Jones Lang LaSalle

A Billion-Dollar Bet
By LAURA MANSNERUS
SECAUCUS

TWENTY FOUR years and six governors ago, a billboard company bought a patch of rail yard next to the New Jersey Turnpike for about $5,000 an acre and began to hatch plans for a new urban center, its hub a train station linking transit lines from all over New Jersey.

The billboard company has not lifted a shovel since then, but the State of New Jersey has spent $1 billion to make the dream come true. It built the Secaucus Transfer station on the property, created a new turnpike interchange and plotted a transit village, right down to the permissible awning designs, for a swath of Meadowlands dotted with truck pads and aging warehouses.
The state envisions more rail lines connecting the station to other points within the Meadowlands, and the Port Authority of New York and New Jersey has pledged $150 million for a rail link to the sports complex.

But now that they have set the table, finally opening Exit 15X on the turnpike in December, state officials wonder whether anyone will show up to live and work in the south end of Secaucus, a wedge between the turnpike and the swamp cattails. Without a surge of development, skeptics say, the taxpayers will be left holding a very large bag.

James W. Hughes, the dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers, said the Secaucus hub was among a handful of recent transportation boondoggles in the state. They include the 34-mile, $1 billion light-rail line between Camden and Trenton and the monorail linking the Newark Liberty International Airport to a new station on the Northeast corridor line.
If the Meadowlands investment is to pay off, Mr. Hughes said, it will require development as dense as any in New Jersey's bigger cities. "If all of a sudden $3 or $4 gasoline becomes our threshold, lots more people are going to use public transportation, but that would not be within a decade's time," he said.

He concluded: "It was certainly a good idea to create Secaucus Transfer. But did it have to be that grandiose?"

There are hints of settlement to come near the lonely, hulking rail station. The property owner, the Allied Junction Corporation, says it is within weeks of an agreement with a big developer to take over the project and build office towers on top of the station.

Across the turnpike, earth-moving equipment is churning at an old landfill where construction of a mid-rise housing development called Fraternity Meadows will begin this spring. On the edge of the transit village nearest the station, another property owner has applied to build a parking lot since the rail station has no parking lot to speak of.

Otherwise, though, the city of the future is quiet, except for the marsh birds and trucks lumbering from the turnpike to the Secaucus warehouses.

It could take decades to find out whether this isolated stretch becomes a thriving urban center; the transit village is expected to take 25 years to build, and no one expects the Allied Junction project to be built all at once. The pace may determine when and whether the state sinks more money into the Meadowlands.

For now, the wisdom of the $1 billion transportation investment is being debated by familiar players: environmentalists and some transit advocates, who say that the state designed projects around developers' needs and that the money would have been much better spent in less glamorous ways; developers and planners, who applaud the effort to build infrastructure and plan development before sprawl takes its course; and state officials, who sigh and promise to make the best of things that were set in motion long before they were in their jobs.

"It was a terrible idea," said Janine Bauer, a lawyer who specializes in transportation issues and the former director of the Tri-State Transportation Campaign, an advocacy group for transit passengers. "From the outset it was a terrible idea. When you have a terrible idea that has gone forward, then what do you do about it?"

Ms. Bauer added: "It's a bad idea from a land-use point of view because there's nothing around there. There are plenty of cities and brownfields that are crying out for development."

Jeff Tittel, the director of the state chapter of the Sierra Club, contends that spending on the station and the Interchange 15X — which he said stands for "Exit 15-Expensive" — has mostly benefited developers and the contractors, lawyers, engineers and consultants paid for real estate deals.

"We take all this public money and invest it in the middle of nowhere so some connected developer could cash in later," Mr. Tittel said.

A Dream Long in the Making

But Martin Robins, the director of the Transportation Policy Institute at the Alan M. Voorhees Transportation Center at Rutgers and a former New Jersey Transit official, could hardly disagree more. Mr. Robins said a transfer station allowing passengers from Bergen and Passaic Counties to reach Pennsylvania Station in Manhattan was in the dreams of transit planners long before any developers materialized, and would have been built — as it indeed was — without them.

Development was not going to happen before the opening of 15X, he said, but now it will.
"It's more than just a quote, unquote, transit village that ought to be there," Mr. Robbins said. "Ultimately, this location has tremendous power as an economic development site. It also has tremendous power as a residential site. It could become a new urban center in New Jersey."
Rail Lines, Then Development
Richard F. X. Johnson, the chairman of the northern New Jersey chapter of the Urban Land Institute, a national planning organization, said that whether the new center is a success or not, it only makes sense to put in rail lines before development.

