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PILOTs in Montgomery, Explained
A PILOT (payment in lieu of taxes) replaces ordinary property taxes with an agreed yearly charge. Montgomery has four on record; a fifth, for Thrive at Montgomery, has been announced but not introduced. Under state law most of the money goes to the township and none to the schools unless the town contracts with the school board. The law, each PILOT, and what is not known.
What a PILOT is
A PILOT, or payment in lieu of taxes, is a long-term tax exemption. The new buildings on a site are taken off the ordinary tax rolls, and the owner pays the town an agreed yearly charge instead. In New Jersey most market-rate PILOTs are made under the Long Term Tax Exemption Law (N.J.S.A. 40A:20). Affordable-housing projects financed by the state Housing and Mortgage Finance Agency can use a separate law (N.J.S.A. 55:14K).
The township’s own PILOTs page puts the case for them this way: “A PILOT frequently allows a town to retain more revenue locally than traditional taxes.”
What the law says
Under the Long Term Tax Exemption Law:
- Who can get one. Only an “urban renewal entity” building a project in a redevelopment area. The financial agreement “shall not take effect until approved by ordinance of the municipality.”
- How long. “Not more than 30 years from the completion of the entire project,” or not more than 35 years from the signing of the agreement.
- How much. A yearly “annual service charge,” usually a percentage of the project’s annual gross revenue. The percentage “shall not be more than 15 percent in the case of a low- and moderate-income housing project, nor less than 10 percent in the case of all other projects.” After an initial stage the charge must step up toward ordinary taxes: the greater of the percentage or 20%, 40%, 60% and finally 80% of the taxes otherwise due.
- A floor. “The minimum annual service charge shall be the amount of the total taxes levied against all real property in the area covered by the project in the last full tax year in which the area was subject to taxation.”
- Land tax. The land itself stays on the tax rolls, and the owner gets “credit for the amount … of the real estate taxes on land paid by it” against the service charge.
- Admin fee. The town may charge “an annual administrative fee, not to exceed two percent of the annual service charge.”
- The county. For agreements made after July 2003, the town “shall remit five percent of the annual service charge collected by the municipality to the county.”
- The schools. Since P.L.2023, c.311 (approved January 16, 2024), the law adds: “If the municipality enters into a contract with a board of education pursuant to section 7 of P.L.2023, c.311 (C.18A:7G-15.1a), the municipality shall also remit to the board of education such amounts as may be required under the contract.” Section 7 lets a school board sell school-building bonds without a referendum if a town contracts to “annually remit to the board of education a portion of the payments in lieu of taxes,” with state approval.
Two later changes matter. P.L.2025, c.91 (approved July 8, 2025, effective October 1, 2025) lets a county sue for an unpaid 5% share and requires the town to notify the county’s chief financial officer and clerk “of the date, time, and place of the public hearing” before adopting a PILOT ordinance. The state’s Local Finance Notice 2025-12 adds that “PILOT agreements executed pursuant to a law other than the Long-Term Tax Exemption Law are not subject to the provisions of P.L. 2025, c.91.”
A bill now in the Legislature would go further. S1807 “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 town makes a special-projects agreement. It was reported out of a Senate committee 4-0 on February 5, 2026 and referred to the Senate Budget and Appropriations Committee. No later action is recorded.
Who gets the money
On an ordinary 2026 Montgomery tax bill, by our calculation from the county’s 2026 rates:
| Goes to | Rate per $100 | Share of each $1.00 |
|---|---|---|
| Montgomery schools (regional district) | 2.457 | about 68 cents |
| Somerset County, county library and open space | 0.609 | about 17 cents |
| Montgomery Township, including open space | 0.541 | about 15 cents |
Under a Long Term Tax Exemption PILOT, the land tax is still split this way. The rest of the payment (the service charge minus that land-tax credit) is split 95 cents to the township and 5 cents to the county, plus the township’s admin fee. The schools receive nothing from that part unless the town has a contract under P.L.2023, c.311. These shares are an illustration from published rates and the statute, not a figure from any Montgomery agreement.
