Final borough garage vote set for Tuesday

Developer’s agreement with Nassau HKT Associates is on the line.

By: Jennifer Potash
   The future of the downtown Princeton garage development will hinge on a single vote Tuesday.
   On that day, the Princeton Borough Council is slated to vote on the developer’s agreement with Nassau HKT Associates for the project. The agreement spells out what will be built as well as the timetable and the penalties for missing deadlines.
   The financial arrangements are the heart of this agreement.
   The borough’s cost for the multiphase project is estimated at $13.5 million, which includes $9.1 million for a 500-space parking garage and $1.3 million for a new plaza and series of walkways.
   Nassau HKT Associates has obtained a letter of intent for a $9.8 million loan for the developer’s portion of the project, the two five-story mixed-use buildings. The net cash flow to the borough from the development, which is based on land leases, payments in lieu of taxes, revenue from the garage and developer’s contributions, would range from $350,500 in the first year to between $104,800 and $1.8 million a year over 25 years. Borough Administrator Robert Bruschi said these revenue projections are "the worst-case scenario."
   The agreement includes a $301,875 "annual service charge" from the developer to the borough that is essentially a payment in lieu of taxes for a 10-year period, but either party has the option to cancel that after five years, in which case regular property taxes would apply. The borough also will receive payment and performance bonds for the garage and the plaza as well as a bond or personal guaranty of completion for the mixed-use building on the Tulane Street lot.
   Should the developer decide to sell the completed buildings, the new owner or developer will be bound by the terms of the redevelopment contract, said Robert Goldsmith, the borough’s special legal counsel for the development project.
   The developer will make a one-time $150,000 contribution for the plaza and also will maintain the site. Under the proposed land-lease arrangements, the developer will pay the borough $30,750 a year for the retail space and $220,700 for the residential units. Those payments will increase as gross rents increase over time.
   The parking rates in the garage would be the same as in the former Park & Shop lot for the first three years, roughly $1 an hour. Then the rates would increase by 15 percent with the council’s approval.
   The borough will own the garage and the plaza and lease the land under the two mixed-use buildings to the developer for 99 years, at which time those buildings will revert to the municipality.
   The borough also has an indemnity agreement that stipulates that if the borough chooses not to go forward, the developer will be reimbursed for design costs for the garage and the mixed-use building on the Park & Shop lot plus 30 percent of those costs to cover overhead. Robert Powell, principal with Nassau HKT Associates, said that cost is now estimated at several hundred thousand dollars.
   The agreement spells out how the project will be phased over a three-year period.
   Phase 1 is the 500-car garage, a five-story mixed-use building and the plaza located on the Park & Shop lot. Phase 2 is a mixed-use building containing a food market on the ground floor and roughly 50 apartments on the upper floors, as well as a pocket park, all to be located on the Tulane Street parking lot. Phase 3, if built, will include a 3,000-square-foot building on the 15-space parking lot bounded by the Princeton Record Exchange, Community Liquors and J. McLaughlin that is accessible by way of a driveway from Witherspoon Street.
   The garage would be completed first, by late December 2003, followed by the first mixed-use building in early 2004, followed by the plaza at the end of 2004. Phase 2 would be completed by no later than the end of 2005.The last parcel, or Phase 3, may not be developed right away because that land might be best used as a short-term surface parking lot.
   Since the designs were approved by the council, some minor changes have been included in the developer’s agreement based on cost considerations and compliance with building code regulations.
   For example, a metal screen to be covered with plantings along the east façade of the garage, facing the South Tulane Street residences, which was to cost $300,000, will likely be replaced with a different screening. Mr. Powell said officials reviewing the project at the state Department of Community Affairs were concerned about ventilation inside the garage with the original screening.