TOMS RIVER, N.J. – A bitter development battle in downtown Toms River has prompted state lawmakers to move forward with a sweeping reform that would force municipalities to share tax-abatement revenue with their local school districts.
While the Toms River situation was not unique to the problem with the Payment in Lieu of Taxes (PILOT) program in New Jersey, it was one of the most profilic fights against the program and overdevelopment in New Jersey in decades.
The dispute centered on a ten-story twin-tower residential and commercial project approved under a deal given by former Mayor Maurice “Mo” Hill’s administration, which current Mayor Dan Rodrick has sharply opposed since taking office.
Rodrick, who campaigned against high-density development in the township, has repeatedly condemned the PILOT agreement, arguing it robs the Toms River Regional School District of much-needed revenue, besides being an overall bad deal for the township which less than 30% of residents wanted.
The project, slated for the area near Irons Street and Water Street in downtown Toms River, was granted a long-term tax exemption by the Mo Hill administration that allows the developer to make discounted payments to the township instead of paying traditional property taxes — with no share allocated to local schools.
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Rodrick had called the arrangement a “giveaway to developers” and vowed to fight both the project’s approval and the broader system that allows towns to keep all PILOT payments.
Bill would require towns to share PILOT revenue with schools
In direct response to cases like Toms River’s and others, the Senate Community and Urban Affairs Committee voted February 5 to advance Senate Bill 1807, legislation that would overhaul how municipalities distribute PILOT revenues. The bill mandates that towns share portions of developer payments with the school districts that serve their communities, ensuring that new development contributes to education costs rather than bypassing them.
Under the bill, for residential projects, municipalities must pay school districts an amount equal to the number of public-school children living in the development multiplied by the state’s base per-pupil funding rate. For commercial or mixed-use properties, the required payment would equal five percent of the total PILOT or an equivalent in-kind contribution. Municipalities could also negotiate separate agreements with school districts for specific educational projects.
The proposal also requires towns to notify school boards, counties, and the Department of Community Affairs (DCA) when a tax-exemption application is being considered, adding transparency that has often been lacking in local PILOT approvals.
With or without a PILIOT approval, Rodrick has vowed to continue to fight downtown apartment towers approved by the Hill adminstration and keep overdevelopment out of the town’s quaint downtown village setting.
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Penalties and transparency measures
If a municipality fails to remit the required payment to its schools, the bill allows districts to collect the unpaid balance, interest, and attorney fees through court action. Municipal finance officers could face revocation or suspension of their certification for intentionally withholding school payments.
Urban renewal entities applying for long-term tax exemptions would have to provide copies of their applications to the DCA, local school districts, and county officials. Once approved, those applications, ordinances, and financial agreements must be publicly posted online by the DCA. Developers would also have to file annual audits certifying the number of public-school students living in their projects.
Exceptions and local negotiations
The measure includes limited exemptions for 100 percent affordable senior housing projects and for cases where towns and school districts negotiate direct investments in educational programs or facilities.
The committee amended the bill to specify that a school superintendent must lead negotiations on behalf of the district and that any funds received from a PILOT must directly reduce the district’s tax levy, preventing double taxation.
The Toms River School District is facing a dire financial crisis and, according to the district, was on the verge of bankruptcy in 2025, despite mounting a battle to give its superintendent, Michael Citta a very large pay increase at the end of the year.
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- Mayor Dan Rodrick opposed a 10-story downtown Toms River project approved under a PILOT deal
- Senate Bill 1807 would require towns to share PILOT revenues with local and regional school districts
- Developers and municipalities must notify schools and post agreements publicly
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