Repost of News Flash from New Jersey State League of Municipalities (NJLM.org)
The Division of Local Government Services recently issued Local Finance Notice 2025-12 providing guidance on recently enacted legislation regarding Payment-in-Lieu of Taxes (PILOTs). P.L. 2025, c.91, was signed by Governor Murphy on July 8 and becomes effective on October 1, 2025. The new legislation amends the Long-Term Tax Exemption Law to strengthen counties’ ability to collect their 5% share of a Long-Term PILOT annual service charge (5% county portion). The new law requires municipal tax collectors or chief financial officer who obtain payments-in-lieu-of-taxes under “Long Term Exemption Law” to transmit county portion directly to the county. The new law only applies to annual service charges received on or after October 1, 2025.
Changes to the Long-Term Exemption Law include a requirement that upon receipt of the annual service charge, the municipal tax collector or chief financial officer shall immediately notify the municipality and the county chief financial officer (CFO) within which the municipality is located. Within 7 days of the notification, the municipal tax collector or chief financial officer shall directly transmit the 5% remittance to the county chief financial officer.
Another key change is the requirement that, beginning with the county tax installment due on November 15, a chief municipal finance officer (CMFO) provides, with each quarterly county tax installment paid to the county, the following information for each Long-Term PILOT entered into after July 9, 2003:
- Project name, address, and block/lot/qualifier;
- Date on which the municipality entered into the agreement;
- Expiration date of the agreement;
- The annual amount due to the county;
- The quarterly installment of the annual service charge collected by the municipality;
- The portion of the quarterly service charge installment due to the county [i.e. 5% of the quarterly annual service charge installment collected by the municipality] and confirming that said amount is included in the amount of county tax due; and
Another change allows the county to now sue the municipality for the unpaid balance and interest, at the rate of 1% per month in addition to attorneys’ fees and court costs in the event that a municipality fails to pay the 5% county portion for a Long-Term PILOT when due. CMFOs may also be subject to revocation or suspension of a municipal finance officer certificate as a result of willfully and intentionally failing, neglecting, or refusing to comply with the 5% county portion requirement.
Municipalities should also note that the 5% county portion only applies to post-July 9, 2003 Long-Term PILOT Agreements. 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.
The CMFO will also be required to verify that the entire portion of the quarterly service charge installment due to the county is included in the quarterly county tax installment.
Starting November 15, 2025, a CMFO will have to provide quarterly reporting to the county. A model quarterly report template has been created by the Division of Local Government Services to standardize the reporting process. The project name and address, along with the PILOT agreement start and end dates, must be identical to the information listed in the municipal User-Friendly Budget for the same project. If the Chief County Finance Officer (CCFO) and the county treasurer positions are held by different individuals, the CCFO should also receive a copy of the report.
In addition, the Local Finance Notice provides guidance on P.L. 2024, c. 6, which authorizes a municipality to grant a PILOT to the housing sponsor of an affordable housing project for affordable housing unit development or preservation that is wholly or partially supported by the State or municipal affordable housing trust funds. While the tax exemptions provided in P.L. 2024, c. 6 are different than Long-Term PILOTs the municipal governing body must adopt an ordinance to grant the tax exemption and authorize entering into the financial agreement.
The financial agreement authorized by P.L. 2024, c. 6 may require the housing sponsor to pay the municipality up to 20% of the annual gross revenue from the housing project for each year of operation of the financial agreement following the substantial completion of the project. The payment cannot not be less than the greater of 4% of the annual gross revenue or the amount of taxes attributable to the land value component of the property comprising the project site for the year preceding the recording of the mortgage. If the property is a farmland assessed property than the minimum amount of the housing sponsor must pay is 4% of the annual gross revenue.
Within 30 calendar days of ordinances effective date or the execution of the underlying financial agreement between a housing sponsor and a municipality, whichever is later, the municipal clerk must electronically transmit a certified copy of the ordinance and the agreement to the Division at DLGS@dca.nj.gov with the heading “Affordable Housing PILOT”.
Click here to view “DLGS Issues Local Finance Notice on Recently Enacted PILOT Law” on NJLM.org