A COMPREHENSIVE ANALYSIS OF WESTSIDE PARK


Part I of an Exploratory Study to Establish a Special Improvement
District on Springfield and South Orange Avenues, Newark, NJ

Report to the Corinthian Housing Development Corporation and New Community Corporation

May 11, 1998


Property Tax Analysis


Study Area

The area studied in this report examines predominantly the commercial corridors along South Orange and Springfield Avenues in Newark, New Jersey. Specifically, the boundaries encompass South Orange Avenue to Bergen Street and Springfield Avenue to South 20th Street. This area is commonly referred to as West Side Park. Within this bounded area, there are six different property classifications that are present. The Newark Tax Assessment Office has assigned codes to each property type within the city. Within our study area, Commercial (4A), Vacant (1), Residential (2), Apartment (4C), City Owned (15C) and Non-Profit (15D) all exist. In total, 306 property tax records were retrieved from the tax assessor's office in our study area. However, within our study area, 331 property parcels were recorded. This discrepancy results as an individual property tax records may contain more than one parcel of land. In effect, some property owners within the study area are owners of a few parcels of land.

Property Classification

From the 306 property tax records, approximately 129 or 42 percent were commercial businesses. The second and third largest land uses were tax exempt properties. 95 property tax records were city owned, representing 31 percent of the land use here. Examples are city-owned properties include the High School here along with a few industries, parking lots and vacant lots. Nonprofit land use accounted for an estimated 10 percent of the area here with 32 property tax records. Examples of nonprofit institutions here are the New Community Corporation and its various property holdings like Baby Land, Harmony House and its housing along with the many church denominations along the streets. While tax exempt properties comprised about 40 percent of the land use, thirty properties were found to be vacant. Representing 10 percent of the area, these vacant properties are clearly a negative site for this struggling community. A stronger effort from the community will be needed to attract much needed businesses on these lots. Finally, residential and apartment use represent 4 and 3 percent of the land uses in the area, respectively.

Table X: Property Records .
Property Tax Records Property Percentage
Commercial 129 42%
Vacant 30 10%
Residential 12 4%
Apartment 8 3%
City-Owned 95 31%
Non-Profit 32 10%
Totals 306 100%
Source: Newark Tax Assessmnet Office


Property Size

When analyzing and describing land use, it is useful to know the size of each of the dominant classifications. By understanding the size ratios of the property classes here, it will help better familiar outsiders to the present community dynamics. Most land uses are measured either by square footage or acreage. In our sector, these 306 properties represent a total of 2,437,617 square feet of space. With over 960,000 square feet, an average city-owned property occupies about 10,000 square feet and comprises a little over 22 percent of the total space here. Next, commercial properties contain over 600,000 square feet with each property having 4, 660 square feet. About 14 percent of the total space is within commercial properties. Non-Profit organizations are the largest average properties with each containing over 17,000 square feet of space. However, with 548,856 feet of total space, non-profits occupy just 12.6 percent of the total space here. In our area, about 257,000 square feet of space lays unoccupied and vacant. The average vacant property in our area contains 8,567 square feet of space and vacant property represent about 6 percent of the land uses in our area.
Residential and apartment units contain about 36,000 and 32,000 square feet of land, respectively. As a result, they only represent a very small percentage of the total area. Each represents less than one percent of the area here.

These findings concerning property size have implications. The tax exempt properties here clearly offer the prospective tenant more room than the ratable properties. With a little over 4,600 sq. ft., the size of the average business can be considered quite small compared to the tax exempt properties. However, future business owners may find it encouraging that the average vacant property is almost double that of the average business. Now, the prospective tenant will have the opportunity to open an enterprise in a large, unconfined space.

Table XI: Size of the Properties
Total Square Footage Total Acreage Average Square Feet Average Acreage
Commercial 129 42% 4,660 .11
Vacant 30 10% 8,567 .20
Residential 12 4% 3,013 .07
Apartment 8 3% 3,975 .09
City-Owned 95 31% 10,133 .23
Non-Profit 32 10% 17,152 .39
Totals 2,437,617 55.96 47,500 1.09

Property Assessment

These 306 properties have a total assessed value of $21,928,610. This assessed value takes into account that properties in Newark have not had their taxes reassessed in approximately 40 years. Non-Profit organizations in the area have an assessed value of $ 13,130,800 with each property value at just over $410,000. City owned properties have the second highest composite value in the area with an assessed valuation of $4,914,610. This means each city owned property is valued at about $51,000. Commercial properties have an assessed value of $3,100,000 in today market with each property being assessed at $24,031 in the study area. The vacant properties here have an average assessed value of $11,753 with a total of $352,600. Apartment and residential buildings are assessed at about $276,000 and $154,000 respectively here.

