'Transit villages,' including Jersey City's, stall with slumping economy

by The Jersey Journal
Sunday June 21, 2009

Jersey City Mayor Jerramiah T. Healy in April as he walks by site of proposed mixed-use development next to Journal Square Transportation Center. The plan has stalled along with the economy.

The slumping economy has derailed a number of the state's planned "Transit Villages," according to The New York Times.

This news comes as no surprise to residents of Jersey City who have watched a mixed-use development planned for Journal Square next to the PATH Transportation Center come to a standstill.

Despite Mayor Jerramiah T. Healy's pre-election press conference in April, in which the last of the demolition was celebrated, there is still no date for construction to begin on the $500 million development, which is to have some 1,600 apartment units.

?Transit Cities? Face Roadblocks

The New York Times
By ANTOINETTE MARTIN
Published: June 19, 2009

THE state?s emphasis on ?transit-oriented development,? most particularly with its 10-year-old Transit Village program, has brought transformative change in city after city along commuter rail lines.

Jersey City, Morristown, New Brunswick and Rahway are among 20 state-designated Transit Village communities in which whole new neighborhoods have been planned, are under way or are almost complete near downtown transit stations.

By providing planning models and incentives for developers to create mixed-use projects around transit stations, New Jersey has established a national reputation among planners for its ?smart growth? approach. And for a long time, the program?s momentum seemed unstoppable.

Then came the roadblock of a severely strained economy. As Jeffrey Otteau, a residential analyst, put it in a recent interview, ?Nothing has been able to escape the economic and financial collapse we?ve seen over the last year ? transit-oriented development included.?

Work on several large projects has continued. In Morristown, for example, a new 217-unit rental building next to the train station is nearing completion, and leasing begins this week.

But work and planning at others have slowed, or even stopped. The area around the rebuilt transit center in Rahway, for instance, is considered a ?shining star? of Transit Village design, according to Martin E. Robins, a senior fellow at the Alan M. Voorhees Transportation Center at Rutgers University.

Yet despite that, and despite downtown Rahway?s new identity as a residential and retail center, the area?s transformation was halted halfway through. Construction financing dried up last year, and the retail market shriveled, so work on a number of planned condominium buildings with street-level retailing was put off, or else never begun.

Similarly, in Somerville, work continues on a $153 million upgrade to the Raritan Valley Line train station, but redevelopment of a huge former landfill beside it as a potential Transit Village is one of two stalled projects.

?In today?s market, developers won?t just show up,? said Colin Driver, Somerville?s director of economic development. ?We made a two-year study, and involved the entire community in creating a great plan for a transit-oriented development ? and then the bottom sort of fell out for any kind of development.?

The town, which is in Somerset County, had hoped to approve contracts by March 2008. Instead, when it requested proposals from developers last fall, none responded ? even though four had earlier expressed interest.

Now, Mr. Driver said, the town has decided to act as the primary developer of the land, seeking state financing for landfill cleanup, creating open space, and beginning to install roads and utilities.

?The transit-oriented development plan is still alive,? said Mr. Driver, noting that ground was broken two weeks ago on the new Mass Transit Tunnel under the Hudson River, which will double train capacity and someday make Somerville a ?one-seat commuter town,? without a change of trains to Manhattan. ?The town is just going to have to take the lead during this time of economic difficulty.?

Meanwhile, on the other side of the Somerville train station, a second project hasn?t had much luck, either. The planned remaking of an old strip mall into a mixed-use center with more than 300 condos, offices and shops had already been stymied for several years by a legal battle with Pathmark, a former tenant, when the developer?s bank financing fell apart last fall.

The town agreed that the developer, Edgewood Properties, could scale back the plan by half ? and it even agreed to provide a construction loan, permitting the developer to borrow against future tax income on the project. But work has yet to begin.

Is this merely a stumble, or are the projects doomed not to recover their momentum?

?We cannot know that yet,? Mr. Robins of Rutgers said, ?but they still appear to be the best possible hope for healthy growth in the future.?

Mr. Otteau, whose company, the Otteau Valuation Group, provides data and analysis to real estate companies, agreed. Even with the downturn, he said, housing values are holding up better in cities with mass transit stations and new development around them. He cited fresh statistics showing that ?transit cities? were outperforming their counties of residence so far this year:

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In Hudson County, where sales prices are down by 21 percent from last year, they have fallen only 12 percent in Hoboken.

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In Union County, prices are down by 13 percent over all but have dipped 9 percent in Summit.

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In Monmouth County, prices are down 11 percent, but in Matawan, they are up by 10 percent.

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In Middlesex, prices are down 21 percent, but in Metuchen they have dipped only 11 percent.

?Nine of the top 10 housing markets in the state have rail stations,? Mr. Otteau pointed out in a recent report, adding that ?the new tunnel just increases the appeal of downtown living.?

Communities around the state continue to apply for Transit Village designation and support. Two weeks ago, Orange became the 20th city to receive Transit Village redevelopment designation for the area around its train station. In addition to Rahway, New Brunswick, Jersey City and Morristown, Orange joined Belmar, Bloomfield, Bound Brook, Burlington, Collingswood, Cranford, Elizabeth, Matawan, Metuchen, Netcong, Pleasantville, Riverside, Rutherford, South Amboy and South Orange.

In Somerville, town officials say they continue to work closely with the state on the transit-oriented plan. But a Transit Village designation is not being pursued at this time, Mr. Driver said.