Does Margate’s plan to buy a contaminated gas station with taxpayer funds make economic sense?
Margate resident Joel Naroff is a seasoned economist who shared his following thoughts on the controversial plan supported by Mayor Collins and Solicitor Scott Abbott.
Joel Naroff: It is hard to see how the parking lot could translate into city revenue significant enough to make the project financially feasible.
What is clear is that the due diligence needed to purchase a polluted property has not been done. All we have from the Commissioners is a comment that it will benefit all of Margate.
I suspect the reason no economic or financial study exists is that there is an example of the revenue potential of the proposed lot. Having done many economic impact statements, one thing always considered is similar existing or former projects. They provide a baseline for estimates of income potential.
Luckily, there is a recent attempt at building and running a parking lot. It was on Ventnor Ave on the south side of Margate. That lot failed miserably and it wasn’t even a Superfund site.
No reputable economic consultant who was hired to do a study of the feasibility of the proposed parking lot would be able to discount that example. It is almost the exact same property type as the one being proposed. Thus, there is a revenue stream (or lack thereof) and a property value for a lot not subject to pollution issues. (I haven’t seen an appraisal of the property that would support the purchase price. Does one even exist?)
Given a comparable that is a failed parking lot, there is little reason to believe that the project would show any positive return on investment unless there is a massive positive impact on economic activity.
In addition, there hasn’t been any financial/cash flow analysis presented (or assumably done) that shows the impact of the bond costs, construction expenses and annual maintenance expenses on the city’s budget.
What will this thing cost taxpayers, assuming everything goes right? Is there a worse-case scenario estimate?
And finally, we haven’t seen any environmental impact statement or the legal documents that would protect the city from clean-up costs. All we have is City Solicitor Abbott who doesn’t appear to have the experience in environmental law to secure an iron-clad purchase agreement that would protect the city against future environmental costs, as well as the certainty that the clean-up would be finished before the city enters into any agreement to purchase the property.
This needs to be in place before the city secures a bond for payment of the property.
Given if something goes wrong Mr. Abbott could be facing off against a huge international corporation, Exxon, who is purportedly responsible for the clean up, this is extremely worrisome.
Why does Solicitor Abbott think he has the background and skills to enter into an agreement of this type?
In short, no property value appraisal or economic, financial or environmental statements have been shown to the public (or maybe even done) that would provide us with confidence that this property purchase makes sense.
And Margate is being represented by legal counsel who isn’t an environmental lawyer against a major corporation. All we have is the request that we trust our Commissioners.
Well, Ronald Reagan said it best, “Trust but verify”.
Before the Commissioners enter into such a major, potentially financially perilous purchase, they need to do all the necessary due diligence. Little or none of that has yet to be done.
Joel L. Naroff, Ph.D.
President
Naroff Economics, LLC
Naroff Economics, LLC is a strategic economic consulting firm that advises corporations and financial institutions on the risks and opportunities economic developments can have on the organization’s operating environment.
Naroff Services:
- Strategic Economic Consulting – Advising corporations on how they can operate, grow and develop new products and markets in the context of changing national and world economies.
- Financial Industry Consulting – Providing economic analysis and forecasts to financial institutions for portfolio management, asset/liability management and credit risk decision-making.
- Public Speaking – Yes, it is possible to enjoy listening to an economist discuss economic trends and the future economy.
Margate Mayor Collins wants someone else to pay for his parking lot. The mayor and his minions will say anything to achieve that end.
Anyone with any integrity would have stayed out of that matter due to the conflict of interest.
Why would the city want to purchase a property that is contaminated?
Thank you Joel for this information
Two of Margate City leaders are pushing this hard. Horn and Collins claim this purchase is an asset for Margate.
Asset? NO! Liability? YES!
Purchase of opportunity? That’s emotional and any business person knows you don’t buy from emotion.
Our city leaders (2) and solicitor need to slow down and protect those they represent. Us.
Why would Margate leaders not want a thorough economic and environmental assessment and let the data drive the decision?
As a tax payer, it is unfathomable that the city would leap without looking.
Please do the right thing, honor your oath to the citizens, be transparent, and get the necessary data to make an informed decision.
Hoping that Ms. Horn and Mr. Collins save face now and abandon this money losing deal, and at the same time, get rid of Abbott for such bad advise.
They appear to be the puppets of John Amodeo , thr father in law and Tom Collins the father of the Mayor.
