The plan would generate real-estate development near train stations and boost revenue for NJ Transit, officials say. (Photo by Edwin J. Torres/N.J. Governor’s Office)
Murphy administration officials will propose a $100 million program to allow the state’s Economic Development Authority to purchase properties from NJ Transit for development in hopes of remitting some funds back to the transportation agency.
Under the proposal, whose details are still being negotiated, the authority would be required to remit a portion of its proceeds back to NJ Transit if the sale or lease of a transit property exceeds the authority’s purchasing costs. NJ Transit’s exact share of such proceeds has not yet been determined.
Economic Development Authority CEO Tim Sullivan and NJ Transit CEO Kevin Corbett announced the plan during a call with reporters Thursday.
“We think this is an exciting opportunity. It’s a way for us, the EDA, to be helpful in bringing more sites forward for development and also helping out with transit’s efforts that the governor and Kevin and the team at transit have been at for many years now,” said Economic Development Authority CEO Tim Sullivan.
As part of the program, developers would purchase or lease properties from the authority for residential, commercial, or mixed-use projects.
Market conditions and local governments would ultimately dictate what types of projects get built, but Sullivan said he expects residential construction to take up the greatest share. He cited continued strains in the commercial real estate market following the pandemic and high residential demand near transit stations.
Officials have proposed funding the program with $100 million from the still-unenacted corporate transit tax proposed by Gov. Phil Murphy. That tax is expected to generate roughly $1 billion for the general fund in its first year, and lawmakers are expected to dedicate its proceeds to NJ Transit in later years, when it’s expected to collect about $800 million annually.
On Thursday, officials said they are aiming to see the program approved before legislators take their summer recess after passing the annual budget. Murphy must sign the annual spending bill before July 1 to avert a government shutdown.
The legislation would require transit property sales to the Economic Development Authority under the proposal to be sold at fair market value, Sullivan said.
“This is not a fire sale of properties to us. This is a fair-market-value sale,” Sullivan said.
The two agencies would work together to identify the most appropriate parcels to purchase. That list is still being drafted but is likely to include parking lots abutting some NJ Transit stations.
Commuters at some NJ Transit stations, especially those close to New York City, face lengthy wait lists for parking, and Sullivan said such locations were unlikely to see their lots sold, at least in the program’s early stages.
“Places that have the most complex parking challenges probably don’t make the first cut here. Places where the parking challenges are more reasonable probably are likelier to be on the go-list,” Sullivan said.
He added replacement parking would be a consideration in “almost every imaginable scenario.”
Officials said cooperation between the two agencies would amount to more than the sum of its parts.
While NJ Transit owns and occasionally develops parcels abutting its stations, the responsibilities of running a transit network and the Economic Development Authority’s broader development powers make the authority a better fit, they said.
“If Tim and his team are able to leverage our parcel to get greater value, it’s one plus one equaling three,” Corbett said. “It’s fair that EDA gets some because they’re going to be enhancing the value beyond anything we would be able to achieve.”
Property sales under the program still require approval from the Economic Development Authority and NJ Transit boards, and projects under the program are likely to focus more on rail stations than bus stops, Sullivan said.
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