Planet Princeton

AvalonBay Sues Town of Princeton Over Deed Restriction for Affordable Units

A rendering of the AvalonBay project slated for the former hospital site in Princeton.
A rendering of the AvalonBay project slated for the former hospital site in Princeton.

For the third time in four years, developer AvalonBay is taking the town of Princeton to court regarding the Witherspoon Street apartment project.

AvalonBay contends that Prineton has reneged on its contract with the developer to limit the affordable housing deed restrictions for the development to 30 years.

In the developer’s agreement drafted by the town’s lawyer and signed by the town and AvalonBay last year, both parties agreed to a 30-year deed restriction for the 56 affordable housing units that will be part of the 280-apartment project.

Under the affordable housing ordinance for the former Princeton Borough, new rental housing was required to be affordable housing for 30 years also.

In recent months, the town has demanded that the deed restriction for the affordable units state that the affordable housing restrictions can stay in place for 30 years or longer, if the town so chooses, allowing the town to possibly extend the number of years at its discretion.

AvalonBay refused, citing the existing developer’s agreement and the Princeton Borough regulations.

At the end of April, the lawyer for the town told AvalonBay in a letter that no building permits would be issued unless AvalonBay agreed to the deed restrictions of “at least” 30 years or more.

In order to keep the project moving, AvalonBay submitted the deed restriction “under protest and duress” and said the company reserved the right to legally challenge the deed restriction.
AvalonBay argues in the lawsuit that there has been no urgent need to delay the project because construction will take 18 months to complete.

“Princeton’s insistence that dispute be resolved immediately is not based on any legitimate project-related concern,” reads the lawsuit.

In a May 5 letter, the attorney for the planning board said the signed deed restriction was a condition of the planning board’s approval, and thus permits could not be issued until the deed restriction was signed.

Footings and foundation permits have since been issued for AvalonBay, but no other building permits have been issued yet.

AvalonBay argues that the town is being arbitrary, capricious and unreasonable in its demands. The changes, the company argues, would cost AvalonBay millions of dollars in future rent.

According to correspondence included in the lawsuit, the town contends that the state’s Uniform Housing Affordability Control regulations supercede any town ordinance or contract with AvalonBay and allow the town to include the language “at least 30 years” in the deed and extend the number of years for the affordable unit deed restrictions. The Princeton Planning Board’s approval of the project was subject to Uniform Housing Affordability Control regulations.

It is unclear why the town did not include that wording in the developer’s agreement contract that was signed by the town and AvalonBay.

Mayor Liz Lempert, the Princeton Council, the town, and the Princeton Planning Board are named in the lawsuit. AvalonBay is seeking a judgment against the town, attorney fees, and court costs.

[pdf-embedder url=”http://planetprinceton.com/wp-content/uploads/2015/06/AvalonBay-Developer-Agreement.pdf”]

Krystal Knapp

Krystal Knapp is the founding editor of Planet Princeton. She can be reached via email at editor AT planetprinceton.com. Send all letters to the editor and press releases to that email address.

  • Resident

    If the municipality’s attorneys did not understand or properly interpret the regs, or did not adequately advise the governing body on the contractual language, we need to know and the taxpayers of Princeton should not pay for the cost of this litigation. I don’t know what, if anything, can be done to rectify the substantive problem. After 30 years, it could all be market rate housing and where will that leave the people who will no longer be able to afford it? SFB is right, it’s a fiasco. I second his request for comment — here — from both the responsible lawyers and Council.

  • SFB

    Thanks for posting. Whatever the plugin is, it looks really good. RE: the developer’s agreement, I mean, I’m not a lawyer, but it does indeed look like we are hosed. Hosed by our own governing body. “Deed restrictions shall be for 30 years.” It doesn’t get much clearer than that. The preceding lanaguage “units will be constructed and marketed in accordance with all COAH, UHAC and local ordinance requirements” might offer some hope, but not with Kasuba litigating. ‘Resident’ is right, this is more taxpayer money down the drain, and even worse, the affordable housing deeds will lapse after just 30 short years. Pretty much a fiasco. I see the town is not taking ownership of the pocket park either. I’m disappointed with that. AvalonBay offered us a free park, and it seems like the GB have turned it down. I told them to take the park. I specifically came to the PB to tell them that. If you have semi-privatized public space, there is always a risk it will become wholly-privatized. Another mistake. I am also pretty skeptical that bike parking will get used much if it is buried at the back of the parking structure. Great reporting but I am really not impressed.