When that happens, as in the suburbs of Philadelphia and Chicago, he said, "you get better places to live, more interesting places."

As for a commercial center, Mr. Johnson, who is himself a real estate developer, allowed that the North Jersey office market remains slow, but said that "companies will make decisions based on adjacency to transit because that's what their workers want."

In any event, the new transit infrastructure has boosted property values in the Meadowlands. In the south end of Secaucus, the land that sold for $5,000 an acre in 1982 is now selling for $1 million or more an acre.

By putting so much of the marshland off limits to developers, "we gave value to a lot of old warehouses," said Robert R. Ceberio, the executive director of the New Jersey Meadowlands Commission, the state agency that regulates land use throughout the 8,000-acre district.

One of those warehouses, on seven acres near the transfer station, brought $14.7 million last summer from Edison Properties, which applied to the commission three weeks ago to raze the warehouse, put in a parking lot and eventually build a hotel and commercial buildings. In the local speculation about nearby properties, "there are numbers out there that are reaching telephone-book-type numbers," the mayor here, Dennis Elwell, said.

The builder of the Fraternity Meadows housing development, Atlantic Realty, got a comparative bargain, paying $17.2 million for 60 acres, or $287,000 an acre, in 2004. The mix of rental apartments and condominiums, many of them restricted to buyers older than 55, must be built in phases; if the first are successful, Atlantic can ultimately build about 1,800 units.

Many people wonder aloud whether the residential market, still overheated by most accounts, will draw 2,000 buyers and renters to a neighborhood of rail yards, warehouses and brackish canals.

The closest thing to a template for the project is Harmon Cove, also in Secaucus, a high-rise and town house complex built in the 1970's on what was an uninviting bank of the Hackensack River.
Mr. Elwell, who grew up in Secaucus and remembers when there was no such thing as fishing in the river, recalled that the Harmon Cove town houses "went like wildfire," although the developer, Hartz Mountain Associates, had a much harder time filling the high-rises. Today, two-bedroom apartments there typically sell for $450,000 to $500,000.

The Little City That Can't Quite

But nothing could bring to life the little city that Allied proposed at the train station. Company officials approached the state soon after buying the castoff property, knowing that "the station was in the gleam of the eye of the transit people for a century or better," said Allied's president, Marc Joseph. Years later, it reached an agreement with New Jersey Transit.

The venture became an entirely public one, however, and the company still owes the state $140 million. Under a 2001 agreement with the state, Allied agreed to repay $30 million in costs to support the towers on the station and the rest for work on roads and train tracks. But after the market for office space collapsed, the company could not attract investors.

As recently as 2004, one advertisement in a local Chamber of Commerce magazine called Allied Junction "the most significant public-private venture in the United States of America" and continued, below an architect's rendering: "Allied Junction's the place that will make you smile when you say New Jersey." Nothing happened.

Mr. Joseph said last week that "we are deep in discussions with a nationally prominent development office" and expected a deal within a few weeks.

But in the next breath, Mr. Joseph added, "I've said that 40 times in the last 40 years."
Mr. Joseph declined to identify the prospective developer, but state officials said it was Brookfield Properties Corporation in Manhattan, whose projects include the World Financial Center. A spokeswoman for Brookfield said the company would have no comment on its interest in Secaucus.

In the Shadow of a Station's Glow

For their part, backers are hoping that the transit village will take on a certain glow just by being called a transit village. It does not yet have the official state designation, which gives local officials some technical help and sometimes grants for planning around their train stations. But developers' enthusiasm for transit villages helps.

"New Jersey Transit has been looking for development along their train tracks, and, once word got out, every developer under the sun has been chasing train stations," said Arthur Weiss, a vice president at CB Richard Ellis, a real estate broker.

The state is aggressively promoting transit villages, using the designation to encourage high-density development.

In return, developers can get expedited approvals for their projects, which otherwise involve long legal entanglements. Since the program started in 1999 — it began slowly, but was expanded and touted by Gov. James E. McGreevey — the state has designated 17 official transit villages.

New housing and retail businesses at the older ones, like those in South Orange and Metuchen, are widely viewed as successful. The new ones are trickier, Mr. Weiss said.

"People figure, 'If I build it, they will come,' " he said. But he added, "I don't think the developers are stupid, so I'm pretty sure they've done their homework."

The labeling amuses Mr. Hughes at Rutgers. "There are two buzz words, 'town center' and 'transit village,' that you hear over and over," he said.

"The names have great appeal because they conjure up images of the New Jersey of yesteryear," he said, "when baby boomers used to visit Grandma and the house had a front porch and you could walk downtown and there was a train station."