Planning Board Resolution Memorializing Executive Drive AINR #20-09

r. The property at 100 Executive Drive has seen its municipal tax assessment decline by 81.4 percent in less than a decade. In 2017, the total assessment fell by 16.6%, while the assessment of the improvement value declined 63.5% from the 2016 figures. The property most recently changed hands in 2017, with the current owner acquiring it for $2,200,000. This price was less than a quarter of its equalized assessed value and amounted to approximately $23.55 per square foot. At the time of sale, the property was 40 years old, having been constructed in 1977. The previous sale occurred in 1997, twenty years prior. At that time, the sale price was $10,570,000, or $113.16 per square foot. The sales price of the property decreased by about 80% over the last 20 years (without adjustment for inflation). s. The property at 200 Executive Drive has seen its municipal tax assessment decline by 75.5 percent in less than a decade. In 2017, the total assessment fell by 15.8%, while the assessment of the improvement value declined 44.9% from the 2016 figures. The property most recently changed hands in 2017, with the current owner acquiring it for $3,300,000. This price was about a quarter of its equalized assessed value and amounted to approximately $30.07 per square foot. At the time of sale, the property was 39 years old, having been constructed in 1978. The previous sale occurred in 1997, twenty years prior. At that time, the sale price was $11,700,000, or $106.60 per square foot. The sales price of the property decreased by about 72% over the last 20 years (without adjustment for inflation). t. The property at 10 Rooney Circle has seen its municipal tax assessment decline by 64 percent in less than a decade. In 2017, the total assessment fell by 11.6%, while the assessment of the improvement value declined 17.8% from the 2016 figures. The property most recently changed hands in 2017, with the current owner acquiring it for $3,000,000. This price was less than half of its equalized assessed value and amounted to approximately $42.31 per square foot. At the time of sale, the property was 46 years old, having been constructed in 1971. The previous sale occurred in 1997, twenty years prior. At that time, the sale price was $5,040,000, or $71.07 per square foot. The sales price of the property has decreased by about 40% over the last 20 years (without adjustment for

7, twenty years prior. At that time, the sale price was $5,040,000, or $71.07 per square foot. The sales price of the property has decreased by about 40% over the last 20 years (without adjustment for inflation). u. The Board, having considered the testimony and comments provided by Ms. Gruel, Mr. Pessolano, Mr. Spatz, as well as other members of the public, adopts the criteria analysis contained in the Planner’s report, and as bolstered by the information. Specifically: 1. “b” criteria analysis: There is substantial credible evidence that the existing on-site office park buildings have been significantly vacant for six or more years. The leasing trends in 2015 and 2016, when the buildings were being marketed for sale prior to their acquisition by the current owner show that there was minimal interest and each building carried significant vacancies. The buildings had been previously maintained, as evidenced by numerous permits requested of the Township over the years. When the current owner took over the buildings marketing efforts to attract (40906317: 4} 6

(40908317: 4} tenants continued. The marketing effort included: (i) bi-weekly email blast to over 1,300 brokers (ii) bi-weekly emails to tenants in the market (iii) regular canvass calls to active tenants or tenants with upcoming lease expirations (iv) broker follow- up (v) listing in CoStar and (vi) leasing sign at the top of Executive Drive and two signs with Rt. 280 exposure. The current property owner invested in maintenance, upkeep, and some improvements to the buildings and properties, and actively tried to market and lease space within them. Despite these efforts, 100 Executive Drive’s vacancy rate rose from about 70% with four tenants in June 2017 to 77% with two tenants in December 2018, to its currently vacant state. No new tenants signed leases for 100 Executive Drive from the time the current owner acquired the property until present. A similar situation has played out with 200 Executive Drive. In June 2017, the building was about 51% vacant with Lincoln Educational as the primary tenant and two additional tenants in smaller spaces. By December 2019, one of the smaller tenants left. Today, Lincoln Educational remains as the only tenant and the building is about 53.7% vacant. No new tenants signed leases for 200 Executive Drive from the time the current owner acquired the property until present. The high vacancy rate of 10 Rooney Circle has remained stable for years. The TSA remains the only tenant occupying building. For years prior to the current owner taking title to the building, no other tenant spaces were leased. Since the change in ownership, no new tenants have signed leases for 10 Rooney Circle, and it remains 58.5% vacant. According to Cushman & Wakefield, the overall vacancy rate in the “Essex Rt. 280” submarket has been between 16% and 18% since 2018. Per Avison Young, the vacancy rate in the “Suburban Essex / Rt 280” submarket has been around 10% since 2017. “d” criteria analysis: There is substantial credible evidence contained in photographs of the buildings, building history and condition reports, and analysis of broader planning, design, and market trends to demonstrate that these office buildings are functionally obsolete. A review of real estate, planning, and design literature reinforces the various ways the buildings are obsolete. The buildings lack modern amenities such as full-service cafeterias, fitness centers, and

