GUEST OPINIONFarrell Delman and Hemi Nae
If there ever was any doubt as to just how lucrative the redevelopment of public property is, Steve Goldin’s offer to contribute a relatively unfettered $1.5 million to get the Princeton Junction redevelopment project back on track, has laid all doubts to rest.
In his op-ed piece (July 3), Mr. Goldin correctly writes that the workshops "digressed into a confusing process that left us where we are now: still sitting at the starting line." With all of the anticipated profits there is hope that a positive redevelopment can take place if genuine leadership can be found to move it forward and if the West Windsor taxpayer can get a cut of these profits to help mitigate their risks.
While we appreciate Mr. Goldin’s offer, we also need to realize that his goal is to leverage public property to maximize the value of his 25 acres on the West Side of the tracks. It is after all the "public transit" piece that makes this a "transit village."
Goldin’s 25 acres is in the same zone that Mr. Hillier sought to redevelop first, and not the Eastern Route 571 side, the Main Street, which West Windsor residents overwhelmingly told Mr. Hillier they want to develop first as their town center.
Unfortunately, the existing business model requires the developers to do their development and make their profits first, those profits being easier and faster to reap on the west side. Then the township can get the eventual trickle down tax revenues and hope that they will be sufficient to pay for the public’s amenities once the infrastructure requirements like the Vaughn Drive connector are paid for by the taxpayers.
Mr. Hillier’s ERA fiscal impact analysis showed that even with 500 residential units, closer to Mr. Goldin’s 400 unit plan, the total $321 million in market value breaks down as follows:
Residential $155.88 million;
Office $138.22 million (assuming 401,386 square feet);
Retail $26.90 million (assuming 75,668 square feet).
The analysis shows that land owners would be selling their land for $66.2 million and that developer profits would be $36.33 million. Given the varying book values for the land, no profits for land sales were shown. Infrastructure costs would be $24.5 million.
Annual net municipal tax revenues would be just $3.4 million, assuming ERA’s optimistic assumptions come to pass. These revenues would pay down the bonds needed to pay for the infrastructure and some $20.35 million in amenities.
Bottom-line: Land owners and developers get a combined $81 million and the residents get to pay down the debt on the amenities and infrastructure.
Now the rate of return for developers, and in Mr. Goldin’s case the windfall profits for recent land purchasers, is especially important given the enormous rates of return sought by private equity firms these days, well beyond the 15 percent profit margin that ERA assumes.
The question then is simple: Is this a good deal for the West Windsor taxpayer?
Let’s recognize that under the current model, the residents are providing the cash flow through tax revenues to pay back the bonds (issued without a referendum option) needed to build the roadways and other aspects of the infrastructure so that the developers and landowners can earn their profits.
If this redevelopment evolves, as so many have, such that the developers are further provided with highly skewed payments in lieu of taxes (PILOT) that would deprive the school system of needed tax revenues, the developers gain even more.
While a Community Benefits Agreement (CBA) could in principle be crafted to make a PILOT beneficial for the community, this has rarely taken place since most redevelopments are in blighted zones where developers need to be induced to invest. This is not the case in West Windsor.
Since it now appears, contrary to our Mayor’s repeated claims, that the State of New Jersey and New Jersey DOT have backed off from their planned investment in our transit infrastructure, any CBA should commence with requiring this financing to be made from land owner and developer profits.
The CBA would distinguish public amenities like a performing arts center from roadways, making a share of the former a function of anticipated tax revenues with the latter contributed by land owner and developer profits.
Among other elements, a CBA would also acknowledge that genuine affordable housing is best situated at or near a transit village, especially if groups such as HomeFront can be brought in to manage these units.
Given the trickle down tax benefits, we need to note that Mr. Goldin loses nothing if his four star client for two seven story buildings eventually goes bust in an Amaranth or Bear Stearns-style hedge-fund shakeout. A CBA, therefore, needs to address taxpayer risks that full occupancy may be unrealistic.
The current business model gives the land owners and developers enormous, relatively risk-free, short-term profits and it projects risky long-term tax revenues for West Windsor residents. This is the principal flaw in Hillier’s plan even at 500 units: the need for wildly optimistic financial assumptions just so the taxpayers break even and ultimately get the amenities they are seeking, both down the road.
Since the business model is all about how much the developer-land owners get and how much the residents get, a CBA needs to be negotiated now before we waste more time doing surveys or conducting Mr. Goldin’s comprehensive charrette. Mr. Hillier has provided enough data to begin this negotiation.
Since CBA’s are agreements between community groups and developers, community groups such as the Princeton Junction Neighborhood Coalition and others should act now to launch such negotiations.
If West Windsor Council does proceed with a survey perhaps the key questions should be focused around the business model itself and include questions such as "what share of the short-term profits should West Windsor’s taxpayers get and what share should the land owner and developer get?"
A second question might be "what guarantees, if any, should the developer / land-owner provide to mitigate the risk that the trickle-down tax revenues will actually be forthcoming?"
A third question might be: "if we taxpayers cannot afford it or cannot afford to take the risk that the project will fail, should we just forget it?"
Instead of scaring the residents that Mr. Goldin and other property owners will just go ahead and build whatever they want, the Mayor should remind the citizenry that his Planning Board has the power to tie up any development for years and years especially when variances are needed.
The mayor should acknowledge that three stories is the current limit and that no residential units are now allowed so variances would be required. He should also acknowledge that the Parking Authority has been eager to build a parking garage for West Windsor residents for years only to be told repeatedly by his Administration that it must wait for some grand design that may or may not materialize in ten or twenty years.
He should also tell us that if we keep waiting to spend the County’s money for the Route 571 improvements, we may risk losing it for a second time.
Finally we need to ask why the mayor has not actually taken charge of a redevelopment that he has consistently championed by providing the taxpayers with a business model that profits the West Windsor taxpayer now, not in thirty years?
If the administration refuses to take charge, what about council? And how can either really take charge if the township’s attorney and Mr. Goldin have already demonstrated in the Hamilton redevelopment mess that guardians of the taxpayer they are not.
The question is not whether we ever needed a redevelopment zone to put West Windsor in charge. The question has always concerned what sort of leadership will guarantee a fair distribution of profits between the developers and the taxpayers in a highly transparent fiscal process that takes into account the wishes of West Windsor residents.
We are looking forward to the emergence of such leadership but regret to say that Mr. Goldin and his offer are not the answer.
Farrell Delman and Hemi Nae are residents of West Windsor.

