The Princeton Council has approved an ordinance to create a payment-in-lieu-of-taxes (PILOT) agreement with the developer of the former Princeton Theological Seminary property on Stockton Street.
The PILOT agreement, which was approved at the Princeton Council’s Dec. 19 meeting, is the next step in the process to redevelop the property at 108 Stockton St. into a 240-unit multifamily development. It will be in effect for 30 years after the project’s completion.
Princeton will receive 95% of the annual service charge or PILOT, and Mercer County will receive 5%. The Princeton Public Schools will not receive any money from the PILOT agreement with developer HP 108 Stockton Urban Renewal LLC.
During the first year of the PILOT, Princeton is anticipated to receive $631,360 in revenue. Under conventional taxation, the town would receive $210,000, according to a memorandum from the town’s financial adviser for the project.
School district officials reached out to the Princeton Council before the meeting on Dec. 19 to recommend that PILOT payments be shared with the Princeton Public Schools. New residential developments will generate more students, which will likely mean more teachers will be needed.
The PILOT money could help to pay for more teachers and to maintain academic programming and student services, school board president Dafna Kendal wrote in a Dec. 19 statement. The school district is limited to a maximum tax levy increase of 2% annually, with some exceptions.
New Jersey does not require towns to allocate money from a PILOT to the school district, but it makes sense to do so in cases where redevelopment will create additional housing units, Kendal said.
A PILOT is based on a percentage of annual rental income generated by the project. As rental income increases, the payments made to Princeton and Mercer County will increase.
A concept plan submitted in July by developer HP 108 Stockton Urban Renewal LLC showed four multifamily apartment buildings scattered across the former Princeton Theological Seminary property. The 4.8-acre site is bordered by Stockton Street, Edgehill Street and a small area west of Hibben Road. An existing house at 92 Stockton St. will be renovated.
Of the 238 apartments proposed by the developer, 48 units will be set aside for low- and moderate-income households to help the town meet its obligation to provide its fair share of affordable housing. In addition, there are two single-family homes included in the development, for a total of 240 units.
There are plans for underground parking, public open space and recreation areas, and other amenities.
Developer HP 108 Stockton Urban Renewal LLC will contribute $200,000 to the town’s Sustainable Transportation Fund to support sustainable transportation initiatives in Princeton.
Attorney Steven Mlenak and financial adviser Sherry Tracey told the Princeton Council that the project would not be able to go forward without the PILOT, given the highest design and sustainability standards – including underground parking spaces – other amenities as proposed.
“It could not be developed without the assistance of a PILOT,” Mlenak said. “The redevelopment plan would need to be amended to permit a far less desirable project with above ground parking, less aggressive stormwater management and a far less desirable aesthetic design.”
During the public hearing on the ordinance, the PILOT faced pushback from some residents and questions from others about whether some PILOT funds could be redirected toward the Princeton Public Schools.
Hibben Road resident Jo Butler, who is a former Princeton councilwoman, said PILOT agreements were not meant for wealthy towns such as Princeton.
Butler was critical of the overall project, which she said would result in more traffic, the destruction of the tree canopy and the loss of the historic integrity of the neighborhood. The development is out of place, she said.
Philip Drive resident Kristin Muenzen questioned the allocation of PILOT funds, stating that the school district would not receive any money from it. She urged municipal and school district officials to work together to allocate some of the money for the school district.
Princeton Councilman David Cohen said he would favor a sharing arrangement so that some of the PILOT money would go to the schools. He said he is eager to start the conversation.
Princeton Council President Mia Sacks agreed, and said she hoped that the town and the school district could work together on the issue of sharing. The Princeton Council would never do anything to harm the school district, she said.
