Marshalls Corner Pennytown Task Force
Pennytown Purchase
Frequently Asked Questions
Why purchase Pennytown?
There are three reasons why the Township Committee is considering buying Pennytown:
first, because it is available; second, because it is a unique site in the township in that it
has its own sewage treatment plant and is part of a sewer service area; and third,
because it can help the Township meet its pressing need to build affordable housing.
Each of these reasons will be addressed more fully below.
Are we paying fair market value for the property?
Yes, we are paying fair market value for the property. Three appraisals have been done
on the property, each by a state-certified appraiser. Two of the appraisals were
commissioned by the Township and one was commissioned by the seller. The two
Township appraisals valued the property at $6,100,000 and $6,000,000, while the
seller's appraisal valued the property at $5,825,000. All three appraisals were
consistent with the assessed value of the property for tax purposes, which is $6,100,000,
a number that was affirmed by the Tax Court in 2007 after the owner filed a tax appeal. The price the Township would pay is $6.1 million.
Why is the property available now?
The property has not been maintained by its current owner, and is in foreclosure. The
holder of the mortgage anticipates taking title and has shopped the property to different
commercial buyers. He also approached the Township and asked whether we would be
interested in purchasing the property.
What is the development potential of the property?
The property is in the SC-1 shopping center zone. This zoning permits retail sales,
personal services, offices, clinics, theaters, banks, night clubs, bars, restaurants, motels,
and other uses. Given the limits on development imposed by the size of the treatment
plant, a commercial development could be between 112,000 and 140,000 square feet,
depending on the use. By way of contrast, the existing development – two houses, an
office, two restaurants, a motel and retail stores -- fill approximately 60,000 square feet,
which is just half of what could be built at the site.
What is unique about having sewers at the property?
Hopewell Township has limited sewage treatment capacity. There is no large-scale
treatment plant in the Township, and the Township is not a full member of a regional
treatment authority like the Stony Brook Regional Sewerage Authority (SBRSA) or the
Ewing-Lawrence Sewage Authority (ELSA). In fact, the EPA has said that Hopewell
cannot build a treatment plant because of concerns about water quality in the Delaware
River. In the southern portion of the township some neighborhoods, such as Brandon
Farms, have tied into the ELSA system, but approximately 90% of the land in the
Township still has no access to sewer service and must rely on septic systems for waste
treatment. Other than Princeton Farms, which was forced to tie into the SBRSA system
in 1989 after its small treatment plant failed, and the BPG site on Carter Road, which
has its own limited treatment potential, the only area north of the Pennington Circle that
has sewage treatment capacity is Pennytown. Without sewers, the township is unable to
develop at the density needed to meet its affordable housing requirement.
Why do we have a pressing need to build affordable housing?
Two reasons. First, the New Jersey Supreme Court's Mt. Laurel decisions in 1975 and
1983 established that municipalities have a constitutional obligation to provide real
housing opportunities for low and moderate income households, and that towns cannot
enact exclusionary zoning that prevents affordable housing from being built. The
Council on Affordable Housing (COAH) was created in 1985 to help towns meet this
constitutional obligation. As a state agency, COAH develops formulas for determining
what a municipality's "fair share" of affordable housing will be, and if a municipality
complies with COAH rules, it is immune from lawsuits from developers who claim that
the town has not meet its affordable housing obligation.
Second, since 1985, COAH has enacted three separate sets of fair share calculations for
each of three separate rounds of review. The most recent, known as the "Round Three" rules, were adopted in June, 2008. However, COAH's third round actually began in
January, 2004. The town's fair share obligation that accumulated from 2004 until this
year, when the new rules were finally adopted, must be filled within two years of COAH
certifying the township's affordable housing plan. As a result, Hopewell must plan to
meet this "retroactive" need immediately.
Who qualifies for affordable housing?
The guidelines for qualifying for affordable housing are set by the Council on Affordable
Housing. "Low income housing" is housing that can be afforded by a household earning
up to on half of the median income for a household of that size in the region. At present,
a family of four with a gross income of $42,283 would qualify for low income housing. "Moderate income housing" is housing that can be afforded by a household earning
between 50 and 80% of the median income for a household of that size in the region. At
present, a family of four with a gross income of $67,653 would qualify for moderate
income housing.
What is our affordable housing requirement?
The COAH rules are complex, but we have calculated Hopewell's current affordable
housing requirement to be 419 units. Of that, approximately 130 units are required to
meet Hopewell's retroactive need.
What is the deadline for meeting our Round Three requirements?
We must submit a Round Three compliance plan by December 31, 2008. The compliance
plan provides for phasing the construction of affordable housing over the next 10 years,
through 2018.
What happens if we fail to meet our affordable housing requirement?
If a town does not meet its affordable housing requirement, it looses its immunity from
lawsuit, and a developer would then be permitted to sue the town and ask the court to
allow the developer to build the affordable housing. These lawsuits, known as "builder's
remedy" lawsuits, are costly to defend, but more importantly, they can cause the town to
lose control of its zoning and planning process. In a builder's remedy lawsuit, the
planning process takes place in the courtroom, rather than at the Planning Board and
Township Committee. Furthermore, developers that build affordable housing are entitled
to build market-rate housing as well. By including these market rate units in the
development, a developer could be permitted to build five times the amount of housing
that would otherwise be required. Finally, if we fail to meet COAH's deadlines, COAH
can seize the funds that the township has been collecting from developers for its
affordable housing trust fund under the theory that if the town won't use the money to
provide affordable housing, the state will.
