Why would a town that already collects some of the highest property tax bills in Union County agree to let its newest buildings pay less than everyone else?
That question sits underneath downtown Fanwood if you know where to look. Walk from the historic train station along South Avenue and Martine Avenue and you'll pass three separate phases of the same redevelopment story: Fanwood Crossing, Station Square, and the more recent SOHO at Fanwood Station. Each one is a deal between the borough and a private developer, and in each case, the new building pays less in property tax than a comparable structure built without an agreement would. For a one-square-mile borough where the median annual tax bill runs above $12,900, that can look like existing homeowners are quietly subsidizing someone else's shiny new townhouse. The borough's own disclosed numbers argue the opposite happened.
What a PILOT Actually Buys the Town
The mechanism is called a PILOT, short for Payment In Lieu of Taxes. Under New Jersey's redevelopment law, a designated redeveloper doesn't pay conventional property tax on the assessed value of new construction. Instead, for a term that can run up to thirty years, it pays an annual service charge negotiated as either a percentage of revenue or a share of construction cost. Municipalities don't hand these out reflexively. Fanwood's own economic development materials describe PILOTs as a tool used to offset extraordinary costs, most often environmental cleanup, high acquisition costs, or infrastructure gaps that would otherwise make a project unbuildable.
That description fits Fanwood's downtown almost exactly. The 6.5-acre parcel known as Block 64, bordered by South Avenue, Martine Avenue, La Grande Avenue, and Second Street, sat for years as vacant light industrial and brownfield property before the borough adopted a formal redevelopment plan in 2005. The borough has stated that more than $1 million was spent remediating contamination there, a process that took over a decade and drew recognition from the New Jersey Department of Environmental Protection as an innovation and partnership success story. Station Square, the 35-unit townhouse project at Second Street and La Grande, sits on what was formerly the Dean Oil Site. Cleanup requirements delayed the project before Landmark Companies broke ground, and the development wasn't finished until fall 2018. Landmark has disclosed roughly $10 million invested in that project alone, PILOT payments included.
The Numbers the Borough Actually Discloses
Most towns talk about redevelopment in the abstract. Fanwood put dollar figures on it. In a 2024 FAQ addressing questions about its redevelopment financing, the borough disclosed what its two active PILOT properties actually paid that year.
| Property | PILOT Payment | Conventional Land Tax | Total Paid, 2024 |
|---|---|---|---|
| Fanwood Crossing III (16 units, 233 La Grande Ave) | $49,519.33 | $21,492.97 | $71,012.30 |
| Station Square (35 townhomes, 2nd St & La Grande) | $176,190.63 | $41,118.00 | $217,308.63 |
Together, those two properties paid just over $288,000 in 2024. Before redevelopment began, the borough's FAQ states the underlying property generated roughly $72,000 a year in conventional taxes, with Fanwood's own municipal share amounting to just $14,347. The borough's stated conclusion is that these two PILOT agreements alone have produced more than $400,000 a year in new revenue to the borough, county, and school district combined, without reducing the pre-development land tax revenue that schools and the county were already collecting.
When Landmark broke ground on the newest phase of that redevelopment, SOHO at Fanwood Station, at South Avenue and First Street in 2022, Mayor Colleen Mahr framed it as a continuation of the same bet rather than a new one.
"We've raised the bar again here in Fanwood," Mayor Mahr said at the groundbreaking, calling the project "a gorgeous addition to Downtown Fanwood."
That project, built with Boyce Construction as site contractor and financing from TriState Capital Bank, added roughly 5,000 square feet of ground-floor retail and 58 apartments, nine of them designated affordable, with completion estimated for fall 2023.
