On Monday evening, Princeton Council unanimously introduced an ordinance for a tax break in the form of a PILOT* (Payment in Lieu of Taxes) agreement worth approximately $40 million over the next 30 years with the developer of the Tennent-Roberts & Whiteley Gymnasium (TRW) sites. Their action comes on top of tax breaks given to several other developers of multi-family dwellings that total well over $100M.
As has been previously pointed out, it is the schools and taxpayers who suffer when the town engages in PILOT agreements. Under a PILOT agreement, the municipality receives 95 percent of the revenues from the agreement, with the town being required to share the remaining 5 percent with the county. Unlike with tax-paying entities (the residents), the developer contributes zero dollars to support the schools, even though it is our strong public school system that makes Princeton an attractive place to live and a nearly risk-free investment for developers.
The schools must be funded, so taxpayers make up the missing contribution through increased taxes, which is approximately $48M over 30 years in this case. And this is occurring while residents are being asked to approve a $89.1M bond referendum to help our schools remain strong.
This development is also likely, based on conservative estimates, to have over 150 children, many of whom will attend Princeton Public Schools, which makes the lack of support particularly egregious.
The developer and the town claim that the project would not be financially feasible without a PILOT, despite the fact that it was feasible for Avalon Bay to construct 280 units (with 56 Affordable) on Witherspoon St. without a PILOT.
In their rationale for supporting the taxbreak, Council identified the following reasons:
- The developer met the legally mandated 20 percent minimum requirement for affordable units. There is no tax break justified by simply meeting the law. There is no competitive disadvantage to providing affordable housing in Princeton.
- The provision of public open space and recreation areas; These are unusable areas between buildings or the required sightlines at the intersection of Hibben and Stockton. Given the current traffic on Stockton (206), these are highly unpleasant spaces for recreation, and will be devoid of landscaping or furniture, which would obstruct required sightlines. Given that the marvelous Marquand Park is only 150 yards away it is laughable to suggest that these small spaces have any value to the public. We are not in NYC.
- A $200,000 contribution by the Redeveloper to the Municipality’s Sustainable Transportation Fund to support sustainable transportation initiatives in the Municipality. This is a paltry, one-time contribution. It represents less than half of year-one tax break.
In summary and without support, the newly elected Mayor stated, “The Project will result in significant benefits for the health, welfare and financial well-being of the Municipality and its citizens.”
The Council believes that these benefits and the fact that the developer has “identified certain costs associated with the Project, including the provision of the affordable housing units, that are beyond those customarily confronted by a developer” justify a PILOT.
Unfortunately, this statement is not supported by the facts and it’s hard to see any incremental value or public benefit being provided to justify this tax break, let alone $40M worth?
The Municipality does get increased payments over and above what property tax would deliver to the town, but these come at the expense of the schools and county, expenses that must be covered by existing taxpayers. It is not clear what these funds and money from other PILOTS will be used for, but there has been no commitment to use this money to fund the schools.
The money that Princeton (the town) gets is often cited as a financial benefit to confuse the issue. You cannot give away $40M and claim that you are better off.
In a scant 30 years, the town will lose both these affordable units as they revert to the developer AND the windfall revenue, which without a clear plan, will have been frittered away. The schools will have suffered, taxpayers will have suffered, and the taxpayers will be faced with funding a bloated municipal government and the need to fund additional new affordable housing. So what happens in 25-30 years when close to 200 affordable units go away?
Perhaps the answer is we do the same again, showering developers and investors with more tax breaks at taxpayers’ expense? Let’s hope the taxpayers stay and keep paying for this.
We are robbing from our future, not investing in it.
The Council is following their pattern of allowing public comment to be made only at the public hearing (3 minutes only!) on Thursday 19th of December, less than a week before Hanukkah and Christmas. This is the exact time of the PHS choir and orchestra concert at University chapel.
One has to wonder whether this timing is intentionally designed to reduce public input and attention. It was after midnight late last November when the Planning Board insisted that they had to limit conversation to pass the new Master Plan, which they claimed was "urgently needed". One year later, the only action taken is to green light this project. Then during the holiday week of July 4th, Council unanimously passed a Redevelopment Ordinance while limiting input from residents and professionals.
Clearly, by its actions, this Council continues to favor the needs of developers over those of the taxpayers. They sound more like the developers PR department than a body representing the interests of the Princeton residents. The whole project has been conceived and progressed through a series of closed-door meetings, including this tax break that the developer confidently claimed two years ago that he would get.
We can assume based on experience that there will be unanimous approval of the PILOT agreement. The Mayor’s support for the project was included in a memo as part of the agenda packet, so we know where he stands should he be required to break a tie vote.
It is a lot to ask residents to take time out of their holiday preparation and celebrations to attend a public meeting on short notice – even one of such consequence for our future. But if you are able, please consider attending and let our elected officials know that PILOTs were never intended use in a town like Princeton or for prime properties. Another option is to tune in by Zoom while you wrap packages. The link for the meeting should be available on the calendar on the town’s website. Or, write to the elected officials to express your concerns.
*Acronyms such as PILOT etc can be somewhat confusing. Here is a copy of a great article Planet Princeton published a year ago that explains in detail how these tax breaks work.
