Eatontown's future will change with Monmouth Mall tax break, homes on golf course

EATONTOWN - Kushner Cos. got its tax break for its Monmouth Mall plan and Old Orchard golf course was rezoned to allow for commercial development in two moves the Borough Council took Wednesday in hopes to solve redevelopment pains on two key properties.

Mayor Anthony Talerico Jr. said the council didn't want to give a 30-year tax break, or payment-in-lieu-of-taxes (PILOT) to Kushner Cos. but at the same time they were facing a dire financial situation at the mall and the PILOT was a solution to the mess brought on by a tax appeal lawsuit.

While the future of the mall has been one of the more controversial issues in the borough, the bipartisan council was in unison on the tax deal and no residents spoke up Wednesday against the plan. One resident, former councilman Al Baginsky, did ask Talerico why they approved a PILOT after he previously said the town couldn't afford to give any tax breaks to the mall.

"I don't believe it's a tax break to get us out of a multimillion dollar lawsuit. I feel that not having to pay back millions and millions of dollars is a good thing," Talerico said.

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Kushner Cos., the mall owner, is currently taking the borough to tax court and appealing its taxes going back to 2017. If successful, the mall's readjusted assessment would drop the property value and cause a 5.5% to 9% loss in the borough's commercial ratable base, said Michael Hanley of NW Financial, who was hired the borough as an independent consultant on the PILOT.

On top of a significant debt service on the tax refunds and drop in valuation, if the mall is not redeveloped, the borough would looking at a $22 million bill on the debt service while taking in just $11.8 million in taxes over the next 10 years, according to Hanley's projections. Currently the mall pays about $4.5 million a year in taxes.

Under a PILOT, a developer pays a fixed annual fee for a set number of years, rather than based on the property tax rate, which can climb annually.

With the PILOT, Kushner Cos. will drop the contested tax assessments going back to 2017, borough attorney Andrew Bayer said, essentially ending the litigation. Furthermore, the borough will take in $25.3 million in payments and $12.5 million in redevelopment fees in the next 10 years under the PILOT.

Kushner Cos. first presented plans to the public to overhaul the mall in 2016 to save it from what is said was an economic downturn brought by competition from e-commerce. That plan called for a "live, work, play" town center with 700 apartments.

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The borough rezoned the property to allow the apartments and then was sued by residents who accused the borough of "spot zoning," or catering to the developer. The sued failed in state Superior Court.

Since then, the plan has gone through many modifications while the mall's retail occupancy rate has plummeted to below 60%, according to Kushner Cos. Two years ago the borough designated the property an area in need of redevelopment, which opened the door for the PILOT but gave the borough more control over what gets built at the mall.

Kushner's new plan consists of 1,000 apartments, most of which will now be located in the center of the property and be four stories tall instead of the seven stories originally permitted in the first approval. Kushner also plans to demolish the second floor of the mall to open it up for pedestrian paths and outdoor spaces, and include about 900,000 square feet of retail, which is a reduction from the roughly 1,467,000 square feet there now.

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Homes, stores on the golf course

The borough approved new zoning for the Old Orchard Country Club, an 18-hole golf course on 136 acres that was designed by famed architect A.W. Tillinghast and opened in 1929. The course was built on an apple orchard and Babe Ruth once hit the links there. Some of the namesake trees still stand.

The new zoning will allow commercial development along the Route 36 but will secure 100-foot buffer zones between existing residential homes that border the course and 145 new age-restricted, single-family homes that a developer is planning to build.

Late Wednesday, residents handed the mayor and council with a petition with 202 signatures opposed to the rezoning. While the petition had not been certified, Bayer said in the event that it was, the council would need a supermajority to pass the new zoning, which it got when 4 of 5 council members voted "yes." Councilwoman Virginia East recused herself due to a conflict of interest and Councilman Mark Regan Jr. abstained from the vote.

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Attorney Jennifer Krimko, who represents the developer Surrey Equities, a real estate investment and management firm with a location in the borough, said the developer is under contract to purchase the property. She said the developer will submit its site plan to the Planning Board now that the zoning was passed. Krimko said about 50 acres will not be developed.

Old Orchard was already zoned for 129 single-family homes with no buffer zones. However, commercial development was not a permitted use. The borough opted to work with the developer in order to secure the expansive buffer zones and protect residential streets from being opened up.

When Jersey Shore native Dan Radel is not reporting the news, you can find him in a college classroom where he is a history professor. Reach him @danielradelapp; 732-643-4072; dradel@gannettnj.com.

This article originally appeared on Asbury Park Press: Eatontown OKs tax break at Monmouth Mall, homes at Old Orchard