On December 19, 2025, the Princeton Municipal Council voted to award the developer a Payment in Lieu of Taxes (PILOT) agreement worth an estimated $40 million over a period of 30 to 35 years.

 

What is a PILOT? Not unlike the Area in Need of Redevelopment designation, the state legislature designed the PILOT in part to help encourage investment in truly blighted redevelopment areas. Under the arrangement, a developer and a municipality cut a deal whereby the developer pays what is sometimes called a voluntary tax – a contradiction in terms -- in lieu of what it would pay by traditional tax assessment.

 

The PILOT amount, over time, can be and usually is dramatically less than the developer would otherwise pay. In the case of the Stockton Street project, Herring Properties will pay up to $40 million less than it would have paid over the 30-to-35-year life of the PILOT.

 

The distribution of proceeds from PILOTs also differs from the distribution of traditional taxes. With traditional taxes, in Princeton, 50% of proceeds go to fund the public schools, the remainder divided between the Municipality and Mercer County. In the case of PILOT payments, 95% of proceeds go to the Municipality and 5% to Mercer County and none directly to the schools. Even if the Princeton Public Schools receive the 100% funding that the Council asserts is guaranteed, the overall revenue shortfall due to the PILOT remains.

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Public benefits?

Municipalities looking to award a PILOT need to show that the public will reap substantial benefits from the project being funded. Attached to its ordinance approving the Stockton Street PILOT, the Municipal Council includes a memo from its redevelopment lawyer whose justifications, based on such benefits, helped guide the Council’s deliberations.

 

These supposed benefits include that, whereas the property is currently tax-exempt because owned by the Princeton Theological Seminary, the Municipality would stand to gain nearly $50 million in revenue over the life of the PILOT. But the self-evident fact that formerly tax-exempt property will now, owned privately, yield great revenue to the Municipality is hardly a reason to extend a huge tax break to a developer of that property. If it were, anyone who purchases a tax-exempt property and redevelops it should be eligible for enormous municipal giveaways.

 

The Stockton Street project, the memo remarks, will also provide 48 affordable housing units which will satisfy the Municipality’s existing affordable housing obligation. And, of course, stripped of all context, as the memo does, the addition of 48 affordable units is literally a public good. But the context is crucial. These affordable units, the absolute minimum under state law, are offered as part of a high-rise luxury apartment complex -- an imbalance of luxury units to affordable by a factor of 4 to 1.

 

How does replicating a public evil – the glaring economic and social disparities that afflict Princeton -- advance the public good? Why must the solution of the Municipality’s affordable housing crisis come as a by-product or an after-thought on building nearly two hundred densely packed luxury rental apartments? And why does any of this entitle the developer to a PILOT?

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Neighborhood residents have always wanted to see MORE affordable housing on this site -- 100% affordable housing -- with more units than 48 and with a pathway to ownership. (By contrast, though it rarely gets mentioned, the Stockton Street project’s affordable housing obligation sunsets after 20 to 30 years, at which point the rents convert to market price.) We are committed to providing affordable residences to low-income households in Historic Princeton, more than the Stockton Street project provides, in a way that will avoid introducing nearly 200 high-end rentals -- and that will not degrade Historic Princeton, threaten the environment, and worsen an already out-of-control traffic mess.

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More public benefits?

​​The PILOT agreement lists some additional public benefits deserving of the Council’s enormous giveaway. The Stockton Street complex, it says, will “provide open space and recreation areas.” In fact, the complex devours the large greensward that previously graced the Tennent-Roberts campus, compared to which its “open space” –  not green space --  is trivial. How is this a public improvement deserving a PILOT? The complex is located a block from the grandest green space in Princeton, Marquand Park, to which this development, unlike the space that preceded it, will virtually nothing.

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​​​​​​​​​​​​​The PILOT agreement notes that the developer will donate $200,000 to the Council’s “sustainable transportation fund.” This of course amounts to loose change compared to the windfall the developer is receiving. But it also buys into the bankrupt “walkability” myth that residents will ride around in buses rather than cars.

 

Finally, the agreement asserts that the project will create construction jobs (nothing deserving of a PILOT, even if they were union jobs) and will “enhance the gateway to the municipality.” How an enormous complex unlike anything else in Princeton, in an architectural style that clashes with everything around it and everything else in town, enhances the “gateway” -- especially compared to the large open space that preceded it – needs explaining.

 

Who really benefits?

The lawyer’s memo to the Council does reveal, perhaps inadvertently, that the only good served by this project, apart from that of the developer, is the good of the Council, by instantly solving its own affordable housing problem, the need to fulfill its obligations to the state by 2030. New Jersey developers have mastered a familiar maneuver: they will cover a municipal government’s affordable housing quota while the municipality clears the way for them to build their luxury complexes -- and maybe reward them with a PILOT to boot.

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Above all – and this is really the key – the Stockton Street developer claims that the project will not be financially feasible without a PILOT. The Council ordinance attaches numerous calculations it asserts support that claim. But even assuming, for the sake of argument, that those figures are complete, accurate and forthright, the claim is difficult to take seriously. The site in question is one of the choicest pieces of real estate imaginable, in New Jersey and virtually anywhere else in the nation. How is it that a private developer cannot make a sizable profit on 4.8 acres of elite Princeton real estate without also receiving tens of millions of dollars in tax breaks? It defies common sense. And if the developer can’t make a sizable profit, what business does it have developing the site in the first place? Why doesn’t it just step aside? Why replace basic free market principles with corporate welfare?

 

Are we to believe the developer is being altruistic? What, then, are the great public benefits that come from this benevolence? Squeezing a handful of low-income units – again, the absolute minimum – into an enormous luxury complex? Doesn’t that illustrate and amplify the inequities that continue to plague our town, rather than rectify them? Especially when there are possible alternatives that would provide more affordable housing in Historic Princeton without a luxury development and without a PILOT tax break?

 

As with everything else connected with this project, a close look at the PILOT suggests there is far more cynicism involved here than there is social justice.