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No. The Township has no financial obligation to pay for any of the affordable housing, the market rate housing that comes with it, or any of the infrastructure (water/sewer/roads) that is needed to support it. In fact, the Intervenors are on the hook for paying for everything that is associated with constructing the housing that is approved in connection with this settlement.
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Any Hopewell Township Landowner (or builders who have a contract with a landowner) who agrees to provide Affordable Housing on their site has the right under NJ law to “intervene” in the lawsuit described above. As part of this, they can independently develop a plan to provide the Township’s obligation for affordable units and submit it to the Court.
This includes being able to specify the number of market rate units required to build a given number of affordable units. During the trial, the Court encouraged municipalities to work with their intervenors to agree on a plan for each prospective site.
If the Court believed the Township was not acting in good faith to ensure its obligation was met, it could have let the Intervenors make their own plan, called a Builder’s Remedy Lawsuit. In South Brunswick, that is exactly what happened and the Court determined that their obligation was more than 2,900 units of affordable housing (plus thousands of market rate units). The judge also determined that this plan could be implemented by the builders themselves versus by the Town’s Planning Board in a public setting, working in conjunction with court-appointed professional planners and cutting the Township entirely out of the process, from determining where the units would be built to what they look like, who would live there and how the rentals would be managed.
In a Builders Remedy Lawsuit, any property owner can propose their site for development, including lands that are not currently in sewer service areas. In the 1990’s, in a prior COAH round, Hopewell Township was subject to a Builders Remedy lawsuit because it failed to make sufficient progress towards meetings its affordable housing obligations. This resulted in Brandon Farms, a new development with over 1200 homes and a ratio of 8-9 market rate units for each affordable unit.
As a result of our negotiations, Hopewell Township secured a lower Affordable Housing obligation (653 affordable units) than we would have gotten had we carried through to the end of the litigation. In the multi-town Mercer County trial that continued on after Hopewell Township reached a settlement, the Court ultimately ruled that Hopewell Township’s obligation for Affordable units would have been almost 100 units more, resulting in roughly 500 more housing units. The Court also ruled that West Windsor, one of two towns that did not settle in Mercer County, must produce approximately 1500 new affordable housing units, as well as at the associated market rate units. These municipalities also took on the costs of many months of additional litigation – in the tens if not hundreds of thousands of dollars, and will bear the cost of any appeals.
Importantly, Hopewell Township will receive credit If there is new legislation, Supreme Court rulings or a Constitutional amendment that reduces municipalities’ third round affordable housing obligations. If this happens, Hopewell Township will be entitled to reduce its Third Round obligation further. It is, however, protected if any of those legal changes results in a higher obligation for Hopewell Township.
It is not something the Township had a say in. The Mt. Laurel NJ Supreme Court decision (also known as the COAH law) requires that each municipality in NJ must provide a “fair share” of these units of housing. In 2015, the NJ Supreme Court ruled that all NJ municipalities were responsible to meet a present and prospective affordable housing need for the 26 years from 1999 to 2025. In the lawsuit, the Township fought to reduce the number and was successful in reducing it from the proposed 1756 units by Fair Share Housing Center to the final number of 653.
It’s important to note that Hopewell Township’s obligation is only to provide a “realistic opportunity” for these units to be built. If there is not sufficient market demand for this many units to be built or if there is another real estate crash, these units will not be built. Similarly, if the financial cost of building all of the new water, sewer and other infrastructure to support the development is too high, the Township is not obligated to assist the developers. Again, the units will not be built if a project proves to be economically infeasible.
The income restrictions that govern who qualifies to live in affordable housing are established by HUD. They look at the census, usually of a county, and figure out what the median income is. Then they set out tables for different size families for different income tests. The affordable housing in Hopewell would be for low and moderate income.
Moderate-income people who would qualify for the affordable housing include our teachers, firefighters, healthcare professionals, trades people and the like. It is a place our seniors can retire to and a place our young people can rent as their first home.
