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The $100 million transit-oriented development plan aims to boost NJ Transit and revitalize downtown areas

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As the state budget process enters the home stretch, the Murphy administration is introducing new legislation to spur transit-oriented development while strengthening NJ Transit.

The plan would see the New Jersey Economic Development Authority (NJEDA) purchase up to $100 million worth of NJ Transit properties. The NJEDA would then convert these spaces, such as surface parking lots, into mixed-use, transit-oriented developments to stimulate economic activity and increase walkability near transit lines. At the same time, the plan would also create a direct revenue stream for NJ Transit.

The agency and its finances have been the focus of many budget efforts in recent months – particularly those related to Gov. Phil Murphy's proposed corporate transit fee. The CTF would fund the agency, which is facing a looming budget crisis. The issue has roiled the business community since the governor's budget address earlier this year. The TOD plan has received parliamentary support, according to administration officials.

Details of the proposal include:

  • NJEDA, in collaboration with NJ Transit, would identify a portfolio of properties for purchase. It would then market the properties as a portfolio – either as a whole or individually – for developers to make offers to purchase or lease.
  • The acquisition of the properties would be financed through revenues from the proposed and previously mentioned corporate transit fee in the first year.

In addition to the upfront payment for the land, NJ Transit could also benefit from catalytic development near these transit hubs. Additionally, offering land for lease rather than purchase creates a potential recurring revenue stream.

Generate new revenue

“Investing in transit-oriented development will revitalize commuter hubs, promote walkable neighborhoods, and improve overall affordability for New Jersey's working families – and potentially create much-needed new affordable housing,” Murphy said. “Together with our partners in the Legislature, we can transform the communities surrounding NJ Transit stations, spur economic activity across the state, and generate new revenue to support NJ Transit operations, which have struggled with shifts in ridership during the pandemic.”

“The legislation proposed today would authorize NJEDA to expand our efforts to revitalize neighborhoods and encourage the development of mixed-use properties,” said NJEDA Executive Director Tim Sullivan. “Transit-oriented real estate projects along NJ Transit stops will spur the renaissance of neighborhoods and improve the quality of life by creating new jobs and modern housing options for families and commuters.”

From left, Governor Phil Murphy and NJ Transit CEO Kevin Corbett at the NJ Transit Emergency Operations Center in Maplewood on March 19, 2019.
From left, Governor Phil Murphy and Kevin Corbett, NJ Transit President and CEO, at the NJ Transit Emergency Operations Center in Maplewood on March 19, 2019. – NJBIZ FILE PHOTO

“Governor Murphy's plan to accelerate transit-oriented communities around NJ Transit properties through immediate funding underscores a forward-thinking approach to sustainable development,” said Kevin Corbett, NJ Transit President and CEO. “This funding will spur economic growth, increase walkability and provide ongoing financial support to NJ Transit.”

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During a press conference on June 13, Sullivan and Corbett explained the details and potential benefits of the proposal.

“This is pretty exciting news that the governor is going to announce here: he's supporting a bill that in many ways will formalize and take to the next level a partnership that Kevin and our team here have had for some time around transit-owned property development,” Sullivan said.

He said the goal is to achieve several things at once, such as:

  • Supporting development – ​​for example, housing, job creation and other economic opportunities;
  • Providing a financial injection to NJ Transit as part of a broader effort to address the future of mass transit;
  • Building a long-term potential income stream;
  • And more.

“Good on several fronts”

“This is good for a number of reasons,” Sullivan said. “It brings properties to market that would otherwise be surface parking or other things that public transit is currently using them for. But they're great opportunities to encourage transit-oriented development and smart growth; to bring underused properties into development and create a tax base for communities along the way. And also, we're contributing to the financial stability and the financial future of public transit.”

Sullivan noted that many details and specifics are still being worked out. He told reporters that there is currently no list of such potential properties and that NJEDA and NJ Transit teams are still working on it.

However, he pointed out that attractive potential projects would also include any parking lots near train stations that provide direct access to Manhattan.

Investing in transit-oriented development will revitalize commuter centers, promote walkable neighborhoods, and improve the overall affordability of life for New Jersey's working families – and potentially create much-needed new affordable housing.
– Governor Phil Murphy

“Generally, we would enter into a real estate transaction where – with the proceeds of this appropriation, if it is accepted and signed, and all reservations – we would acquire real estate from Transit at fair market value,” Sullivan said. “So, for us, this is not a fire sale of real estate.”

“This is a fair market value sale from Transit to EDA,” he continued. “And we will seek out development partners to advance development on these sites. This will all be done in partnership and collaboration with Transit – every step of the way.”

On the edge

Corbett emphasized that his agency and NJEDA have worked together on a number of different projects. He also mentioned the agency's financial problems.

“There is no secret to us. We are facing a budget cliff – and the governor had a great proposal to pass the legislation [CTF]”, said Corbett.

He added that this proposal could help monetize assets and create new revenue streams. “If EDA can realize the long-term potential, we have an advantage. So it's not just a short-term win. This is a very good deal financially for transit. And then, as Tim alluded to, we've certainly seen a shift in ridership and transit-oriented development.”

He highlighted the Brick Church Station project in East Orange as an example.

Rendering for The Crossings at Brick Church Station, a transit-oriented redevelopment at 533 Main St. in East Orange.
Rendering for The Crossings at Brick Church Station. The transit-oriented development is located at 533 Main St. in East Orange. – THE CROSSINGS AT BRICK CHURCH

“We're not getting a penny out of this development,” said Corbett. “Here's a way we can really benefit from this development in the long term. In addition to ridership, there are environmental benefits. Sustainable development is one of our key goals.”

“Sustainability, reducing the carbon footprint, that's the result of TOD,” he continued. “So there are a number of benefits that go beyond financial or even economic development that really excite us.”

On board?

“We think this is an exciting opportunity,” said Sullivan. “It's an opportunity for us to [NJEDA] to help open up more sites for development – and also to help with the transportation efforts that the Governor and Kevin and the transportation team have been doing for many years to turn transportation around. We're honored to be a small part of that and hopefully move it all forward.”

The plan requires parliamentary approval and passage, late in the budget process. By now, the CTF is probably the most controversial item in the proposed budget. But as the government noted, several parliamentarians are on board.

“Providing a long-term funding source for NJ Transit is critical to ensuring the agency can continue to provide safe and reliable transportation options for New Jersey residents and commuters,” said Senator Patrick Diegnan, D-18th District. “I appreciate Governor Murphy, NJ Transit and the NJEDA working together to find a solution that not only improves NJ Transit’s financial sustainability, but also supports the revitalization of communities through transit-oriented development.”

“This is a win-win situation,” said Sen. Raj Mukherji, D-32nd District. “NJ Transit needs money, these properties could be repurposed, and our state needs more affordable housing and transit-oriented development.”

This proposal is expected to generate further responses over time. This story is developing. Please stay with NJBIZ for the latest updates.

Anna Harden

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