To determine how many taxes each of these land uses pays, a simple formula is used. First, the typical property in Newark pays $23.86 of every $100 of assessed value on taxes. So, the total assessed value is multiplied by $23.86 and then is divided by 100. This figure will yield the total taxes paid. Because city owned and non profit organizations comprise over 80 percent of the total assessed value in the study area, these institutions are exempt from paying taxes to the city. As a result, the areas tax base is determined from the amount of taxes commercial, industrial, vacant and residential properties contribute to the city. The Tax Assessment Office calculated that $926,532 will be paid in taxes to the city of Newark. From this total, commercial businesses are projected to pay about $740,000 in taxes. Vacant properties pay $84,130 in projected taxes, while residential units and apartment units pay about $37,000 and $66,000 in taxes respectively.

Table XII: Assessed Value and Taxes Paid of the Properties
Property Type Total Assesed Value 1998 Average Assessed Value 1998 Total Taxes Paid 1998 Average Taxes Paid 1998
Commercial $3,100,000 $24,031 $739,660 $5,733
Vacant $352,600 $11,753 $84,130 $2,804
Residential $153,900 $12,825 $36,721 $3,060
Apartment $276,700 $34,587 $66,021 $8,253
City Owned $4,914,610 $51,732 Exempt Exempt
Non-Profit $13,130,800 $410,337 Exempt Exempt
Totals $21,928,610   $926,532  
Source: Newark Tax Assessment Office, 1998


Current Market Value

To determine the current market value of the properties, the city equalization rate must be taken into effect. In 1997, the equalization rate (the relationship between assessed and true valuation of land) for the city of Newark was 16.43 percent which basically means that each property's assessed value will have to multiplied by a little over 6 (6.08) to determine its true value in 1998. This multiplier of 6 is the value it takes to get the current equalization rate 16.43 to become 100 percent. A 100 percent equalization rate indicates that properties are assessed at their true market value. Non-profit properties are valued at an estimated $80 million with city owned properties being worth $30 million. These large valuations however represent properties that are exempt from paying taxes. Commercial properties are estimated to have a current market value of almost $19 million, while the vacant properties here are worth over $2 million. Residential and apartment units are valued a little over $2.5 million.

Table XIII: Current Market Values of Properties in the Study Area
Property Type Current Market Value
Commercial $18,866,600
Vacant $2,145,924
Residential $936,635
Apartment $1,683,996
City Owned $29,910,316
Non-Profit $79,914,049
Total $133,457,520
Source: Newark Tax Assessment Office, 1998


A further analysis of the current market values within our study area indicate tax exempt properties have 4 ½ times the current value of their tax paying counterparts. This ratio is evidence for the need for more businesses and enterprises within the area.

To analyze what this tax burden really means to tax paying citizens of Newark, a comparison was made to neighboring townships within the vicinity of Newark. Each area chosen has an area of commercial activity which can be looked at in comparison to the businesses along Springfield and South Orange Avenues. For the analysis, the taxes paid as a percentage of current market value were examined. Seven different areas (towns) were examined. The five areas which essentially form a ring around Newark were examined first then larger shopping destinations were analyzed.

The five towns of East Orange, Irvington, Bellville, Bloomfield and Montclair are all areas with commercial districts. Newark residents pay 3.9 percent of their taxes in relation to the current market values of their properties. In comparison, the percentages paid in the five neighboring areas are as follows: East Orange- 3.9 percent; Irvington- 3.5 percent; Bellville- 3.1 percent; Bloomfield-2.8 percent and Montclair at 2.8 percent. This means that Newark tax payers are paying more money in relation to the value of their properties than any town except South Orange.

In comparison, the towns of Millburn and Livingston, each located in Essex County also, have large shopping destinations. The taxes these residents pay as a percentage of their properties current market value are 1.8 and 2.2 respectively. While it is clear that these are two different retail markets, a comparison of taxes paid is applicable in our situation. In effect, residents in Newark are paying almost twice as much in taxes as residents in these two communities.

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