State officials have unveiled a new plan to help NJ Transit monetize its real estate holdings. They announced a proposal that it would sell properties to a fellow agency that it says is better equipped to market them for development.
The program, which would require legislation, would call for the state Economic Development Authority to buy up to $100 million in assets. These assets would consist of surface parking lots near train stations. The goal is to attract new mixed-use, transit-oriented projects, officials said. In the process, it would create a direct revenue source for the cash-strapped mass transit agency. It would also be providing ancillary benefits from development near its transit hubs.
Gov. Murphy’s Contributions
The plan hinges on the passage of Gov. Phil Murphy’s proposed corporate transit fee on the state’s largest companies. This would serve as a new dedicated funding source for NJ Transit but has been panned by business groups. Under the state’s new proposal, a portion of the fee’s first-year proceeds would fund the EDA’s purchase of NJ Transit properties.
“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,” Murphy 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.”
EDA & NJ Transit
The EDA and NJ Transit have not yet identified specific properties as of Friday. They are also noting that the parcels would trade at fair market value. Once that happens, the EDA would market the sites as a portfolio. Developers would bid on these portfolios for purchase or lease, either as a whole or individually.
Officials added that NJ Transit could see a recurring revenue stream if the sites are leased, rather than purchased. This would be in addition to the EDA’s upfront payment for the properties. The transit agency would also share in the upside if the EDA were to make a profit on a development site. This would happen while the addition of new residential units would likely increase ridership and farebox revenue.
“This is all being done in partnership and collaboration with NJ Transit every step of the way,” said Tim Sullivan, the authority’s CEO, given that the development will focus on sites that are likely important to the operations of the rail system. He also called it “an exciting opportunity (for) … the EDA to be helpful in bringing more sites forward for development” and supporting the Murphy administration’s efforts to shore up NJ Transit’s finances.
He later added: “The EDA is not burdened with a day job of trying to run a railroad and a transit system for the most complicated metro area in the world, so this will be something that we have the resources to focus on every single day. And, as a financial matter, it’s a way to move some property in bulk and get a fair, good, upfront payment to transit and upside long-term, so it’s both financial and strategic.”
EDA’s Expertise
NJ Transit CEO Kevin Corbett, for his part, noted that the EDA has the expertise to contemplate larger development plans and potentially work with the owners of adjacent sites to create a more meaningful assemblage.
“Even if we were able to get the best value or fair market value, Tim and his team are able to put it in the context of a bigger development, with what’s going around that station or around that bus facility,” Corbett said. “This allows us to make sure that we can maintain our service adequately, but if … these pieces fit into a bigger puzzle that may be longer-term, broader economic development for these facilities, we don’t have that perspective, that’s not our mission, but Tim and his team do.”
Friday’s announcement included statements of support from several state lawmakers. These included senators Patrick Diegnan and Raj Mukherji, Assemblywoman Ellen Park, as well as Mercer County Executive Dan Benson.
“This is a win-win,” said Mukherji, whose district includes Hoboken and Jersey City. “NJ Transit needs cash, these lots could use repurposing and our state needs more affordable housing and transit-oriented development.”