The township’s PILOT consultant described the same split on October 16, 2025: “THE LAND TAXES WILL STILL BE SPLIT, JUST LIKE CONVENTIONAL TAXES, WHICH I BELIEVE IS ROUGHLY 70% TO THE SCHOOL, 15 AND 15 FOR THE COUNTY AND THE MUNICIPALITY. WHEREAS UNDER THE PILOT, THE NET PILOT, AFTER THAT LAND TAX CREDIT IS APPLIED, 95% GOES TO THE TOWNSHIP, 5% GOES TO THE COUNTY” (video; uncorrected captions).
What this means for everyone else’s bill has been described two ways. At the September 4, 2025 Township Committee meeting, the township’s consultant said, as the minutes record, that “the school board is held harmless because they will still receive the same amount of dollars; additional dollars that would not otherwise exist are brought into the municipal budget so the local taxpayer is the full beneficiary of those dollars.” A 2010 report by the State Comptroller said that “when a property tax abatement occurs, the school district receives no portion of the new PILOT revenue and thus loses out on the new wealth of the municipality.” The first compares a PILOT project with no project at all; the second compares it with the same project paying ordinary taxes.
Montgomery’s PILOTs
| Project | Where | How approved | Terms | What is known | What is not |
|---|---|---|---|---|---|
| The Apartments at Montgomery Crossing (PIRHL), 86 affordable family apartments | 9 Hartwick Drive, Block 28004, Lot 7 | Resolution #18-3-70, March 15, 2018, 4-0, under the state housing-finance law (N.J.S.A. 55:14K) | In an “Agreement for Payments in Lieu of Taxes” (Exhibit B) not attached to the posted minutes | Billed $62,400.63 in 2025 against $530,654.40 “taxes if billed” (state PILOT database) | Percentage, term, start and end dates |
| RPM Development, 70 senior affordable apartments (Headquarters Drive Urban Renewal Associates, L.P.) | 200 Community Drive, Block 20001, Lot 10.07 | Not found | Not found | The administrator listed it as one of “two PILOT agreements” on September 4, 2025 | The ordinance or resolution, terms, and when billing starts; not yet in the state PILOT database |
| Village Walk 1360 (Phase I, “Anchor” retail building) | 1360 Route 206, Block 28007, Lot 2 | Ordinance #25-1763: introduced September 18, 2025 (3-0, two members absent); adopted October 16, 2025 (5-0) | 30 years; 10% of annual gross revenue; 2% admin fee | Land paid $6,279 a year before; year-one charge projected at $25,650; about $1.1 million over 30 years (CFO, October 16, 2025) | The executed financial agreement is not posted |
| Village Walk 1330 (Phase II, 52 apartments including 12 affordable, plus retail) | 1330 Route 206, Block 28007, Lot 1 | Ordinance #25-1764: introduced October 16, 2025 (5-0); adopted November 13, 2025 (5-0) | 30 years; 11% of annual gross revenue for 15 years, then 12%; 2% admin fee | Land paid $18,636 a year before; year-one charge projected at $151,535; about $10.1 million over 30 years; “an additional $50,000 payment for EMS” (township attorney, November 13, 2025) | The executed financial agreement is not posted |
| Thrive at Montgomery (GTP Acquisitions, LLC), 196 senior units | Undeveloped part of Block 4020, Lot 1 | Pending. Resolution #26-9-259, September 17, 2026 (4-0, Committee Member Martin absent), sets up an escrow for the review | None proposed in public | GTP “informed the Township that it would make application for a long-term tax exemption pursuant to N.J.S.A. 40A:20-1” | Requested terms; no ordinance introduced as of October 23, 2026 |
The 2018 resolution says the PIRHL project, “including both the land and improvements thereon, will be exempt from real property taxation,” provided “payments in lieu of taxes for municipal services” are made under the attached agreement. The administrator said on September 4, 2025 that both affordable projects needed “a redevelopment plan and a PILOT” to qualify for low-income housing tax credits. On October 16, 2025 she said: “WE HAVE TWO PILOTS IN PLACE RIGHT NOW IN TOWN. THEY ARE BOTH 100% AFFORDABLE PROJECTS FROM OUR ROUND THREE” (video).
