Princeton school board approves PILOT agreement with Town Council

The Princeton Board of Education voted Tuesday night to approve an agreement with the Princeton Council to accept a portion of the PILOT money the town receives from the AvalonBay Thanet project.

An estimated $300,000 to $500,000 from the town’s PILOT payment from AvalonBay will go to the public schools annually. The amount depends on the revenue the luxury apartment complex generates.

Rents at the Thanet development range from $2,660 for a studio apartment to $4,680 for a three-bedroom apartment. The 220-unit development includes 11 affordable apartment units.

In 2021, the Princeton Council approved a 30-year PILOT with AvalonBay. Under the agreement, AvalonBay is exempt from paying property taxes for the development and instead pays the town an annual service charge, or payment in lieu of taxes. In New Jersey, PILOT payments go into municipal coffers, with 5% going to the county and no funding allocated to the school district. Municipalities can choose to give the school district a portion of the PILOT payments.

PILOT deals approved by town officials in recent years have been controversial, particularly regarding school funding. Officials have claimed that such arrangements do not harm public schools because “they will still get their money.” One local official said the municipality was not allowed to share PILOT money with the schools, though some other municipalities do.

Critics note that while apartment developments add students to the schools, it is the rest of the town’s taxpayers who must absorb a larger share of the cost to fund the schools. Matthew Boxer, a former state comptroller, highlighted the problem with such agreements in a 2010 report.

The Princeton Board of Education issued a written statement Wednesday about the agreement to share the PILOT money from the Thanet development. It is unclear whether similar agreements will be made with the school board for other developments in town receiving PILOTs, including the AvalonBay development at the Princeton Shopping Center, The Alice apartments at the shopping center, and a future luxury apartment development on Stockton Street at the former Princeton Seminary site.

School Board President Dafna Kendal and Princeton Council President Mia Sacks issued a joint written statement on the Thanet deal.

“Princeton’s municipal government and Board of Education share one town. We also share a strong commitment to the value of public education as the cornerstone of a functioning democracy,” the statement said. “As Princeton wraps up the third round of state-mandated affordable housing and embarks on the fourth round, it is essential that both public bodies work closely together to plan responsibly for anticipated growth. This PILOT revenue-sharing agreement is a good start, and we look forward to ongoing collaboration on a variety of issues to provide maximum benefit to Princeton taxpayers.”

The school board will use the funding to defray the cost of maintaining school buildings. Funds from the shared services agreement will help the district with costs and expenses for maintaining public facilities.

“This agreement could not come at a better time for the district,” Kendal said. She said the aid the district receives from the state will be reduced by 3% for the 2025-26 school year.

“As the enrollment of students in our schools continues to grow, we deeply appreciate the innovation and collaboration that made this agreement possible,” Kendal said. “It is a thoughtful and equitable step forward that affirms our community’s strong belief in the power of public education and its importance to the future of our community.”