Kushner: We'll drop Monmouth Mall tax appeal if Eatontown OKs tax break
EATONTOWN - There was no division among the Borough Council Wednesday on a decision to introduce a 30-year tax exemption plan for Kushner Cos. to help turn the corner on the redevelopment of Monmouth Mall.
The council voted 6-0 to introduce the plan, called a payment-in-lieu-of-taxes, or PILOT. A couple of residents who spoke also lent their support to the proposal. The next step will be to hold a public hearing and vote on the measure at the Aug. 23 regular meeting of the mayor and council.
As part of the deal for the PILOT, borough attorney Andy Bayer said Kushner Cos., which owns the mall, will drop its several open tax appeal cases against the borough dating back to 2017.
Kushner Cos. wants to rebrand the brick-and-mortar indoor shopping mall at the confluence of Routes 35 and 36 as Monmouth Square and introduce 1,000 apartments to the property. The redesign, which will feature outdoor pedestrian walkways, or paseos, and community spaces, has been about eight years in the making and has been, at times, a cause of friction in the borough.
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Al Baginsky, a former councilman, questioned why a major developer with seemingly deep pockets can't fund the project itself without tax breaks from the borough. He was told the redesign was not feasible without it.
"Whether you are a $7 billion company or a $1 million company, when you make an investment you need to get a return," said Michael Hanley of NW Financial, who was hired the borough as an independent consultant on the PILOT. "You don't invest money to get less of it at the end. They need to borrow money and take their equity and provide a return to their equity partners. If the return is insufficient, they don't make the investment."
While the council has been closed-mouthed on any potential tax deal for the mall since it declared the 103-acre property an area in need of redevelopment two years ago, opening it up for a potential PILOT, Councilman David Gindi said they'd been working with Hanley on their options for over a year.
Mayor Anthony Talerico Jr. had stated more than once that the town couldn't afford to give any tax breaks to Kushner. At the same time, he said the borough is in a very serious situation regarding the tax appeals at the mall. While he didn't vote on the PILOT's introduction, since the mayor only votes to break a tie under Eatontown's form of government, he said he would have voted "yes" on it given the opportunity.
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$500 million investment
Hanley said Kushner plans to invest $500 million in the mall. Currently, the mall pays about $4.2 million in annual property taxes. Under the PILOT, Kushner would continue to pay roughly the same amount for the first five years while the mall undergoes reconstruction. The borough would receive $4.5 million the first two years, but that number would decrease to $4.1 million in year five.
However, once the new design is complete, Kushner would pay the town 7% of the revenue created by the apartments and 8% to 10% of the revenue created by the mall's new retail configuration. Hanley said the payments would be less than what the owner would ordinarily pay in taxes, but it would help facilitate the redevelopment of one of the borough's key commercial properties.
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The borough would receive 95% of the payments and the county 5%. The school district is excluded from the percentage but can still receive revenue for its budget from the borough's share. Councilwoman Danielle Jones said she will request an itemized list to distribute the money to "make the district whole."
Along with the PILOT, the borough is planning to supply $3 million in Redevelopment Area Bonds to help fund the redevelopment. The borough will finance the bond payments with the revenue received from the PILOT payments.
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Long journey
Kushner Cos. first presented a redevelopment plan to the public in 2016 in order to save it from what is said was an economic downturn brought by competition from e-commerce. That was after preliminary talks took place with borough officials in the summer of 2015. That plan called for a "live, work, play" town center with 700 apartments.
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 development. 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. So far, a medical building has been built and a parking garage demolished.
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 about 900,000 square feet of retail, which is a reduction from the roughly 1,467,000 square feet there now.
In May, Kushner signed a lease with Whole Foods to occupy the 40,000-square-foot building now used by bookseller Barnes & Noble, starting in 2026. Barnes & Noble will be moved to another space in the mall once the redevelopment is complete.
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: Kushner drops Monmouth Mall tax appeal as part of Eatontown tax break
