Does a recent N.J. Supreme Court decision mean the end of tax breaks for developers in Princeton?

In a recent ruling, Malanga vs. the Township of West Orange, the New Jersey Supreme Court ruled that West Orange improperly designated the site of its public library as an area in need of redevelopment under the Local Redevelopment and Housing Law.

The court reaffirmed that the standard for declaring a property or building in need of redevelopment must be that the property is “blighted.” But the town must also prove that the area is detrimental to the community and that there is a public purpose for redeveloping buildings. The Supreme Court also emphasized that the fact that a property is old or requires modernizing is not a confirmation of “blight.”

Why is this relevant to Princeton? In recent years, the Princeton Council has approved at least three properties — The Princeton Shopping Center, Princeton Theological Seminary, and Thanet — as Areas in Need of Redevelopment, primarily to enable property developers and owners to override existing zoning and secure tax breaks in the form of Payments In Lieu Of Taxes.

Given that Princeton has a shortage of buildable land that generally sells at a premium, there are few to no properties that even come close to the standard for being “blighted.”

What’s more, the recent Princeton Theological Seminary properties illustrate this issue perfectly. Of the 10 seminary properties that were included in the Area in Need of Redevelopment, one was a playing field and others were used for residential, recreational, and even conference use. The Area in Need of Redevelopment approval resulted in several historic buildings being demolished and the properties being offered to a developer who is looking for favorable zoning and a tax break. The remaining properties, all of which are in use, including the playing field, still fall under the Area in Need of Redevelopment designation.

The court has highlighted that these types of Area in Need of Redevelopment designations are clearly in violation of the law and represent an overly broad interpretation of the law that has been so enthusiastically embraced by developers.

What should be done?

To respect this ruling, existing Area in Need of Redevelopment approvals should be reviewed, and where relevant, should be corrected to comply with the proper interpretation of the law. This would include, for projects not approved, not negotiating further PILOT agreements that negatively impact school funding and property taxes. The redevelopment of the properties should also comply with the underlying existing zoning. For properties that are presently in use, including playing fields, the Area in Need of Redevelopment should be rescinded, and the properties should revert to their underlying zoning, making them subject to normal planning processes. This represents an opportunity for the Princeton Council to redirect development towards affordable housing, realigning development with the public interest and using tax breaks to encourage developers to prioritize affordable development.

While this decision sets a precedent and highlights the importance of ensuring that Area in Need of Redevelopment designations are made in accordance with the law and serve a true public interest, it does not automatically prohibit the use of ANR designations in the state. Instead, it calls for greater scrutiny, transparency, and adherence to legal standards when making such designations.

Mike Head
Hibben Road