As part of the lawsuit, the intervenors stated that they wanted to provide the Township’s obligation of affordable housing in exchange for being allowed to also build market rate homes. The law typically provides for 15% of rental housing to be affordable, but Hopewell Township was able to reduce this ratio across the board, resulting in less market rate housing for each affordable unit.
Some people would have liked to see 100% Affordable Housing built. Others would have been furious if 653 units of 100% Affordable Housing were built in one or two locations. In the first incarnation of the third-round rules, COAH indicated a preference for “inclusionary” housing, which is housing that is a mix of market and affordable.
Affordable Housing can be funded either by: 1) offsetting profit from contemporaneously built market rate housing units, 2) through investment via tax credit programs administered by the New Jersey Housing and Mortgage Finance Agency, 3) subsidized by a federal program such as HUD, or 4) financed directly by the municipality through taxes. Hopewell Township’s solution utilizing option 1 ensures that taxes will not be used to pay for this Affordable Housing obligation.
Between the breakdown in NJ's Council of Affordable Housing (COAH) third round process and the resulting lack of rules/funding for Affordable Housing, and new 2018 federal tax plan, which substantially lowers corporate taxes and thus lessens their need for credits to offset profits, relying on tax credit funding is extremely unlikely. Funding for 100% tax credit projects is awarded after a lengthy and expensive application process and is most often given in amounts to fund no more than 85 units at a time. Application rounds are usually only announced once every three years and are extremely competitive, especially in this new landscape where every town in New Jersey is being pressured by the Courts to carry out its Affordable Housing Plan. With an obligation of 653 units, the Courts have found that it would not be realistic to rely on 100% Affordable Housing developments, 85 units at a time.
The courts have ruled that it is not “realistic” for a town’s Affordable Housing plan to only have Affordable Housing units, as there are not sufficient tax credits and other public monies to exclusively build 100% Affordable Housing. In one nearby community, where planners wanted to build two small, 100% Affordable Housing developments, a judge required the municipality and its taxpayers to bond upfront for the full cost of these projects, resulting in a financial obligation of almost $40 million.
The average cost to construct one Affordable unit in New Jersey is currently $250,000 to $300,000, so building 100% Affordable Housing units would have resulted in a taxpayer bill for $150 to 200 million in Hopewell Township. For perspective, our current total tax levy, including schools, is just over $100 million. This would have resulted in an unbearable tax burden for our residents.
Now that the Township has met its constitutional mandate to provide a realistic opportunity for Affordable Housing, if construction begins builders would be responsible for financing and building all of the Affordable Housing in Hopewell Township using the plan approved by the court. They will be responsible for the full cost of building these units, including the monies needed to extend sewer and water infrastructure to each site.
The current Township Committee also believe that building inclusive developments will help better integrate these units within our community and that this approach is a better overall solution. This is supported by the decisions of every Township Committee going back at least to 2012 when the Zaitz property was purchased. In Brandon Farms, market rate and affordable units co-exist side-by-side and one can’t tell the difference.
To qualify as affordable housing, the unit must be deed restricted for 30+ years to only house people who have a low-to-moderate income (as determined by the median income charts published by HUD). While there are currently some affordable units for sale in Hopewell Township, we have five pre-qualified buyers for every available unit; on affordable rental units, there is a significant wait list in the Township, particularly for 2+ bedroom units.
In fact, as we work with the landowners who will develop the new housing areas, we have set many goals including sidewalks and bike paths, and connections to existing trail systems. We also expect that some stores will be built that will be walkable to the new community and accessible to all the rest of us as well. The Redevelopment process (discussed below) will allow the Township greater control over those things. The Township is committed to protecting existing viewsheds with buffers, protecting the environment, and retaining the rural nature of the Valley.
As a result of the Court Settlement, Hopewell Township has met its obligation to provide affordable housing in that the Court agreed the Township has provided a “realistic opportunity” for the intervenors to build it.
That said, there are many more steps the intervenors must take before any shovels hit the dirt, including an extended site plan review and permitting process (all open to the public).
