New Jersey Division of Local Government Services Local Finance Notice 2025-12

Local Finance Notice 2025-12 Update on Long-Term PILOTs & Affordable Housing PILOTs

LFN 2025-12 introduces recent changes in New Jersey law affecting Payments in Lieu of Taxes (PILOTs) under the Long-Term Tax Exemption Law, and establishing a framework for PILOTs in affordable housing projects.

Long-Term PILOTs: What’s Changed

Here are the main new rules for Long-Term PILOTs under P.L. 2025, c.91:

• 5% County Share: Municipalities must remit 5% of the annual service charge to the county for any Long-Term PILOT entered into on or after July 9, 2003.
• Effective Date: October 1, 2025, applying to PILOT service charges received on or after that date.
• Quarterly Reporting: CMFOs must provide detailed information with each quarterly installment of county tax, including project info, amounts collected, portion due to the county, and method of determining service charge.
• Model Template: Mandatory after November 15, 2025 with county installments a quarterly reporting template provided by the DLGS must be submitted.
• Enforcement: Counties may sue for unpaid amounts plus interest, court costs, and attorney’s fees. CMFOs who willfully fail to comply may face suspension or revocation of certification.

Affordable Housing PILOTs

• The law L. 2024, c.6 introduces PILOTs for affordable housing projects with these features:
• Eligible if supported by state or municipal affordable housing trust funds.
• Payment may be up to 20% of annual gross revenue, but not less than 4% of annual gross revenue or the property tax on the land before mortgage recording.
• For farmland assessment projects, minimum payment is 4% of annual gross revenue.
• Before project completion, the PILOT cannot exceed the pre-mortgage tax liability.
• Duration: Continues until the loan/mortgage is fully repaid, or longer if affordability controls remain.
• Municipalities must file certified copies of ordinances & financial agreements within 30 days to DLGS.

What You Should Do if You are a Municipal/County Finance Officer

• Review existing Long-Term PILOT agreements to ensure compliance with the 5% county share.
• Begin using the new quarterly reporting template starting November 15, 2025.
• Ensure ordinances approving PILOTs are fully executed, submitted, and hearings are properly noticed (including counties).
• For Affordable Housing PILOTs, confirm agreements follow revenue minimums/maximums, duration requirements, and filings.

Why This Matters

• Shifts some financial benefit from municipalities to counties, impacting municipal budgets.
• Adds transparency & accountability via quarterly reporting.
• Provides affordable housing developers with a clear framework for PILOTs.
• Enforces oversight through penalties for non-compliance.

Local Finance Notice 2025-12

Please follow the link below to read more about these items and guidance on how your local unit can implement them: https://www.nj.gov/dca/dlgs/lfns/2025/2025-12.pdf

Contact Wielkotz & Company, LLC Today

For further information on Local Finance Notice 2025-12 and its implementation feel free to reach out to Steven Wielkotz at (973)-835-7900 ext. 201 or sdw@w-cpa.com.