Horn is just along for the ride as long as she follows what all the above people tell her to do .
SMH.
What a waste of tax payer money.
Margate has plenty of it so the two politicians don’t care as it seems to benefit the one politician.
Mr. Naroff’s points are well taken and we should all be grateful that he has taken his time and used his experience to warn all of us ‘little people’ out here of the potential harm that missing so many important points could come back to bite us.
This is a project that doesn’t need to happen and I have found nobody who is even interested in creating a very expensive parking lot.
Margate is a wonderful town with many opportunities but it seems to be run in the same manner as the ‘F’ word that has lately been bantered around.
In summation, the only ones interested in this game are those who have skin in it. Why do they ignore the will of the people?
These comments are a perfect example of the noise from the just say no crowd.
They cry about needing open space and public views but freak out claiming a waste of tax payer money.
The same crowd would have spewed the same noise had the city bought the private properties on Amherst ave and the Burger joint and left them as open space.
Mr Naroff’s concerns appear to be well thought-out, informed, authoritative and should at the very least be addressed prior to closing.
Red flags aplenty
As a homeowner and taxpayer, I haven’t seen anything that demonstrates the actual cost that each home owner will assume if this property is purchased.
I’m not talking about the $3 million, but what costs will be passed onto the individual homeowner.
Simply, I’d like to know what this will cost ME.
Unless a massive group of concerned taxpayers come to a commissioners meeting to voice their concerns and opposition nothing will change.
It may take a large group of taxpayers who hire an attorney together to stop this.
Just typing does nothing..
It can’t be stopped now. Open up a hardware store to compete with Colmar or next election find better candidates.
Please explain how the parking lot will be financially benefial to Margate? I’m new to this conversation but I was in business and understand profit and loss.
I agree with most comments about the true cost to taxpayers.
To be transparent to taxpayers, any typical due diligence, prior to ‘agreeing’ to purchase, would have an Environmental Site Assessment Phase 1 (EAS Ph1) done to identify any environmental risk.
Then knowing there is some contamination, this would entail an Environmental Site Assessment Phase 2 (ESA Ph2) to fully identify any contaminants, and anticipated contaminants.
Then, a cost estimate is done on what was identified in the ESA Ph2, to estimate the NJ DEP remediation cost the new owner would incur – all this in order to to “clean’ the site and procure a ‘No Further Action’ letter from NJ DEP.
The sale price and cost of this clean-up combined, will give us the true cost to taxpayers.
If sale price is $# million and we have approx 5,000 taxpayers, that equates to $600/taxpayer. Do we know the cost of NJ DEP remediation?
– Who benefits from this city purchase?
– what else can city use the $3 million for that would be best for the city and not just a select few businesses or homes.
– Let a private developer buy this and take on the NJ DEP remediation with a true business plan for a successful benefit to Margate.
How about public bathrooms instead of a flashing road sign on Amherst Ave that says…… NO PUBLIC URINATION 🤪🙃😱🤢
How about you add a bathroom to your 3 stores, Roz, since you claim your customers are literally “crying” about the lack of them? You expanded 50%, can’t be that hard to add one…. Instead of complaining and ranting as always.
Margate plans to make settlement on the gas station property by the end of year…. before they have official statement that the ground is free of any residue.
After or before the city has settlement, the building will be torn down and if residue is discovered, EXXON will pay to mitigate? Will these actions be in the settlement?
Remember the EXXON Valdez spill? How long did it take them to finish that cleanup?
If the ground is positive, the city owns it and will have to wait for the cleanup for as long as EXXON takes. But don’t worry, the city has spent and tied up our money during the wait.
What’s the rush to make settlement? Wait until after the building is removed.
In fact, go back to the original concerns on this purchase.
Two city administrators are pushing for the purchase, while most everyone else is saying: DON’T BUY THE PROPERTY.
Either way, Margate shouldn’t make settlement until they have complete knowledge that the ground will be residue free.
The ground is contaminated. You can’t build on top of oil tanks. There is no justification on how this benefits Margate residents who live in the immediate area.
Parking should be near Washington Ave. That is the area in need of parking.
There is no benefit to the area around the gas station for many blocks in either direction.
to me , it’s pretty simple….forgetting about Joel Naroff’s excellent review…. the ONLY beneficiaries of this purchase are a few nearby businesses & several nearby residences.
who else benefits???