  • krystalknapp

    Embedded whole lawsuit, which includes developer’s agreement, at bottom of story. Easier to read on desktop or laptop than mobile. Testing new plugin. Curious to hear your thoughts on the developer’s agreement.

  • resident

    oops, the town isn’t suing. I don’t see how the town can change the agreement after the fact. Avalon will win its suit, collect damages, etc.

  • resident

    Reading the state agreement, it looks like the town didn’t understand the state regs. Those state regs say that the affordable-rent units must remain that way for at least 30 years. If the developer’s agreement says 30 years, then it meets the state’s requirements. I don’t see how town has any grounds to sue. Unfortunately.

  • SFB

    Tx. Look forward to reading that and I hope the municipal attorney and elected officials will make some comment on this story. Seems like a big stretch to try to retrospectively apply some other standard other than the one you signed up to.

  • Resident

    I think you’re giving them too much credit on the “over and above” piece. The alternative was to wait until the state/towns reviewed and revised fire codes. AB instead took the practical step of “voluntarily” upgrading construction materials in all of its projects rather than deal with delays and enhanced litigation risks. So no gold stars for them on that score. On the other hand, agree they are not necessarily a bad actor. It was the responsibility of the governing body and its lawyers to make sure the agreement was written correctly. Apparently, that did not occur and here we are again with more litigation to pay for.

  • krystalknapp

    The town is arguing the state regs. trump the agreement. Here are the regs. Language is on p. 12. Will post agreement this weekend. http://www.state.nj.us/dca/services/lps/hss/statsandregs/uhac.pdf

  • I Love Princeton

    You need to look back in time a bit further. The whole due process issue could have been avoided if town had been willing to step up and get engaged and showed a little spine when protecting the interests of good planning and affordable housing in town may not have been in sync with other actors with whom town likes to schmooze. Avalon’s bad practices have hurt residents of affordable housing and have burned down more affordable housing in this state than they are offering this town.

  • SFB

    If it’s as simple as that, then it sounds like the town hasn’t got a leg to stand on and serious questions should be asked. But I would like to hear a comment from the municipal attorney before assuming that it is that simple. And if you’ve got the developer’s agreement, please upload it. I never got a chance to read it, and there are several other items in there that are important in addition to the specific context of the affordable housing language. For example, the town was debating whether to take ownership of the new park at Witherspoon and Franklin, or to leave it to AvalonBay to maintain. I never found out what arrangement made the ‘final cut’.

  • SFB

    I don’t have too much faith in our town’s processes, I can assure you of that. The previous AvalonBay court cases came after the town violated due process, which is why, in each case, there was a settlement that allowed construction to continue. In the case of the hospital site, the town didn’t get to choose what ‘actor’ to deal with. AvalonBay owned the property and had a right to develop it. I don’t agree that AvalonBay has acted in bad faith, and the possibliity that the entire complex would be affordable housing was never on the table. The company, for example, has agreed to go *over and above* state standards with regards to fire protection. And they are building more affordable housing than any other entity in the town.

  • I Love Princeton

    Your faith in our town’s processes may be a bit naive and misplaced. The town blew ample opportunity to both obtain more affordable housing and to NOT deal with a bad actor who violates fire codes and who builds unsafe buildings in a manner that is unsafe to both those who are doing the building and who are living there. I’d be happy if the whole complex were affordable housing but don’t want a shoddy and dangerous construction of such units. Town leaders didn’t show spine when they had the chance.

  • krystalknapp

    The developer’s agreement said “30 years” as the story says.

  • SFB

    Thanks for bringing us this story. It would be great if we could have a link to the developer’s agreement so we could see exactly what language was used. It’s possible that the developer’s agreement did not specify how many years the deed restriction would apply for, and only stated that a signed statement consistent with state law must be provided before construction could begin. That would open the door to ambiguity. I’m happy that the town is pushing for the strongest possible language to support affordable housing. If proper procedure has been followed, then we have nothing to worry about.

  • I Love Princeton

    The sorry thing is that residents attended council meetings and submitted information to both town “council” and town “counsel” and wrote letters urging council not to do business with this bad actor, and further if doing business with them was a done deal, to at least move slowly and carefully and protect town interests. Decisions on the hospital site seem to have been made while everyone was “distracted” by consolidation and political re-org, and the voices for careful planning & decisions in this matter were dismissed.

  • Resident

    Sounds like the lawyers messed up. More legal fees for the Princeton taxpayer to pay.

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