With all of the required environmental, traffic and water studies, the planning and permitting process is expected to take 18 to 24 months once initial plans are submitted. Additionally, the construction of new water and sewer infrastructure to these sites could further delay building. In addition to the requirements of site plans and planning and zoning board approvals, builders may have issues with DEP, DOT, DVRPC and other State agencies. Brandon Farms took 15 years to build. These projects could easily take more. Hopewell Township’s court ruling anticipates a significant portion of any construction may occur after 2025.
And since we are talking about timing, please note that the affordable and market units on any given tract need to be built concurrently. The market rate units may not reach 50% completion until the affordable units also reach 50% completion. The market rate units may not reach 90% completion until the affordable units are 100% complete.
The School District has done extensive studies of the school populations. Currently they are well-below capacity. In total, there are more than 600 open seats across the District. We, the Township, working with the School District plan to complete more detailed demographic studies, but initial analyses suggest that any additional children that will come to the school district via these new developments will be absorbed within the existing capacity through 2025.
Just like any other neighborhood that has been built in Hopewell Township, if the Township sees a need for additional services in decades to come that might cost taxpayers money, we will look very closely at how to raise and spend those funds. As one example, because these sites have been put into redevelopment areas, the Township has the option to negotiate a Payment in Lieu of Taxes (PILOT) with the developers, which can provide significantly more tax revenue to the municipality. This strategy has already been employed for the Klockner tract on Federal City Road, resulting in incremental revenues to the Township of ~$750,000 in the first year after the project is completed. This is equivalent to 5% of the current municipal tax levy and this one development will contribute almost as much revenue to the Township coffers as our largest employer does today (5.9% of tax base).
1. Scotch Road – A significant portion of the development will be on the east side of Scotch Road (Merrill Lynch side), including a new Continuing Care and Rehabilitation Center and an age-restricted community next to Capital Health to establish a new, affordable continuum of care for our senior residents. There will also be development on the West side, but it will be restricted to land right across Scotch Road from the main Merrill entrances. Landscape buffers have already been agreed to, so the vista from Pennington-Washington Crossing Road will not be impacted. It also will end far away from the Jacobs Creek. We hope that the long-wished for bike paths between the Municipal building and Bear Tavern will be developed as a side project.
2. Behind Shop Rite (“Zaitz Tract”) – The development behind Shop Rite and the redevelopment of the ShopRite, Exxon and Wells Fargo site will enable us to significantly improve the traffic patterns at the Circle, including moving the main entrance/exit to Shop Rite and providing secondary means of egress through the Development. The redevelopment of the commercial parcels at the Circle will also bring new tax revenues to the Township. We also plan for this to be the future site of a new Senior and Community Center. The developer will be responsible for bringing sewer and water infrastructure as well as other utilities to the entire site,, and will complete rough grading and storm water management for the Community Center at no cost to Hopewell Township.
3. Federal City Road (“Klockner Tract”) – This development will contain multi-story luxury rental housing. It is located on the south side of I-95 along Bull Run Road, adjacent to Lawrence and Ewing Townships. It will be marketed to young professionals. A community center in the project will be available to their residents.
4. BMS – There is a possibility that as BMS moves out of Hopewell by 2020, they may provide an opportunity for a developer to construct some housing on their site to support the attraction of new commercial tenants for the existing research and office space. This will help preserve our tax base, and BMS will have to give up existing development rights (for additional research buildings) to offset any residential development.
From a practical standpoint, development on this scale can only occur where infrastructure already exists, including having existing sewer service or being in a sewer service area. In fact, for the intervenors to qualify to be part of Hopewell Township’s plan, they had to show that they had or could have the infrastructure available to support the housing it proposed. This includes making it as walkable as possible as well as having access to public transportation.
The proximity of the hospital, Merrill Lynch and other major employers makes the sites on Scotch Road the best sites for development. They also will have much less impact on traffic than a development of this magnitude would have on Rt. 31. Siting the new housing south of Washington Crossing Pennington Road and establishing traffic calming measures and accessory roads will divert traffic south to I-295 and minimize the impact on Route 31.
