peter Strzok fired on Friday.

  18. 3b says:

    This Turkey situation could get very ugly!

  19. The Original NJ ExPat says:

    The method behind the madness in the Strzok firing just hit me. Sure, short term win for Trump. But…the IG (Horowitz) has no subpoena or interview power over those who aren’t still employed by the government.

  20. Juice Box says:

    3b – It is not clear that Erdogan understands basic economics, he controls their central bank and their hence the money supply. You have to raise rates to stem inflation. They are instead headed the way of the Weimar Republic.

  21. 3b says:

    Juice he is a dictator who will destroy the country but he does not care. As long as Islam is restored and dominates. Attaturk is rolling over in his grave. Borrow in dollars pay back in devalued liras!! That won t end well!!

  22. leftwing says:

    “LOL. Peter Strzok fired on Friday.”

    And nary a peep from the MSM. Bias by deafening silence….

    Well at least the Special Prosecutor is above politics, given his aggressive pursuit of Podesta over Ukraine as well……oh snap.

  23. joyce says:

    PILOTs and other economic incentives offered to a chosen few, and not entire industries or literally everyone, should be declared unconstitutional.

  24. Libturd questioning the gender of Hillary's Cankle fluid. says:

    Town councils/Mayors love PILOTs. They can tax a developer at whatever rate they choose, and the county portion of the bill is much smaller than it would have been had they been taxed like any other commercial ratable. Of course the developer loves it because they get a discount that should fall somewhere in between what they would have paid without the PILOT and what they finally agreed to pay. Where the PILOTs turn to sh1t, is when the town council/mayor who offer these pilots do a terrible job evaluating the value of the developed property. This evaluation is often unduly influenced through the purchase of political favor by the developer that is not available through traditional tax collection.

    In Montclair, when the first PILOT was offered for the leaky Sienna, the developer robbed the town outright. The developers’ lawyers wrote the PILOT in such a way that the town would not be able to start collecting any PILOT money until every retail unit was fully occupied. Then the developer cut a tiny sliver out of one of the retail spaces with a completely undesirable footprint and then didn’t start paying their taxes for nearly 7 years after the building was first occupied. The political favor purchased must have been great though. The town elected to go with the same developer to build 4 other projects which are all in currently in various states of construction.

    I was at the town council meetings when this PILOT was approved and watched as the mayor and pot-head blue wave lawyer systematically denied that anything could go wrong with these then, already known to be devilish PILOTs.

  25. Libturd questioning the gender of Hillary's Cankle fluid. says:

    On the right is your high attorney. You’ll probably recognize the guy in the middle. Most likely his bong buddy.

  26. Libturd questioning the gender of Hillary's Cankle fluid. says:
  27. Libturd questioning the gender of Hillary's Cankle fluid. says:

    Here he is with mayor b00b. Check out how disheveled he is. I bet the dispensary in Montclair has a strain named after him.

  28. JCer says:

    Yes that is the issue with the PILOTS. In a lot of ways they can spur development and taxes to be paid that otherwise wouldn’t exist. The problem becomes is the PILOT payment a net positive, sometimes yes, sometimes no, and also would development occur without the abatement? Political favor resulting in bad PILOTS given to developers who shouldn’t need them is the problem(see every high rise built in Downtown JC for the last 5 yrs).

  29. 3b says:

    Has anyone here been to Punta Cana? Not familiar with the DR.

  30. 1987 Condo says:

    Was in Punta Cana last summer for vacay. Went Iberostar, supposedlyy #1 on Trip Advisor for all adult/inclusive. Was good. We usually go to Aruba but switched it up. Trip Advisor has many reviews.

  31. Not Bloomberg News says:

    Did NJ Expat really talk about pilot schools when an article was posted about Payment in Lieu of Taxes, PILOT?


  32. xolepa says:

    Yes, several times in DR. What’s the story?

    Personally, it’s OK, but not as nice as my stay at Casa De Campo on the other side of the island. That was pure paradise. But then again, that was 17 years ago.

  33. chicagofinance says:

    Friends of our came back from Punta Cana just a week ago. My son’s 11 year old friend came back with hand-foot-mouth disease.

  34. Blue Ribbon Teacher says:

    Apparently, Peter Strzok sent 50000 text messages with his girlfriend? Holy crap! Did he ever actually do work?

  35. 3b says:

    Chgo sorry to hear that. So kind of mixed on Punta Cana and the DR it seems.

  36. The Original NJ ExPat says:

    I thought the same thing a long while ago. Aside from the content, did ever do any work? I’m astounded that it happens all day long all around regular offices. It used to be a “thing” to use the “company” phones for personal business. Now it doesn’t seem to matter how much personal “business” you do at work.

    Apparently, Peter Strzok sent 50000 text messages with his girlfriend? Holy crap! Did he ever actually do work?

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