Economic Impact Study
Total Page：16
File Type：pdf, Size：1020Kb
Economic Impact Study The Monmouth Town Center Monmouth Mall Borough of Eatontown, Monmouth County New Jersey April 12, 2016 BENECKE ECONOMICS 55 WANAQUE AVENUE SUITE 135 POMPTON LAKES, NJ 07442 Monmouth Town Center Economic Impact Study BE 1. Introduction. This report examines the local area impact of the turnaround and proposed repurposing of the Monmouth Mall (the “Mall” or “Project”) located in the Borough of Eatontown, Monmouth County, New Jersey. This report includes a description of the positive impact the Project has on employment, commerce and the tax base of the Borough of Eatontown. The impact on municipal and school services will also be described. Local economies are impacted by shopping Malls which are experiencing a continual state of decline. The Monmouth Mall is experiencing such a decline. As an example, on August 10, 2015 the property value was reduced by the New Jersey State Tax Court in the amount of $7,400,000, a tax revenue loss of over $160,000 annually. This is the annual tax payment equivalent of approximately twenty (20) typical Eatontown residences. The entire loss of value, $7.4 million, was due to the reduction in the value of the buildings located at the Mall. If the deterioration of the Mall is not reversed the Borough of Eatontown will experience a significant reduction in the value of the Borough’s most significant property tax payer. The Mall currently pays over 10% of all property taxes in Eatontown. If the building values located at the Mall continue a downward trend the impact on existing residences would be dramatic. The Borough of Eatontown, Monmouth County, New Jersey had a population of 12,709 in 2010, down from 14,008 in 2000. The U.S. Census Bureau estimates the Borough’s population at 12,257 in 2014.1 As the population of a locality declines so does its economic activity. Median annual household income in Eatontown was an estimated $64,378 in 2014, with the New Jersey 2014 median annual household income estimated at $72,062, and Monmouth County having an estimated 2014 median annual household income of $85,605. Of the 5,274 occupied housing units in Eatontown 69.1% were occupied by one or two persons. This compares to 56.1% of households having one or two occupants in New Jersey. The average Eatontown household had an estimated 2.32 individuals in 2014, compared to 2.72 in New Jersey (a 15% lower rate of occupancy than statewide). Eatontown had a 2014 benchmark unemployment rate of 6.1%, higher than both the state and county averages. These numbers lead to the conclusion that the local economy of Eatontown is sluggish. The Monmouth Mall property pays more in taxes, $5,582,734 in 2014, than any other property in the Borough. To have this important property experience a decline, especially in the face of the retail headwinds most shopping Malls are experiencing (on-line retail activity as an example), will lead Eatontown from economic sluggishness to decline. 2. Summary of Study Findings. This report will demonstrate, in detail, the following: A-the Monmouth Mall currently generates approximately 12% of the local total property tax levy in Eatontown ($5,582,732/$46,701,409); B-if the status quo were to be maintained the existing Mall would experience a significant decline making the funding of local services, including schools, police and other public safety services, more difficult and reliant on the residential property taxpayer; C-the new Monmouth Town Center will generate estimated NEW net (of local services costs) tax revenues of approximately $6.0 million. When combined with the amount of existing tax payments a total of $11.5 million in property taxes will be paid on these properties, over 20% of the total property tax levy. This will provide real property tax relief to existing Borough property owners; D-the new Monmouth Town Center will create approximately 1,892 retail/office jobs and 2,985 construction jobs. 3. Retail Activity and the new proposed Monmouth Town Center. Local economies are impacted by shopping Malls which are experiencing a continual state of decline. According to Green Street Advisers, a real estate analytics firm, more than twenty (20) shopping Malls have closed in the past few years, such as Rolling Acres 1 The U.S. Census Bureau, American Community Survey, 2014. 