We are also concerned about potential traffic impacts. To help address this, Hopewell Township’s Affordable Housing obligation was proactively distributed across three different I-295 interchanges, with the highest density occurring where the road system is most developed (Scotch Road). We also reduced the proposed density on the Route 31 circle by approximately 25% vs. the preliminary 2015 housing plan, as we were concerned that it called for too many units (500) on an already-busy roadway. Further, we will be consolidating existing commercial driveways on the northwest and southwest corners of the circle to improve traffic flow, and will eliminate the wrong-way exit coming out of the Shop Rite across the Circle.
As proposed projects come forward to the Planning Board, each developer will be required to conduct a comprehensive traffic study and mitigation plan. The Township will have its experts review each study in-depth and ensure appropriate actions are being taken to minimize traffic impact on roadways and neighborhoods.
It’s important to note that this site is currently zoned and pre-approved for over 1.5 million square feet of new office space, as the result of prior litigation. The intervenors who own this site successfully demonstrated to the courts that this site could meet the legal requirements for the provision of Affordable Housing. If we had not been able to accommodate the 400+ Affordable units on this site, the Township would have had to place them on other large land parcels on Scotch Road, on the Route 31 Circle, adjacent to the golf course or on Pennytown, and in other parts of the Township.
The Township is trying to make the best of what it has been handed. As part of this settlement, the Township was able to contain development and protect other largely rural areas across Hopewell Valley.
The Planning Board was asked by the Township Committee a very narrow question: do each (or any) of the tracts owned by an intervenor in the affordable housing lawsuit meet the criteria of “in need of redevelopment” that is part of New Jersey law? The Planning Board was not asked whether they thought building any kind of housing on that land was a good idea, they were only asked whether the land in question met the criteria. In each case, the Planning Board found that they did.
What a Redevelopment Plan does is give the Township a larger degree of control over how the development will be built on the land owned by the intervenors, what it will look like and how we can ensure it best benefits our existing residents. Through Redevelopment, we will direct the projects to contain such things as sidewalks, bike paths and commercial ratables, landscaping to minimize the visual impact of the structures and other green infrastructure like solar-ready roofs and cutting-edge storm water management features.
Being in a redevelopment area also makes any affordable units eligible for bonus credits, reducing the net number of units needing to be built, and PILOT (Payment in Lieu of Taxes) programs, which could benefit our residents financially.
It certainly would have had an impact as we went through the litigation. Part of what the Court looked at in this suit was what progress the Township had made over the years in providing its fair share of affordable housing. Had we built affordable housing at Pennytown, it might have helped mitigate the results of this current lawsuit.
The amount that was spent to purchase Pennytown was $7 million. The development of our required 653 units of affordable housing with the concomitant infrastructure required, including connecting to ELSA, would cost $150-200 million. If Hopewell Township chose to develop the Affordable Housing on its own, each Township household would be on the hook for over $30,000 in added taxes.
Pennytown is currently for sale, and we expect to recoup monies that can be put towards reducing the Township’s debt. Please keep in mind that both the purchase of Pennytown and the decision to remove it from consideration for affordable housing development were bipartisan decisions made over nearly 10 years (2008 to 2016) and multiple Township Committees.
Click HERE for a complete list of Township Committee decisions.
The Intervenors’ right to build housing and to install the infrastructure necessary to support it has nothing to do with existing housing. The Township is not obligated to provide infrastructure for the new housing and the Intervenors are not obligated to provide infrastructure for existing housing. However, as we recently demonstrated with Diverty Road (which is in an existing sewer service area), we are able to negotiate with developers to help provide sewer and water infrastructure to impacted area residents.
Similar concerns were raised in the 1990s when Brandon Farms was first proposed. The Brandon Farms community has become a strong vibrant part of Hopewell Township, helping bring in more young families and diversifying our housing stock, including several wonderful age-restricted communities like Four Seasons and Wellington Manor. Since Brandon Farms was built, home values have increased across Hopewell Township, as families that originally bought homes in Brandon Farms have traded up to larger single-family homes in other parts of Hopewell Valley.
