Transit-oriented proposal: EDA would buy underutilized parcels from NJ Transit, develop them — and share future profits

Last-minute budget item, contingent on Corporate Transit Fee being instituted, would allocate $100M of CTF to program to ensure parcels are bought at market value

Here’s the idea: The N.J. Economic Development Authority will use $100 million in funds raised through the proposed Corporate Transit Fee to buy parcels of land from New Jersey Transit near stations (such as surface parking lots) and transform them into transit-oriented developments that will spur economic growth in various towns, provide much-needed housing — and seemingly create an additional source of revenue for NJ Transit.

Here’s the catch: It’s a last-minute proposal by the administration to the budget process (which needs to be completed by the end of the month) and it is contingent on the Legislature first approving the proposed CTF (which aims to raise $800 million annually through a 2.5% surcharge on the state’s largest companies).

Here’s what should not be overlooked: At a time when critics are suggesting there needs to be a different way to fund NJ Transit that is not just a tax grab, this is the first large-scale proposal that meets that aim. NJ Transit not only would get funding at the time of the initial sale (which officials said will be full-market value), should the EDA (through the developers it works with) gain additional profits through a sale or lease of the development down the line, NJ Transit will get a portion of that, too.

Here’s what you may not realize: The EDA not only regularly works with NJ Transit on economic development projects, it also has a history of buying properties and developing them — so, this is not new territory for either agency.

It has yet to be determined which parcels at which stations would be targeted first, EDA CEO Tim Sullivan and NJ Transit CEO Kevin Corbett said in a media call Thursday.

And the municipalities (driven by zoning) would have a large say in what type of development takes place, whether it’s straight residential, mixed-use or commercial.

But Sullivan and Corbett said the idea, which they have been working on with the administration for months, makes sense on a number of fronts:

  1. It will create more development, including much-needed housing, for towns. And that development would spur economic growth (including tax growth) for the towns and, likely, NJ Transit, as it would provide a steady stream of more riders;
  2. It will get bring desirable transit-area properties onto the market at a much-faster pace than currently exists;
  3. It will allow NJ Transit and the EDA to both continue in their core missions — NJ Transit concentrating on transportation and the EDA working on development;
  4. It will offer the opportunity of the much-sought-after recurring revenue stream for NJ Transit — which would benefit at the time of the initial sale and then, possibly, in the future.

Sullivan offered all of the necessary acknowledgements that the proposal is just that, a proposal — and one with details that still need to be worked out by the Legislature. But his initial assessment is that the plan is a winner on multiple fronts.

“This is good on several fronts,” he said. “It’s bringing properties to market that otherwise would be surface parking lots or other things that Transit uses them for presently. They are great opportunities to foster transit-oriented development, foster smart growth (and) bring underutilized properties into development tax base for municipalities as well.”

Corbett said he favors the proposal because he feels it enables NJ Transit to gain full financial benefit of parcels that are not being utilized — while enabling Transit to work on … transit.

“Our core mission is transportation, not broader economic real estate development,” he said. “Even if we were to get the best fair market value (for parcels), Tim and his team are able to put it in the context of a whole bigger development.”

Gov. Phil Murphy obviously favors the idea — it wouldn’t have been brought if he didn’t.

“Investing in transit-oriented development will revitalize commuter hubs, promote walkable neighborhoods and improve overall affordability for working families in New Jersey, and potentially generate much-needed, new, affordable housing,” he said.

“Together with our partners in the Legislature, we can transform communities around NJ Transit rail stations, help spur economic activity across the state, and generate new revenue to support the operation of NJ Transit, which has been forced to contend with a shift in ridership trends in the wake of the pandemic.”

The administration also offered a number of elected officials who offered support for the proposal:

  • State Sen. Patrick Diegnan (D-South Plainfield): “Providing NJ Transit with a long-term funding source is critical to ensure the agency can continue providing safe and reliable transportation options for New Jersey’s residents and commuters. I appreciate Gov. Murphy, NJ Transit and the NJEDA working together to come up with a solution that will not only enhance NJ Transit’s financial viability, but will also support the revitalization of communities through transit-oriented development.”
  • State Sen. Raj Mukherji (D-Jersey City): “This is a win-win. NJ Transit needs cash, these lots could use repurposing and our state needs more affordable housing and transit-oriented development.”
  • Assemblywoman Ellen Park (D-Englewood): “Transit is vital to District 37, with thousands of our residents relying on it every single day. It’s important that we leave no stone unturned to ensure the health and stability of this agency in the future.”
  • Mercer County Executive Dan Benson: “Mercer County is home to four NJ Transit stations and the Trenton Light Rail. We understand the importance of quality transit to the economic success of our communities. Having the NJEDA manage the development of these valuable properties in cooperation with our towns will ensure that it’s a win-win for taxpayers, commuters and smart planning.”