The School Question the Zoning Doesn't Answer
The obvious worry with any new multifamily building near a train station is what it does to school enrollment. Fanwood's own compliance documents address this directly, and the numbers are smaller than most assumptions would predict. Across the 80 units at Fanwood Crossing, the borough reports that the number of school-age children living there at any one time averaged about four over a nine-year period. Since the pandemic, that figure has risen to roughly 14, several of them part-time with a single parent or enrolled in private school. That is a modest addition against a district that already serves both Fanwood and Scotch Plains. It's also the quieter half of why the PILOT math works in the borough's favor: revenue from these properties has grown steadily while the marginal cost to the school district has stayed close to flat.
A Discount With an Expiration Date
None of this is a permanent arrangement. PILOT terms under New Jersey's Long Term Tax Exemption law run for a maximum of thirty years, after which the property reverts to full conventional assessment and starts contributing at whatever rate applies at that time. Fanwood has also used a separate, shorter five-year exemption and abatement track for smaller rehabilitation-area projects along South Avenue, which phases a property up to full taxation faster. The earliest pieces of Block 64, Fanwood Crossing I and II, built between 2011 and 2016, are further along that clock than Station Square or SOHO. Anyone trying to project what downtown Fanwood contributes to the tax base a decade from now should know that today's figures are a snapshot mid-cycle, not a fixed rate.
What This Means If You're Comparing Fanwood to a Neighboring Town
Fanwood's current market numbers sit inside this context, not outside it. Over the three-month window ending in May 2026, Fanwood's median sale price was $775,000, down 5.5 percent from the same window a year earlier, with homes fielding an average of seven offers and selling in about 19 days. The borough's effective property tax rate has been assessed at 2.84 percent, with a median annual bill of $12,916.
A buyer weighing that rate against a neighboring town's shouldn't assume Fanwood's downtown investment is what pushed it there. The borough's own disclosed figures point the other direction: the ratable base grew because of these PILOT agreements, not in spite of them, which is one reason the rate sits where it does rather than climbing to cover the cost of rebuilding a commercial corridor from scratch.
There's a second, less obvious piece worth knowing if you're choosing between Fanwood and a town still working through its own affordable housing math. New Jersey's 4th Round obligation, covering 2026 through 2036, has already been accepted using the same South Avenue corridor Fanwood built out over the last two decades. No additional areas within the borough were required to be identified for affordable housing production this round. For a buyer trying to gauge whether a quiet residential block elsewhere in town might see new rezoning pressure over the next decade, that's a meaningfully different starting point than a town still searching for sites to satisfy its obligation.
Before You Read Too Much Into a Tax Line
- Recognize that a low effective rate in a town with recent downtown investment may reflect PILOT-driven ratable growth rather than restraint.
- Ask how far along a town's PILOT agreements are, since the discount narrows and eventually disappears.
- Weigh a town's already-satisfied affordable housing obligation against one still identifying new sites, since the second scenario carries more zoning uncertainty for existing residential blocks.
- Treat any single tax rate comparison between towns as a snapshot of financing history, not just current cost.
Frequently Asked Questions
Does the PILOT program lower my own property tax bill directly? Indirectly. It grows the borough's ratable base without adding to existing single-family assessments. The effect shows up in the town's overall rate trend over time rather than as a line-item credit on any individual bill.
What happens when a Fanwood PILOT agreement ends? The property reverts to full conventional assessment and begins paying at whatever rate applies at that time, adding further to the tax base. The earliest Block 64 projects, Fanwood Crossing I and II, will reach that point before Station Square or SOHO does.
Will Fanwood need to rezone more of the town for affordable housing? Based on current filings, no. The borough's 4th Round obligation was satisfied using the same South Avenue corridor already built out, with no additional areas identified.
Understanding how a town financed its own growth is part of understanding what you're actually buying into, whether that's a single-family home two blocks from Station Square or a move-up property closer to Forest Road Park. If you're weighing Fanwood against Westfield, Scotch Plains, or another Union County town and want a clearer read on how local tax history shapes what you'll pay going forward, The Isoldi Collection is glad to walk through it with you. Request a Private Market Consultation to talk through the specifics of your search.
