A deal in Washington Township between elected officials and school leaders may help temper opposition to a housing and commercial project initiated seven years ago.

The township council approved a measure Wednesday to allocate 44 percent of the revenue from a proposed tax agreement for the Washington Square redevelopment project to the school district.

Resistance to the project from residents and school officials has centered on concerns that the planned housing components and a payment-in-lieu-of-taxes (PILOT) deal would leave the district with more students but not more revenue.

PILOT agreements provide money directly to municipalities, with 5 percent being paid to county government. Town officials had vowed to compensate the schools but did not initially specify an amount.

Amid disputes, the project off Hurffville Cross Keys Road - about 330 rental apartments, 100 for-sale townhouses, and 170,000 square feet of retail and office space - has remained on hold.

The redeveloper, Washington Square Partners, sued the town in 2013 after the council rejected a proposed PILOT. The challenge cited an agreement that noted such an incentive might be necessary for the project.

In December, in an effort to settle the matter, an amended PILOT agreement went before the five-member governing body. A majority of the council voted to put off a decision, infuriating lawyers who had drafted the deal.

Now, council members are again considering a PILOT agreement and are expected to make a decision this month. While there's hope that the dedicated portion for schools will quell some protest, worries about the impact on the district remain.

We're "making the best of a bad situation, frankly," said Ginny Murphy, president of the Washington Township Board of Education. The board was set to vote on the agreement Thursday night.

"The resolution was passed to give the school board comfort in knowing the township was splitting the revenue," Township Administrator Bob Smith said Thursday.

In its latest incarnation, the PILOT is a 25-year agreement that would generate $1.1 million in its first year and about $1.8 million in its last. The townhouses would now be taxed regularly.

Murphy, who credited town leaders for working with the district, said the current deal was a step forward in minimizing the potential impact on schools. Still, she said, the district will likely have to absorb additional costs - upward of $435,000 in the first year of the project alone, based on a projected 109 additional students.

The school district, with about 7,800 students, has a budget of more than $148 million this year. Under standard property taxes, the district receives 56 percent of collected revenue.

"We don't have anything to gain by this," she said of the Washington Square project.

The additional financial pressure on the district could be greater depending on the number of students with special needs, including those who attend schools out of the district, Murphy said.

Council President Michelle Martin, citing the litigation, would not say how she planned to vote on the PILOT agreement when it comes before council March 25. She said the cooperation between the town and school district was important.

"I don't know how that will affect the voting on the PILOT," Martin said, "but I think it eases the minds of people out in the public and on the Board of Education."