2 Monmouth Town Center Economic Impact Study BE Mall in Akron Ohio. Another example is the closure of White Flint Mall in suburban Washington, D.C. which is nearing demolition. Most retail experts agree that middle level Malls are slowly disappearing and the widespread difficulties of anchor stores such as Sears, J.C. Penney, and even Macy’s have made many Malls tenuous propositions.2 Monmouth Mall located in the Borough of Eatontown is one such middle level Mall. As previously mentioned, should the Monmouth Mall experience the downward spiral forecasted by Green Street and others it would be deleterious to Eatontown. In response to the decline of the shopping Mall forward thinking developers are investing in lifestyle centers where people live and visit to enjoy entertainment, shopping and other experiences. Kushner Companies is embarking on such an investment by repurposing the Monmouth Mall into a unique lifestyle center. Retail centers are being built and repurposed nationwide to include mixed use concepts and visitor experiences beyond shopping. Examples to draw upon are the Kierland Commons (Phoenix-Scottsdale, Az.), Mercato Plaza (Naples, Fl.) and Coconut Point (Estero, Fl.). These experience destinations add foot traffic to a retail center and provide for a sustainable town center atmosphere as opposed to a tired shopping Mall experience.3 Monmouth Mall first opened on March 1, 1960 having retail space of 500,000 square feet. In 1976 JC Penney was built on its own site but is considered part of the Mall. The Mall underwent renovations in 1987 and then was expanded in 1995-1996 with the addition of a fifteen screen movie theater. In 2009 another expansion bought Barnes and Noble to the Mall. As the attached map indicates the Monmouth Mall is located off of Garden State Parkway, Exit 105 and Route 18, on the corner of the intersection of NJ 35/NJ 36 and Wyckoff Road (Route 547). The new Monmouth Mall, or Monmouth Town Center, will be an exciting destination for visitors from throughout the eastern United States which will include a hotel, office space, and residences combined with new and improved Class A retail and entertainment experiences.4 The proposed Project is known as the Monmouth Town Center and contains two distinctive yet integrated areas: Monmouth Gallery and the Streets of Monmouth. The Project is in the concept planning stage and the Project components described in this report and in the referenced conceptual site plan may change. These changes may be based on community feedback and market considerations. In addition, it is anticipated that the Project is an expensive undertaking and non-traditional financing options may be necessary to make the Project financially viable. The United States Army's Fort Monmouth operated in Eatontown from 1917 until its closure in September 2011, based on recommendations from the Base Realignment and Closure Commission. The base closure as well as the decline in the Borough’s population its persistent high unemployment rate and the recession of the past few years has left Eatontown in need of an economic infusion. As this report shows Kushner is proposing making such an infusion but headwinds to achieve success, such as construction costs, need to be addressed before the Project can proceed. 4. The Project. The existing Monmouth Mall includes approximately 1,554,900 square feet of retail space on one-hundred five (105) acres.5 The Mall features approximately 150 retail shops. The following figure provides is a breakdown of the existing properties making up the Mall and their assessed values and 2014 property tax payments. 2 Radio Shack is closing more than a quarter of its 4,000 Mall stores and Aeropostale has announced plans to close 240 of its Mall locations. Kohl’s is moving to shed up to 80 stores and Abercrombie has closed 180 stores since 2009. Delia's is closing all 92 of its stores as part of its liquidation. 3 We can also look to Montclair, Ridgewood, Morristown and other traditional town centers to demonstrate the town center concept and its success. 4 Please refer to the Project Concept Master Plan prepared by RTKL Associates, Washington DC, dated July 8, 2015. 5 The total square feet of space includes a 50,000 s.f. pad which is undeveloped. 3 Monmouth Town Center Economic Impact Study BE Land Improvement Total 2014 Taxes Block Lot Assessment $ Assessments $ Assessment $ $ Acres Notes 2201 1.01 6,700,000 17,112,600 23,812,600 537,212 2.0 2201 1.02 117,300,000 49,700,000 167,000,000 3,767,520 78.2 2 5,265,000 9,185,000 14,450,000 325,992 10.53 L+T 4 2,950,000 19,994,000 22,944,000 517,617 2.36 Macys 5 5,650,000 12,750,000 18,400,000 415,104 11.3 JC Penney 2202 1 855,000 140,000 995,000 19,289 0.38 Total 138,720,000 108,881,600 247,601,600 5,582,734 104.77 Less: 2015 Tax Ct. -7,400,000 240,201,600 -164,724 Decision Adjusted Total 138,720,000 101,481,600 240,201,600 5,418,010 In 2014 the Borough of Eatontown has an assessed to equalized (market) value ratio of approximately 100%.