Is a developer's remedy lawsuit realistic in this economy?
Yes. As residents, we know Hopewell to be a wonderful place to live. We take pride in
our beautiful landscape and our unique rural-suburban mix. Hopewell is appealing to
developers for these very same reasons. Right now, developers and their attorneys are
looking closely at towns like Hopewell. One prominent law firm's website says, "Towns
that are subject to this [December 1, 2008] deadline and who fail to file with COAH by
that date loose their immunity from exclusionary zoning until they do file. Because these
towns have an urgent need to prepare and adopt new housing plans over the next ten
weeks, this is an opportune time for property owners and builders to propose projects
that include both residential and mixed use low and moderate income housing."
Developers understand that the best way to force towns to accept development is to claim
that they are meeting an unmet affordable housing need. For Hopewell, risking a
developers-remedy lawsuit is the ultimate gamble: the town has spent ten years and
hundreds of thousands of dollars formulating and defending its 6 and 14 acre zoning, all
of which could be overturned by a developer who successfully argues that the township
has not met its constitutional obligation to provide for affordable housing. Such a
lawsuit could easily result in high density development throughout the Township.
How would development at the Pennytown site affect firefighting in the area?
Development of affordable housing at Pennytown would have no adverse impact on
firefighting in the area. Currently, the pond at the site provides water that can be used
for firefighting, and that would not change. On the contrary, if the pond is dredged as
part of the development, it will become a better fire protection resource.
How would development at Pennytown affect wells in the area?
We have asked Matt Mulhall, the hydrogeologist whose research formed the basis for the
Township's current zoning, to look at the groundwater resources at the site. Mr. Mulhall
reported that "the Pennytown site has unique attributes with respect to water supply and
wastewater treatment that make the property favorable for converting from existing
commercial operations to affordable housing." He noted that the reported yields from
the existing wells at the site were more than enough to meet anticipated residential
demands; and that in addition, the site is located near a fault zone that is a significant
groundwater resource, and is above a rock formation that is the best water supply
aquifer in the township.
How would development at Pennytown affect traffic in the area?
A detailed traffic study will be performed as part of the detailed site planning process.
However, the estimate of the total trip load for a 70-unit residential development is
significantly less than the trip load for a commercial development that could be built at
the site under the current zoning. Seventy affordable units at the site would generate 474
total daily trips. This is 13% of the 3,612 total daily trips the site as it currently exists is
calculated to generate, and 27% of the 1,728 total daily trips the site would generate if it
were converted to a 140,000 square foot office use.
How is the township protected against environmental damage at the site?
Under the agreement of sale, the township has the right to perform Phase I and Phase II
environmental audits and a groundwater assessment. If the results of the audit are
unsatisfactory to the township, it has the right to declare the agreement null and void.
Who would demolish the existing buildings, and when?
The seller must demolish the existing buildings before closing, with the exception of the
office building on Route 654 and the HI Ribs restaurant. The restaurant lease runs
through April 30, 2010, and therefore the restaurant property will be subdivided from the
remainder and then deeded to the Township after the lease expires.
What is the timeline for development of the site?
The Township would close on the property (with the exception of the HI Ribs parcel) by
June 30. 2009. The site is slated for development between 2011 and 2012, according to
the Township's proposed affordable housing implementation phasing plan.
Pennytown is isolated and located on a state highway. Is this a reasonable location
for affordable housing?
Pennytown is actually next to residential zoning districts or land uses on all sides, except
for a small portion on the southern end near the pond and across Pennington Hopewell
Road (Route 654) at the Kootronics/Pennwell site. That adjacent Kooltronics/Pennwell
site has been designated as a "hamlet" in the township's zoning ordinance, meaning that
a small compact development with a mix of uses could be built there. The use of
Pennytown for residential purposes fits well with this "hamlet" concept. Also,
Pennytown's access to Route 31, its location between two traffic signals, and its
proximity to Hopewell Borough (which is four minutes away) and commercial services to
the south make it a reasonable site for affordable housing. We also anticipate that by the
time the site is developed, it will be served by New Jersey Transit.
Building affordable housing at the Pennytown site also has the advantage of distributing
the township's affordable housing obligation in a fair and equitable manner. The
township's affordable housing should not be concentrated in any single area of the
township.
What would the houses look like?
It's too soon to tell. Affordable housing can take many different forms. The township
would work with the selected developer to ensure that the end product is aesthetically
pleasing, fits the character of the area, and enhances this stretch of Route 31.
Will the houses be sale or rental units?
Again, it's too soon to tell. We will work with the developer to come up with a product
that makes the most economic sense and provides stability for the site.
How will the township pay for the property?
We have proposed that the Pennytown property be purchased with a combination of
affordable housing funds (which are only available if the property is used for affordable
housing) and municipal borrowing. The down payment would be from the Township
Affordable Housing Trust Fund, while the balance will be financed over40 years. It is anticipated that this financing will be reimbursed through the trust fund as that fund is
replenished by developers paying development fees.
