The Murphy administration is proposing a plan for the state’s Economic Development Authority to purchase $100 million of valuable NJ Transit property around the railroad — parking lots or inconvenient, underutilized parcels — and generate development, more ridership and revenue for NJ Transit.
The idea, according to an announcement by Economic Development Authority CEO Tim Sullivan and NJ Transit President and CEO Kevin Corbett, is to encourage transit-oriented development and smart growth, develop underutilized properties, create a tax base for municipalities and contribute to NJ Transit’s fiscal stability, Sullivan said during a briefing with reporters.
Sullivan said the EDA would conduct a real estate transaction, use the proceeds to purchase properties at fair market value from NJ Transit and then seek development partners for those sites.
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NJ Transit would also benefit if the EDA sells or leases the properties for more than what it bought them from NJ Transit, Sullivan said. “Public transportation wins here, too,” she said.
Gov. Phil Murphy and his senior leadership team praised the program as a win-win solution, but it requires difficult pieces to be put in place in the remaining few weeks of the budget season before the state’s fiscal year 2025 begins on July 1. .
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The $100 million the EDA would need to buy the NJ Transit properties would come from the first year of collecting a proposed corporate transit fee that Murphy introduced this year to address NJ Transit’s fiscal problems.
That proposed transit fee, which would impose a 2.5% tax on corporations making more than $10 million in profits, has faced controversy. And legislative leaders are debating the mechanics of that fee, and which programs or agencies would receive the revenue, as the June 30 budget deadline approaches.
Fiscal cliff for NJ Transit
Fiscal cliffs also loom at NJ Transit. For Corbett, this deal could help the agency’s long-term financial situation by providing $100 million in the short term and potentially revenue through EDA-negotiated leasing agreements in the long term. The transit agency predicts a deficit of nearly $1 billion in 2026.
“It’s no secret that a fiscal cliff is looming,” Corbett said. “This part really allows us to monetize the assets.”
Sullivan or Jennifer Sciortino, a spokeswoman for Murphy, did not respond to questions about the policy of the corporate transit fare agreement and whether other money from it would still go to NJ Transit.
NJ Transit leans toward leveraging its real estate assets
NJ Transit had already immersed itself in leveraging its valuable real estate into potentially lucrative development deals.
In recent years, the agency has signed lease agreements with developers in Woodbridge at its Metropark station and LCOR, which is leading the rehabilitation of the Hoboken Terminal and building on a parcel next to the station. The agency has similar deals in the works in Jersey City and Matawan.
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When asked why NJ Transit needs the EDA to advance the type of work they are already doing, Corbett said it frees the agency from real estate work, which is outside the scope of its core mission of transit operations.
Working with the EDA can also add value to NJ Transit properties that the agency would not otherwise have because the EDA can enhance value by selling or leasing a portfolio of properties, including those purchased from NJ Transit, as part of a development and a broader vision. .
“If Tim and his team can leverage our packages for greater value, one plus one equals three,” Corbett said. “These are areas where they are really looking to improve and we will get a part of that benefit that we wouldn’t get if we did it alone.”
NJ Transit, which owns dozens of parcels, would still negotiate land lease deals on its own, Corbett said.
Neither agency identified which of NJ Transit’s packages would be considered for sale to the EDA. “We’re still working with Kevin and his team on what makes the most sense here,” Sullivan said. Those near rail lines make the most sense, he said.
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