Holmdel’s Vonage PILOT: Residents Pay Up, Schools Lose Out

At the Holmdel Township Committee meeting last night, the tax assessor’s presentation on the proposed Vonage PILOT sounded reassuring. Residents were told that if the Vonage property comes off the regular tax rolls, there would be “no impact” on the school budget: the schools now get about $240,000 a year from that property, and homeowners would simply make that up through a small increase in their school‑tax bill. The mayor even suggested the township would contribute $245,000 a year for 30 years.

When a resident asked what the fully built‑out Vonage site could generate in normal property taxes, the assessor acknowledged it could be close to $3 million a year. Under Holmdel’s current tax structure, roughly 68% of a typical property‑tax bill goes to the school district, so in a conventional (non‑PILOT) world about $2 million of that $3 million would support Holmdel’s schools every year. That long‑term school revenue — not the current $240,000 — is what’s missing from the story.

Holmdel has lived this movie before at Bell Works. When Bell Labs was fully occupied, it contributed roughly $4–4.5 million a year in property taxes and made up close to 20% of the town’s tax base. After the building emptied out and tax appeals were filed, the bill collapsed to roughly $500,000 by 2010 and the site was put into a long‑term PILOT as Bell Works.

That lost $4–4.5 million in regular property taxes was never fully shifted onto residents. To replace the schools’ roughly $2.7–3.1 million share in a single year, the district would have needed a levy increase well above 5–6%, far beyond New Jersey’s 2% levy‑growth cap, which can only be exceeded with voter approval in a referendum. Instead, Holmdel schools absorbed the loss over time through a mix of cuts, slow growth, state aid and stop‑gap measures, while the Township today gets roughly $7.5 million per year from Bell Works PILOTs, none of which automatically goes to the school district.

The current school budget shows why this matters for Vonage. For 2025–26, the budget lists a general‑fund operating budget of $72,039,105 and a general‑fund school tax levy of $65,317,943, with the remaining $6.72 million coming from state aid and other revenues.

New Jersey’s 2% cap applies only to that adjusted tax levy — the amount raised from regular school property taxes, excluding debt service. It does not cap state aid, miscellaneous local revenues or PILOT revenue shared by the Township with the schools. That is why PILOT sharing is so powerful: it brings in new school dollars outside the 2% levy cap.

To see the impact, assume school costs (salaries, benefits, contracts, services) grow 4% per year, while the levy is allowed to grow only 2% a year unless voters approve more in a referendum. Other non‑levy revenues stay flat. Holmdel currently receives about $7.5 million per year from Bell Works PILOTs. If the Township shared 40% of that with the schools, the district would gain an additional $3 million per year in non‑levy revenue.

Starting from the actual 2025–26 budget and levy, the math looks like this: with no PILOT sharing, the 2026–27 budget rises to about $74.9 million. With other revenues flat at $6.7 million, the district would need a levy of roughly $68.2 million to balance — about $1.6 million above the 2% cap path of $66.6 million. By 2027–28, the gap grows to roughly $3.2 million. Without PILOT sharing, Holmdel is driven toward deep cuts or a school‑tax referendum.

With a 40% PILOT share, that $3 million in non‑levy income changes the picture. In 2026–27, the district could cover the same 4% cost growth with a levy of about $65.2 million — roughly $1.4 million below the 2% cap. The first year the levy would creep just above the cap is 2027–28, and then only by about $0.2 million. Instead of facing referendum pressure immediately, Holmdel could delay it until 2027–28, with a much smaller gap to solve.

Lawmakers in Trenton have started to recognize this exact problem. Senate Bill S‑3915 and its Assembly companion A‑1107 would require municipalities to share certain PILOT payments with school districts or, alternatively, fund special projects for those districts. The bill sponsors’ own summary are explicit about the motivation: PILOT agreements can help local redevelopment, but they often deprive school districts of the property‑tax revenue they would normally receive. These bills are a clear acknowledgment that, without sharing, PILOTs can quietly drain school finances even as they grow a town’s tax‑exempt ratables.

This is why the tax‑assessor’s presentation on Vonage is incomplete. It focused on a narrow question: “How do we backfill the current $240,000 the schools get?” By framing it that way, the presentation ignored three critical realities: first, the real opportunity is the fully built‑out tax base — where Vonage could generate close to $3 million in regular taxes and roughly $2 million for schools each year; second, the 2% levy cap makes “just raise taxes” unrealistic, because only $65.3 million of Holmdel’s $72.0 million budget currently comes from the levy; and third, PILOT revenue is outside the cap, so sharing it is one of the few tools that can stabilize the school budget without triggering a referendum or pushing resident taxes beyond the cap.

Holmdel stands at a fork in the road. One path continues the Bell Works pattern: big commercial properties move into long‑term PILOTs, the Township keeps nearly all the revenue, and the schools are left to manage growing deficits under a hard 2% levy cap — inevitably leading to program cuts or tax‑hike referenda. The other path uses PILOT sharing — on Bell Works today and on Vonage going forward — to protect school finances without blowing up resident tax bills. That is the piece missing from the assessor’s slides, and it is why the structure of the Vonage PILOT, and the sharing of all PILOT revenues, deserves a much deeper public discussion before any vote is taken.

We urge residents to sign this petition to stop the township from approving another PILOT that takes money away from the schools.

Save Holmdel Schools

Prakash Santhana

Former Holmdel Deputy Mayor