review of real estate, planning, and design literature reinforces the various ways the buildings are obsolete. The buildings lack modern amenities such as full-service cafeterias, fitness centers, and locker rooms. The property is isolated in a single-use location without walkable access to amenities or transit access. The broader market trends for office buildings in Northern New Jersey have shown that the market is relatively stable, but tenant demand is focused on newer and more recently upgraded buildings. Buildings of similar vintage that have been upgraded are seeking substantially higher market rents than the most recent leases of $21 per square foot at Executive Drive. The significant vacancy rates in the Study Area over the last six years are a symptom of the obsolescence of the facilities. The average vacancy rate in the Suburban Essex sub-market has been fluctuating around 17-18% for the last two years, while the buildings in the Study Area have been 50% or more vacant for a much longer period. The lack of market interest in these properties can be attributed to their isolation and physical obsolescence relative to their peers. There is also substantial credible evidence that the obsolete conditions of the property are detrimental to the public health, safety, morals, or general welfare. The inability to find new tenants and secure average market rents has diminished the value of the properties at 100

and 200 Executive Drive and 10 Rooney Circle. They have declined in both market value and assessed value substantially over the last twenty years. Township tax assessment records show that the total assessment value of property has declined over the last eight years. During that time, the percentage of the tax base attributable to commercial properties has declined while the residential percentage has increased. As a result of the declining assessed value of the property in the Township, the general and effective tax rates have increased. Higher property taxes impact housing affordability, and constrained municipal budgets limits public services. Both outcomes are detrimental to the general welfare of the residents of the Township of West Orange. Based upon the above findings of fact, the Board concludes as follows: 1. CONCLUSIONS Block 155, Lot 40.02 (100 Executive Drive) ; Block 155, Lot 42.02 (200 Executive Drive) and Block 155, Lot 41.02 (10 Rooney Circle) evidences conditions which fall within criteria set forth in Section 5 of the Local Redevelopment and Housing Law (N.J.S.A. 404:12A-5), specifically, criteria “b” and “d” of said statute. Said conditions are detrimental to the safety and general welfare of the Township; and With the proper re-development, the area will enhance the public health, safety and general welfare of the community. NOW, THEREFORE, be it resolved that the Planning Board of the Township of West Orange hereby recommends to the Township Council that the properties identified on the current Tax Map of the Township of West Orange as Block 155, Lot 40.02; Block 155, Lot 42.02 and Block 155, Lot 41.02, be designated a non-condemnation area in need of redevelopment according to the criteria set forth in N.J.S.A. 40A:12A-5. BE IT FURTHER RESOLVED THAT copies of this Resolution be forwarded to the Township Clerk for the attention of the Township Council. The above is a memorialization of a motion which was duly seconded and passed by the Planning Board of the Township of West Orange at a public hearing, at which a quorum was present, held on November 19, 2020, on the following vote: (40908317:4}

NOVEMBER 19, 2020 ROLL CALL VOTE ON ACTION BY THE BOARD Board Member Motion | Second Aye Nay Abstain | Absent Bagoff (Vice-Chair) X Johnson (1* Alt.) Smeraldo Klein Xx McCartney x Trenk Weston (Chair) x Williams Ps} Ps] PS) oD) Wilkes The undersigned, Secretary to the Planning Board of the Township of West Orange, hereby certifies that the above is a true copy of a Resolution memorialized by said Board on December 2, 2020, on the following vote: DECEMBER 2, 2020 ROLL CALL VOTE ON THE RESOLUTION Board Member Motion | Second Aye Nay Abstain | Absent Bagoff (Vice-Chair) Johnson (1* Alt.) LX PX bx Smeraldo x Klein x McCartney Trenk Weston (Chair) x Williams Wilkes be be P< [x |x (40908317: 4} 9

CERTIFICATION I hereby CERTIFY on this day (cc. ur 12. that the foregoing is a true copy of a Resolution adopted by the Planning Board of the’Township of West Orange at a publicly noticed meeting held on December 2, 2020, at which a LY Sean McCauléy-Secretéry (40908317: 4) 10