The Murphy administration is proposing a plan to the state Economic Development Authority to buy $100 million of NJ Transit’s valuable properties around the tracks — parking lots or troublesome, underutilized parcels — and generate development, more ridership and revenue for NJ Transit.
The idea, according to an announcement from Tim Sullivan, CEO of the Economic Development Authority, and Kevin Corbett, president and CEO of NJ Transit, is to promote transit-oriented development and smart growth, develop underutilized properties, build a tax base for municipalities create and contribute to NJ Transit’s fiscal stability, Sullivan said during a briefing with reporters.
Sullivan said the EDA would enter into a real estate transaction, use the proceeds to purchase properties at fair market value from NJ Transit and then find 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 they bought them from NJ Transit, Sullivan said. “Public transport also has a positive influence here,” he says.
The program was hailed as a “win-win” by Gov. Phil Murphy and his senior leadership team, but tricky pieces need to fall into place in the remaining few weeks of the budget season before the state’s 2025 fiscal year begins July 1.
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The $100 million EDA would need to purchase NJ Transit’s properties would come from the first year of collections of a proposed corporate transit fee that Murphy introduced this year to address NJ Transit’s fiscal problems.
The proposed transit fee, which would impose a 2.5% tax on companies making more than $10 million in profits, has sparked controversy. And the mechanisms of that reimbursement, and which programs or agencies would receive the revenue, are being discussed by legislative leaders as the June 30 budget deadline approaches.
Fiscal cliff for NJ Transit
Fiscal cliffs are also looming at NJ Transit. For Corbett, this deal could improve the agency’s long-term financial situation by bringing in $100 million in the short term and potentially generating revenue in the long term through lease agreements brokered by the EDA. The transit agency predicts a deficit of nearly $1 billion by 2026.
“It’s no secret that a fiscal cliff is coming,” Corbett said. “This part really allows us to monetize assets.”
Questions about the politics of the corporate transit fee agreement and whether other money from it would still go to NJ Transit were not answered by Sullivan or Jennifer Sciortino, a spokeswoman for Murphy.
NJ Transit is trying to make the most of its real estate assets
NJ Transit had already made efforts to leverage its valuable real estate for potentially lucrative development deals.
In recent years, the agency has signed leases with developers in Woodbridge for the Metropark Station and LCOR, which is leading the rehabilitation of the Hoboken Terminal and building on a parcel adjacent 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 kind of work they already do, Corbett said it relieves the brokerage of 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 increase value by selling or leasing a portfolio of properties, including properties purchased from NJ Transit, as part of a greater development and vision. .
“If Tim and his team can leverage our packages to drive greater value, one plus one equals three,” said Corbett. “These are parcels that they really want to improve and we get some of that benefit that we wouldn’t get if we did it ourselves.”
NJ Transit, which owns dozens of parcels, would still negotiate land leases itself, Corbett said.
Neither agency indicated which of NJ Transit’s packages would be monitored for sale to the EDA. “We’re still working with Kevin and his team on the things that make the most sense here,” Sullivan said. Those near railroad tracks make the most sense, he said.
This article originally appeared on NorthJersey.com: NJ Transit: Plan to sell $100 million orphaned land raises questions
