In an action that may signal a challenging environment for tax abatements in Jersey City, newly elected Jersey City Mayor James Solomon recently signed an Executive Order on January 21, 2026 launching a comprehensive audit of all long-term tax exemptions currently active in Jersey City. The City has over 100 such abatements currently in effect. The audit will review every active abatement to determine compliance status, and identify any abatements that warrant enforcement action.
In the past, Jersey City has successfully utilized long term tax exemptions, and other programs, to revitalize and incentivize development throughout the City. Under the Long-Term Tax Exemption Law, N.J.S.A. 40A:20-1 (“LTTE”), an owner/developer enters into a financial agreement with the municipality whereby the owner/developer makes payments in lieu of regular property taxes (“PILOT” payment), which would otherwise be due if the property was fully taxed as assessed. The maximum term for a PILOT agreement under law is thirty (30) years but may be negotiated for a lesser term. The PILOT payment is generally measured by a percentage of gross revenue per year and can be no less than 10% of revenue for market rate development but may be set at a lower percentage for affordable projects or if the development is financed by a redevelopment area bond. The granting of a PILOT by the municipality is entirely discretionary.
The stated reason for the new audit program is that the City believes it has not allocated significant resources to monitor these abatements in the past and therefore believes that it has no assurance that the rules are being followed or that the City is receiving all the revenue it should be receiving.
As municipalities increase scrutiny of long-term tax abatements, proactive legal guidance can help identify potential issues and protect project economics.
