Why Princeton’s Growth Brings Houses First, Services Later
By Bakr Al Qaraghuli, Editor
August 23, 2025
If you’re a Princeton resident stuck in traffic or waiting for a new park, you’ve probably wondered: where is all the new tax money going? The answer lies in how the city finances growth. Princeton residents keep asking a fair question: Why do we see new neighborhoods everywhere while police, fire, streets, and parks don’t keep up? The answer is the city’s growth-finance model. It relies on two tools that divert new tax growth into special pots before the general fund ever sees it: Public Improvement Districts (PIDs) and Tax Increment Reinvestment Zones (TIRZ).
WHAT A PUBLIC IMPROVEMENT DISTRICT DOES
A PID is created by the City Council after a noticed public hearing and Council findings “on advisability.” It places a special assessment on homes in the district to repay bonds that reimbursed the developer for public infrastructure (streets, water, sewer, drainage). The assessment is billed with the property tax and runs for many years. In Princeton’s Whitewing Trails Phase 1, the city brochure shows annual PID installments billed with the property tax through the 2048 tax bill; the Phase 2 brochure shows installments through 2052.
WHAT A TAX INCREMENT REINVESTMENT ZONE DOES
A TIRZ captures a negotiated share of the city’s tax increment (the growth above a base value) inside a mapped zone. That increment is deposited into the TIRZ fund and spent on eligible project costs inside the zone instead of flowing to the city’s unrestricted general fund. Princeton lists multiple residential TIRZ and states they remain in effect until PID bonds are repaid or the developer is fully reimbursed for project costs, up to ~30 years per sub-zone. The city also states the TIRZ is fiscally dependent on the City—the City Council is the TIRZ board and approves budgets and any debt. Recent Princeton materials show 45% city participation in some zones.
HOW THIS PLAYS OUT ON THE GROUND
A normal home outside these districts pays city property tax that flows to maintenance & operations (M&O) and to debt service. A PID home pays that same city tax plus a separate PID assessment that services PID bonds for the subdivision’s infrastructure. A PID-plus-TIRZ home also sits in a zone where a share of the city’s tax increment is captured by the TIRZ and budgeted for project reimbursements until the plan ends. Net effect: many of the dollars new rooftops generate are committed to special funds for years before the general fund can hire officers, staff stations, fix streets, or expand parks.
Why the general fund feels squeezed even as the city grows
Look at the current structure in the proposed FY 2026 budget. The total city rate is $0.44026 per $100 of value: $0.254309 M&O and $0.185917 debt service—about 42% of the tax rate supports debt service. The same page shows property-tax dollars budgeted for debt service: $8.19M and for M&O: $11.82M—about 41% of property-tax dollars going to debt payments. When a large share of the base tax supports existing debt, and when much of the increment from new growth is locked in TIRZ for decades, the general fund doesn’t rise as quickly as the population—residents feel that gap.
WHO DECIDES TO USE THESE TOOLS
These are policy choices made in public meetings. A PID requires a noticed public hearing and Council findings by resolution; a TIRZ is created by ordinance under state law, with Council serving as the TIRZ board and approving budgets. These deals do not happen automatically; they bind future councils for many years.
WHAT COUNCIL CAN AND CANNOT CHANGE
Council can’t unwind past bond covenants or reimbursement agreements without legal and financial fallout; existing PIDs and TIRZ generally run to their end dates. Council can fully control future deals and can shape annual TIRZ budgets within the adopted plan. Term length, participation percentage, and eligible costs are policy levers before approval.
WHAT THIS MEANS FOR RESIDENTS
New homes do not immediately fund the level of police, fire, streets, and parks that residents expect. It’s not because the city is unaware; it’s because deal structures divert new growth dollars first to repay project costs and bonds inside the zones. The city then tries to close the gap with what remains in the general fund. That’s why people see rapid construction and slower service growth even when total tax collections rise.
WHAT THIS POST DOES AND DOES NOT CLAIM
This post does not say PIDs or TIRZ are illegal; they are lawful tools under Ch. 372 (PIDs) and Tax Code Ch. 311 (TIRZ). It does say that Princeton’s current mix and terms send a large share of new-growth revenue to special obligations for many years, delaying the city’s ability to fund services at the pace of population growth. Those statements are borne out by the city’s own pages and by state law.
WHAT TO WATCH NEXT
- the length of the zone and its end date
- the city’s participation percentage each year
- the size and timing of PID assessments and bonds
STAY INFORMED WITH THE PRINCETON JOURNAL
If you found this breakdown useful, share it with neighbors and friends. The more people understand how PIDs and TIRZ shape our city’s finances, the stronger our conversations and decisions will be. Join The Princeton Journal Facebook group for ongoing analysis of growth, budgets, and policy, and add your voice in the comments so we can tackle these challenges together.