Both Village Walk ordinances record the finding that “without the exemption, the Redeveloper would not be able to finance, reclaim and construct the Project.” The consultant compared each phase with ordinary taxes but said the comparison is “FOR ILLUSTRATION PURPOSES ONLY, BECAUSE THE WHOLE IDEA OF THE PILOT IS THAT IF IT WASN’T FOR THE PILOT, THE PROJECT WOULD NOT GET BUILT.” On that basis he said Phase I “UNDER CONVENTIONAL TAXES … WOULD PAY $2.6 MILLION,” with a township share of “ABOUT $400,000 … COMPARED TO THE 900,000 UNDER THE PILOT,” and that Phase II would pay “ABOUT 15 MILLION OVER THE 30 YEAR PERIOD, BUT THE TOWNSHIP SHARE WOULD ONLY BE ABOUT 2.25 MILLION.” The minutes list Phase II’s $10.1 million as “total service charges over 30 years”; the consultant described it as the “TOWNSHIP SHARE OF PILOT REVENUES.”
What officials have said
The Village Walk presentation on October 16, 2025 drew two questions from the dais. The quotations below are from the uncorrected captions; the names are from the adopted minutes.
Then-Deputy Mayor Vince Barragan, whom the minutes record as expressing “concern regarding developers seeking PILOTs,” said: “IT SHOULDN’T JUST BE LIKE, HEY, EVERYONE KIND OF EXPECTS THERE’S GOING TO BE A PILOT BECAUSE, YOU KNOW, IT GIVES THEM AN OPPORTUNITY TO PAY LESS TAXES. THERE SHOULD BE A MARKET DRIVEN WAY THAT SOMEONE CAN DEVELOP PROPERTY AND DELIVER AN IRR OF OVER 10%.” The reply from the township attorney, as the minutes summarize it, was “that there are eligibility requirements associated with these agreements”; in the captions: “SO IT’S BUILT INTO THE REQUIREMENTS IN ORDER TO QUALIFY FOR A PILOT” (video).
Committee Member Mike Martin, whom the minutes record as expressing “concern regarding the burden of cost to the schools,” asked: “AM I READING THIS CORRECTLY THAT IT’S A 2.9, ALMOST 3 MILLION OVER THE 30 YEARS IN COST TO THE SCHOOL? … AND THE REVENUE TO THE SCHOOL DISTRICT IS ONLY 647,000.” The consultant answered: “OF THE EXISTING LAND TAXES THE SCHOOL SHARE, THOSE LAND TAXES WILL BE ABOUT 647,000. CORRECT.” Martin then said: “I THINK PRINCETON RECENTLY ANNOUNCED A PILOT WHERE THEY SAID THAT THEY WOULD SHARE … WITH THE SCHOOL DISTRICT.” The consultant replied: “THERE ARE SOME MUNICIPALITIES THAT WE’VE WORKED WITH THAT DO DEDICATE A PORTION OF PILOT REVENUE FROM ONE OR MORE BUILDINGS TO THE SCHOOL DISTRICT. I BELIEVE THAT HAS TO BE DONE YEAR TO YEAR” (video). The estimate assumed “ABOUT SEVEN PUBLIC SCHOOL CHILDREN,” and the minutes record the consultant noting “that 90% of the projected cost is for teachers’ salaries and benefits.”
In Princeton, according to Planet Princeton, the council and school board approved a 20-year agreement in May 2025 that sends the school district part of one development’s PILOT revenue.
Both Village Walk ordinances passed 5-0. At the November 13, 2025 hearing, the minutes record, a resident “encouraged the Township Committee to consider fully funding the fire districts with the revenue received” and said, “I do caution the TC to be careful.” At the September 18, 2025 meeting a resident “spoke in opposition to PILOT programs.”
