Netflix at Fort Monmouth may get $125M in NJ tax breaks; first studios could be up by 2027

TRENTON - Netflix was designated a studio partner by the New Jersey Economic Development Authority for its television and movie production campus planned for the former grounds of Fort Monmouth, which makes the streaming giant eligible for lucrative tax breaks.

To be eligible for a pool of $125 million in tax breaks, which gets rolled over yearly, applicants must have site control, and at least preliminary site plan approval, as well as an executed redevelopment agreement or an adopted redevelopment plan that contemplates the construction of a film studio. Netflix will then have to occupy the studios for at least 10 years.

Netflix is under contract to buy a 300-acre tract of land at the old Army fort, called the Mega Parcel, to build its East Coast television and movie production hub. The sale could take three years to be finalized. The zoning however, was already approved in March and Netflix is in the early stages of drafting its final site plan and seeking the multitude of local, county and state construction approvals.

Netflix has identified the McAfee Parcel, or Zone 7, as the first zone it will build out in the Mega Parcel. The McAfee Parcel is in the heart of the Mega Parcel. The McAfee Parcel is 29 acres and lies in Oceanport. The Mega Parcel has 12 zones altogether. Netflix is planning to place four sound studios on the McAfee Parcel, and 12 altogether throughout the Mega Parcel.

The inside story: How Fort Monmouth got Netflix and one of the world's biggest movie studios

For this particular tax break under the Garden State Film and Digital Media Jobs Act, Netflix needs to be able to provide a temporary or permanent certificate of occupancy for the site within 36 months. However, the NJEDA granted Netflix a six-month extension on that timeline when it approved the studio partner designation on Wednesday. The NJEDA said Netflix has indicated it will have the studios up and running in this zone by 2027.

As Netflix proceeds through development of the many zones in Mega Parcel it can apply for further studio partner tax breaks.

Film crews are already eligible for what's called legacy tax breaks when filming on location in New Jersey. However, a studio partner designation provides even more access to tax breaks because the company that earns them is building permanent studios here.

"We want to encourage and incentivize exactly what Netflix is proposing to do, which is spend a lot of money to build brick and mortar and make a long-term commitment to New Jersey," said Tim Sullivan, the executive director of the NJEDA.

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Gov. Phil Murphy helped lure the streaming giant to the Garden State with an incentive-filled pitch in 2021 that included tax breaks, The other major selling point was 300 acres of land in proximity to New York City.

Since then the pieces have continued to fall into place for Netflix. Four days before Christmas in 2022 it won the bid to buy the Mega Parcel at Fort Monmouth for $55 million and invest nearly $1 billion to build 12 sound sages along with backlots, two hotels, a 90-foot tall office building with a helipad, plus a host of ancillary buildings.

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In March this year, the zoning was approved for Netflix allowing it to move onto the final design stage and begin seeking the multitude of approvals it will need for construction.

“I want to thank Governor Murphy and his administration for their steadfast commitment to bringing this project to fruition,” said Netflix CEO Ted Sarandos. “Today takes us one step closer to making New Jersey an international center for studio production and Netflix is excited to be a part of it.”

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The promise of Netflix coming to Fort Monmouth is already impacting the surrounding communities. Eatontown, one of the towns where the studios will be located, designated most of its antiquated downtown an area in need of redevelopment as its business and elected leaders anticipate renewed interest in the small district which is just a stone's throw from the front gates of the former fort.

The host towns of the former Army installation — Eatontown, Oceanport and Tinton Falls — lost thousands of jobs and residents when the fort closed down in 2011 as part of the federal Base Realignment and Closure process following the shrinking of the military after the Cold War. The Fort Monmouth Economic Revitalization Authority, the state agency in charge of turning over the fort properties, has worked steadily to redevelop the 1,126 acres by selling off the parcels to private developers.

What will happen: Netflix will have to knock down nearly 100 Fort Monmouth buildings to build movie studio

Netflix is the largest catch. FMERA cobbled together several parcels of land across Eatontown and Oceanport to make the Mega Parcel. The deal will all but complete the redevelopment of the fort.

"The closure of Fort Monmouth left an enormous void in the region. The size and scope of the Netflix project will bring enormous benefits to and revitalize the area,” Eatontown Mayor Anthony Talerico Jr. said.

Netflix estimates it will generate between $7.4 billion and $8.9 billion in output over the next 20 years for production and construction. The value added to New Jersey’s economy as a direct result of that activity during that same period would be between $3.8 billion and $4.6 billion, it estimates.

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During peak construction, Netflix estimates the project will contribute as many as 3,500 jobs. Once the studio is fully operational, it estimates that Netflix production could contribute between 1,400 and 2,200 jobs annually.

In addition, Netflix expects there to be a considerable ripple effect as the production hub could spark private sector capital investment into adjacent industry infrastructure and businesses, including post-production and other digital facilities and services.

"That a little town like Oceanport will be home to part of Netflix’s east coast operations center is simply incomprehensible for someone like me who has spent his entire life in this town. I, along with Oceanport’s entire Borough Council, look forward to the opportunities that Netflix will bring to Oceanport, Eatontown, Monmouth County and the State of New Jersey," Oceanport Mayor Thomas J. Tvrdik said.

Overall, television and film is a booming industry in New Jersey, which saw last year's Academy Award Best Picture winner "Oppenheimer" filmed on location here. In-state production spending from filmmaking exceeded $650 million in 2022 and created over 8,500 jobs, according to the New Jersey Motion Picture and Film Commission.

Sullivan said the 2023 numbers haven't been released yet due to last year's Screen Actors Guild-American Federation of Television and Radio Artists strike, which impacted production for several months, but he doesn't think the state saw much of a dropoff, if there was any.

With Netflix leading the way, the creation of new world-class studios has solidified New Jersey's standing as a national leader in film and television production. These substantial investments will create thousands of good-paying jobs, support small businesses and vendors, and stimulate the regional economy," Murphy said.

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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: Netflix at Fort Monmouth could get tax breaks, first studio up by 2027