Report calls for unprecedented public loan program

The report and recommendations of the Joint Revaluation Study Commission of Princeton released on Monday contained a proposal for an unprecedented municipal public loan program that would allow qualifying homeowners to defer the burden of rising property taxes until a later date and give struggling residents more time to plan a way to repay their loans.

The report proposes that the Borough and Township jointly form a new, special-purpose entity that could issue public bonds to fund loans to low- and moderate-income homeowners to be used to pay their property taxes.

Public funds would either be distributed as direct loans or be used to purchase tax liens, forms of security interest akin to mortgages that would be used to secure the homeowners’ repayment obligations. The lending entity would offer either loans or tax liens to borrowers with no conventional financing in place and the use of borrowed funds would be restricted to the payment of property tax liabilities above a certain predetermined threshold.

The advantage of funding homeowners with municipally owned tax liens, the report states, is that “a municipality need not foreclose on tax liens that it owns, but can instead choose to hold them for up to 20 years.” In effect, a program of municipal tax liens would give Princeton homeowners who need loans to pay their property taxes an extra 20 years to repay the loan and an opportunity to avoid having their homes foreclosed.

“It would protect low- and moderate-income persons from having to move out of town immediately, and allow them to make the decision, if they were inclined, to use the equity in their house to stay here for a number of years,” said Roger Martindell, one of the Borough Council’s liaisons to the commission.

The report emphasizes that “participating homeowners would continue to be responsible for paying 100 percent of the property taxes due on the full assessed values of their homes — but those payment obligations would be spread over time.”

The program is intended to help homeowners “avoid the need to choose between moving from the community that is their home or foregoing the appreciation that represents their only real hope of meaningful savings.”

Martindell said the public financing program was not modeled on an earlier program in any other community. “I think this is a fairly creative approach, and I don’t know any precedent for it,” he said.

Support nonprofit student journalism. Donate to the ‘Prince’. Donate now »

Borough Councilmember Barbara Trelstad expressed support for such a program at Sunday’s endorsement meeting of the Princeton Community Democratic Organization.

“There must be a plan put in place that will allow longtime residents to be able to stay in their homes for as long as they would like, and I will support recommendations that do that,” Trelstad said in her official candidate statement before a vote that nominated her to serve another term on the Council.

Trelstad confirmed her support for the program recommended in the commission’s report in an email on Monday.

A program offering publicly financed loans to all residents regardless of income status was considered but would not be legally authorized unless it was open only to low-income candidates. The report states that the Fair Housing Act grants the municipality the authority to issue public bonds to assist low- and moderate-income homeowners.

Get the best of the ‘Prince’ delivered straight to your inbox. Subscribe now »

The commission, made up of representatives from the Borough, the Township and liaisons to both governing bodies, began meeting in January to evaluate the process of the property tax revaluation conducted last year and to make recommendations for how the community can respond to the effects of revaluation now and in future years.