Princeton Public Schools look set to get new funding thanks to a resolution that is on the agenda for the Princeton Council meeting tonight (May 12, 2025). In particular, Princeton Council is establishing an agreement with the school district to hand over a significant portion of the ‘PILOT’ payments that the town receives from Avalon Bay for their apartment and townhouse community at Thanet Road.
‘Avalon Princeton Circle’ opened in the fall of 2023, one of a number of developments constructed to ensure the town of Princeton met state-mandated affordable housing laws. Although just 11 of the 221 apartment and townhouse homes in this community were designated affordable units, Avalon Bay also agreed to provide the town with 2.2 acres of land and a ‘PILOT’ (payment in lieu of taxes) to allow the construction of an 80-unit, 100%-affordable senior living community on the same site. The senior living development also opened in late 2023, and has proven very popular (Report: Units Going Fast At New, 100%-Affordable Princeton Senior Living Complex).
PILOT agreements are potentially advantageous to developers because they are less costly than regular property tax payments. By offering a PILOT deal, the town gains leverage to negotiate for additional community benefits beyond what is normally available through zoning regulations. In this case, the Avalon Bay PILOT also allowed Princeton taxpayers to avoid having to pay the significant costs associated with construction of the 100%-affordable senior living complex. On the other hand, concerns have been raised that PILOT deals do not support local schools. In 2024, Dafna Kendal, the President of the Princeton School Board, sent an open letter saying,
“We hope the Council will consider our heartfelt recommendation that PILOT payments for residential development be shared with the schools, in order to help us support additional schoolchildren while lessening the cost to taxpayers of maintaining the high level of teaching and learning, robust programs, and other educational services that are expected by our community for all students”
Princeton Council now appears to be doing exactly that, and sharing the Avalon Bay PILOT payment with the schools. A proposed Council action described in the meeting agenda as “Shared Services Agreement with the Board of Education of the Princeton Public Schools” describes a remarkable deal in which Princeton Council would provide all of the available money from the Avalon Thanet PILOT to the local school district, after the cost of debt finance for the affordable senior living development, and a 5% cut for Mercer County have been deducted. Under this deal, the town would keep none of the PILOT money.
The payments would begin retroactively as of January 1, 2025, meaning that the school district would receive a payment for PILOT funds already received this year. The payments would be made quarterly, and continue for a period of 20 years. The Shared Services Agreement specifies that “the Municipality is willing and able to provide a portion of the PILOT Revenue to the School District to share with the Board a portion of its operational costs”, and calls it “a unique opportunity for the Municipality to share a portion of the PILOT Revenue with the School District”.
By way of example, the agreement suggests a hypothetical possibility where the town received $1.2 million in PILOT payments from the Avalon Thanet holding company. If the combined costs of debt service for the affordable senior living project and payment of the mandatory 5% share to Mercer County was $500K, then the school district would receive all of the remaining $700K.
Related materials (via princetonnj.gov)
walkableprinceton 