We are working towards a similar end result with these new developments. We will have new housing options for our teachers, firefighters and police officers to move into, as well as new, more affordable starter homes for young couples and other professionals working in the Princeton-Hopewell-Lawrence area. Similarly, there will be new options for older residents whose kids have left the school system and who want to downsize. We are planning for mixed use, inclusive neighborhoods so that affordable housing is not concentrated in any one area. Using the control retained via the Settlement and the Redevelopment process, the Township will be very strict with owners of the rental units with how these developments are managed, both in how lower income tenants are certified and how properties are maintained.
Hopewell Township’s final Affordable Housing plan incorporates many elements from the preliminary housing plan that was developed and submitted to the courts in 2015. There was extensive public input to this preliminary plan, with discussion of Affordable Housing at all 25 Hopewell Township Committee meetings in 2015, and extensive public comment during the actual plan development of the plan in 7 regular and special Planning Board meetings in the summer and fall of 2015.
Public input has been incorporated in many elements of the plan, including the reduction of planned density on the Route 31 circle and the creation of alternate means of ingress and egress from this site. Extensive environmental protections and green infrastructure requirements have been built into each site’s redevelopment plan. Additionally, in 2016, the public had additional opportunities at the Planning Board to provide input on potential retail development on Scotch Road.
In our December 2016 compliance hearing, Judge Jacobsen recognized Hopewell Township for having the most public and inclusive process in Mercer County, if not the state.
Looking ahead, we have continued to seek public input as each site’s redevelopment agreement has been developed and vetted by the Township Committee. We have successfully been able to change and improve plans at each step in the process; for instance, on the proposed Zaitz development behind Shop Rite, we held a series of special outreach meetings at the high school and municipal building, in addition to hearings at regular Committee meetings.
As a result of community input and the concerns we heard, as well as a thorough review by our Planning Board, we made more than 30 specific changes that improve the proposed redevelopment plan for that site. We will likely make additional changes and improvements as a formal site plan application is submitted, when we have additional data from traffic, water and other required studies.
If you have additional suggestions on how we can improve communication and this process moving forward, please share your thoughts in-person or via email with our Township Administrator, George Snyder, or with our Community Development Director, James Hutzelmann. Click HERE for Hopewell Township contact information.
Yes, it’s a very positive deal. Instead of receiving $18.5 million in revenue over 30 years, Hopewell Township is projected to receive over $110 million over this same time period through the PILOT agreement.
This will enable us to pay off outstanding Township debt and reduce taxes, plus reinvest in our community. Options under consideration include added investment in our Fire District and other first responders, building a new Senior + Community Center, and making voluntary additional contributions to the School District, in addition to reducing residential property taxes.
The PILOT will bring in roughly $3 million per year, which is fully 20% of what is raised by the current tax levy, all from just one small tract.
No. In fact, by enabling the Township to reduce debt (currently over 20% of total expenditures) and bring in new revenues, we are hopeful we can reduce the burden of residential property taxes.
Communities like Jersey City and Hoboken had successfully employed PILOTs for a number of years to reduce Municipal and School taxes.
There’s none. The PILOT does not take money away from the schools, not one penny.
As Dr. Smith’s presentation outlined in a Township Committee meeting, the School District will still raise the monies they need; they are indifferent to where this money comes from.
There are currently over 600 open seats in HVRSD schools due to changing demographics and declining enrollments, so with the minimal number of school children generated by the Zaitz project, we expect that these children can be accommodated within the District with little or no additional School costs.
Additionally, Hopewell Township residents will save money as the School tax obligation is more fairly redistributed through this PILOT and The Boroughs pay their fair share. This agreement will help end the higher taxation of Township residents vs. the Boroughs.
As it stands, Hopewell Township currently pays 34% more per enrolled student in Hopewell Valley Schools than the Boroughs ($22,269 vs. $16,674). If we had gone a conventional path with this project, Township residents would have paid an even higher share of school taxes, even if there were no additional school costs.