By Laura D.C. Kolnoski
FORT MONMOUTH – One year after The Two River Times exclusively reported Netflix Studios hopes to build a production facility on Fort Monmouth, the company’s bid proposal for the Mega Parcel is one of four winding through a lengthier-than-usual evaluation process.
On July 20, officials of the Fort Monmouth Economic Revitalization Authority (FMERA), the state-sponsored agency overseeing the sale and redevelopment of the 1,126-acre former U.S. Army base, said evaluations are “proceeding according to the established timeline.” Scoring of each proposal for the 292-acre site across portions of Eatontown and Oceanport is being performed by a committee of FMERA professional staff with input from the New Jersey Attorney General’s office and participation from representatives of the
U.S. Army.
Top scoring bidders for fort projects are generally announced via presentation of a Purchase, Sale, and Redevelopment Agreement to FMERA voting members at a public board meeting, held monthly in the fort’s former library, followed by a press release issued to the media.
“No other comments or information will be provided by FMERA prior to that time,” said Sarah Giberson, senior marketing and real estate development officer, adding the announcement of the top bidder could take “several months.” State officials, including Gov. Phil Murphy, who drew Netflix’s interest by reaching out to top media firms and encouraging them to do business in New Jersey, are monitoring the process.
The sale is said to be the most complex of all Fort Monmouth properties. A portion of the site was originally offered for sale early on, while the Army retained partial ownership and maintained a financial stake in sales. Under an arrangement conceived by Monmouth County Commissioner Lillian G. Burry, the county and its Improvement Authority essentially bought out the Army’s financial interest several years ago. Since then, with less long-distance bureaucracy involved, sales and closings have moved more quickly. Burry, a real estate broker, has been the county’s representative on FMERA for 10 years.
Because the Army retains an interest in a portion of the area offered, “the Army is still involved in the sale of the Mega Parcel,” said FMERA executive director Kara Kopach. “FMERA and Army staff must review everything, adding more layers.” At over 120 pages, the bid specifications include copious technical details and requirements due to the parcel’s size and complexity.
The property represents about 25% of the fort’s total acreage. To date, 33 fort parcels have been sold, with 86 percent of the total property now sold or in the purchase process. The sale of the Mega Parcel would leave only a few minor parcels remaining.
In addition to Netflix, bids were submitted by Extell Acquisitions LLC; Mega Parcel Development LLC; and RDR Partners, LLC, comprised of Russo Development, LLC, Dinallo Development, LLC, and River Development Equities, LLC. Kopach would not comment on whether any bidders have dropped out or been disqualified. In the past, bidders have been disqualified for not adhering to FMERA’s guidelines and parameters specific to each parcel, issues involving finances and more. Other bidders withdraw for a variety of reasons.
The contents of the bids are not made public until the selection process is completed. The Mega Parcel has been appraised at approximately $54 million. Among the allowable uses, which have expanded over time along with the size of the parcel, are life sciences, information and high tech, clean energy, food and beverage, and film and digital media.
Once approved by the FMERA board, the top bidder undertakes a “due diligence” period to examine the site with its own engineers and experts. If the developer opts to proceed, a Purchase, Sale and Redevelopment Agreement is created including precise requirements which must be adhered to by the purchaser. Should the top scoring bidder exit the process for any reason, FMERA would begin working with the second ranked bidder.
County and local approvals must also be obtained; the New Jersey Department of Environmental Protection is also involved; and the entire process is monitored by FMERA through construction and completion. FMERA officials estimate the start of construction could be two to four years away.
Under The National Media Radar?
Netflix has dominated recent headlines, in some good and bad ways: The company experienced a subscriber loss of 1 million, plunging stock prices and layoffs, the purchase of Australian animation studio Animal Logic, and plans to add advertising through an arrangement with Microsoft. Through over 25 articles published by Forbes, Variety, CNBC, The Washington Post and more in the past two weeks, analysts and financial prognosticators have dissected Netflix’s status and gazed into its future. None mentioned the Mega Parcel or the potential impact the purchase could have on the media giant’s operations, cash flow expectations or stock prices.
MarketWatch, citing a letter to Netflix shareholders, reported the company “projected substantial growth in FCF (free cash flow) in 2023 vs. 2022, due to increasing revenue, solid profitability and the successful multiyear evolution of its content model, which is now producing more content than it buys from other companies.” Further, Spencer Neumann, chief financial officer, said on Netflix’s earnings call that the 25-year-old company anticipates spending $17 billion on content this year. TheStreet reported Netflix CEO Reed Hastings told investors, “The sky is the limit for the streaming world.”
The article originally appeared in the July 28 – August 3, 2022 print edition of The Two River Times.
