The Princeton Council has approved a bond ordinance for $8 million as its contribution toward construction of an age-restricted affordable housing development on Thanet Road, off Terhune Road.
The 80-unit rental apartment building, which will be developed by PIRHL Developers LLC at an estimated cost of $17 million, will help Princeton provide its fair share of affordable housing. It is part of a lawsuit settlement between the town and the non-profit Fair Share Housing Center.
Princeton was sued by the Fair Share Housing Center – along with many other New Jersey towns – for allegedly failing to provide its fair share of affordable housing. The town and the nonprofit group reached a settlement agreement in 2019.
Apartments in the 100% affordable housing development are earmarked for very low-, low- and moderate-income households. The residents must be at least 55 years old.
PIRHL will construct the building on part of a 15-acre parcel on Thanet Road. The rest of the parcel is being developed by AvalonBay Communities Inc., which has proposed building a rental apartment development that includes 210 market-rate apartments and 11 affordable housing apartments.
AvalonBay Communities carved out two acres from the 15-acre parcel and donated it to Princeton. The town conveyed the two-acre parcel to PIRHL, which has applied for funding from other sources in addition to the town’s $8 million bond ordinance.
The New Jersey Local Redevelopment and Housing Law allows for a town to issue bonds for a redevelopment project, and that’s why the Princeton Council approved issuing $8 million in a bond ordinance.
The debt service for the bond will be covered by money generated by a payment-in-lieu-of-taxes (PILOT) agreement between Princeton and AvalonBay Communities and PIRHL. Instead of paying property taxes to the town, the public school district and Mercer County, the developer will make annual payments to the town.
Princeton Councilwoman Mia Sacks said she had learned much about how affordable housing is produced. The bond ordinance is one example of the price tag that a town pays for a 100% affordable housing development, she said at the council’s Oct. 11 meeting.
“This is $8 million. It is not chump change,” Sacks said.
“Fortunately, the way this was constructed, the PILOT for AvalonBay on Thanet Circle will go cover this (debt payment), which was a creative way of financing it,” she said of the bond ordinance.
Sacks said it is important for residents to understand that there are two ways to build affordable housing, and there may be consequences.
One approach is to build an inclusionary development, in which 20% of the units are set aside for low- and moderate-income households and the rest are market-rate units, Sacks said. The price that a town pays is more density, because the developer has to build more units overall to subsidize the cost of the affordable housing units.
The increased density, or number of units, has an impact on a town’s infrastructure and schools, she said. There is more stress on the infrastructure, such as roads. More housing units – for sale or for rent – results in more students in the public schools.