The Board of Education’s committee reported on July 15, 2025 that “Communication has begun with regards to the PILOT program.” No later Board item on a Montgomery PILOT has been found.
What this means for Kenvue and 23 Orchard
Nothing has been filed for either. A PILOT normally follows a redevelopment designation, a redevelopment plan and a redeveloper agreement; see Area in need of redevelopment, explained.
- 199 Grandview Road (Kenvue). The September 17, 2026 escrow resolution for the redevelopment study (#26-9-261) recites township costs for “the review and analysis of the application for long-term tax exemption,” the same wording used in the Thrive resolution that night. No application, ordinance or financial agreement for the campus is public. Today about 68% of Lot 2’s tax bill goes to the schools; see the Kenvue tax bill, explained. Under a Long Term Tax Exemption PILOT the schools would receive the school share of the land tax. As an illustration only, at Lot 2’s current land assessment ($4,374,400) and the 2026 school rate, that is about $107,000 a year.
- 23 Orchard Road. At the March 23, 2026 Planning Board hearing the township planner said the designation “provides access to financial and policy tools—such as redevelopment area bonding and payments in lieu of taxes.” No redevelopment plan, redeveloper or PILOT application exists; see 23 Orchard Road redevelopment, explained.
Where the township’s PILOTs page is incomplete
The township’s PILOTs page (read October 23, 2026) says:
- “By state law, PILOT revenues are shared between the municipality and the county only.” Since January 16, 2024, N.J.S.A. 40A:20-12 has also provided that a town that contracts with its board of education under P.L.2023, c.311 “shall also remit to the board of education such amounts as may be required under the contract.” The same “School districts do not receive a direct portion” wording appears in the township’s Redevelopment Timeline.
- “All PILOT agreements must be authorized by the Township Committee through an ordinance.” That is the rule for Long Term Tax Exemption PILOTs. Montgomery’s oldest PILOT, for 9 Hartwick Drive, was approved by resolution (#18-3-70) under the state housing-finance law, which allows a town to act “by ordinance or resolution, as appropriate.” Under the state’s Local Finance Notice 2025-12, the county’s 5% applies only to Long Term Tax Exemption agreements.
- “Traditional property taxes are split among the municipality and county.” On a 2026 Montgomery bill about 68% goes to the school district.
What is not known
- The terms of the 9 Hartwick Drive agreement: percentage, term, start and end dates.
- By what act, and on what terms, the RPM PILOT at 200 Community Drive was approved, and when it starts billing.
- The executed Village Walk financial agreements, including the $50,000 EMS payment.
- Where PILOT receipts appear in the township budget. The state database shows $62,400.63 billed for 2025; the 2026 adopted budget anticipates $52,000 in “PILOTS.”
- What terms GTP will request for Thrive, what the new Thrive lot will be assessed at (which sets the statutory floor), and whether or when an ordinance will be introduced.
- Whether the township and the Board of Education have discussed a contract under P.L.2023, c.311 or a voluntary arrangement.
- Whether a PILOT will be sought for 199 Grandview Road or 23 Orchard Road, and how a successful tax appeal on either would bear on the statutory floor.
- Whether S1807 will pass, and in what form.
What residents can do
- Watch the Township Committee agendas. A Long Term Tax Exemption PILOT needs an ordinance: introduction, then a public hearing and second vote at a later meeting. The Committee generally meets the first and third Thursday at 7 pm; the next scheduled meetings are November 12, December 3 and December 17, 2026. Check the meeting calendar. Public comment is taken at the hearing before the second vote.
- Ask for the documents. The ordinances say the application and financial agreement are “on file with the Township Clerk.” The executed agreements can be requested under the Open Public Records Act.
- Ask the Board of Education whether it has discussed PILOT sharing with the township.
- Note the deadline. Under N.J.S.A. 40A:20-12 a PILOT “may be challenged only by filing an action in lieu of prerogative writ within 20 days from the publication of a notice of the adoption” of the ordinance.