Obscure Group Says Finance Plan For Meadowlands Megamall Violates State Law

John Reitmeyer | September 12, 2016 | More Issues, Politics
The action by the New Jersey Alliance for Fiscal Integrity could mean further delays for a project that has been in the works for more than a decade

american dream
The developer of the American Dream Meadowlands megamall took several big steps toward restarting the long-stalled project earlier this summer and is hoping to soon raise the cash needed to resume construction on a building Gov. Chris Christie once called the ugliest in all of New Jersey.

But now a little-known organization, the New Jersey Alliance for Fiscal Integrity, is threatening to throw up a last-minute legal roadblock that could bring on yet another lengthy delay.

The alliance has taken issue with the complicated structure of a $1.15 billion state-assisted bond sale that’s being readied by developer Triple Five, questioning whether the finance plan violates state law and financial regulations. The group also says the New Jersey Sports and Exposition Authority, the state agency that granted final approval to the proposed bond sale late last month, did not give the public the full amount of notice that’s required by law before it took that action.

To prevent the bond sale from occurring, a lawyer for the group — which refuses to disclose any of its backers — is preparing to file for an emergent stay with the New Jersey Superior Court’s Appellate Division as early as tomorrow.

Unclear right now is whether the group’s last-ditch legal effort will derail Triple Five’s plans to restart construction this year or become just the latest nagging hurdle for it to overcome. While the group threatening legal action says it is acting in defense of fiscal virtue, supporters of the mall project are questioning whether it’s really just an effort to prevent more competition from coming into an area of the state that already has its fair share of malls and retail centers.

The New Jersey Alliance for Fiscal Integrity emerged late last month just as the NJSEA, which owns the property where the mall is being developed, called a special meeting to consider the state-assisted financing plan that’s been proposed by Triple Five as it seeks to meet a new targeted opening date of mid-2018.

Triple Five is planning to sell $1.15 billion in bonds that would be backed by $350 million in future tax breaks provided through the New Jersey Economic Development Authority and another $800 million in pledged payments-in-lieu-of-taxes based on an agreement that the developer has struck with East Rutherford, the town in which the project is located.

The NJSEA gave final approval to the financing plan, which also involves the use of a Wisconsin-based public-finance agency to facilitate the bond sale, during its August 25 meeting, over the objections of the new group and others. That approval paved the way for a bond issue that Triple Five officials say could go to market as soon as later this month, and another $1.5 billion is expected to be raised through private financing by the developer to help get construction crews back at the site this year.

Triple Five, which operates the Mall of America in Minnesota, is the third developer to take on the long-delayed project since it was dreamed up more than a decade ago. The developer’s latest plans for the American Dream Meadowlands mall include more than one-million square feet of retail space, along with an aquarium, indoor-amusement park, water park, and ice rink.

Triple Five officials predict the megamall, once opened, will provide a major boost to a state economy that’s still struggling to fully recover from the Great Recession. Construction work alone would create 23,000 jobs and $50 million in tax revenue, while another 23,000 permanent jobs and $133 million in annual tax revenue would be generated once the mall opens to the public, Triple Five officials have said.

But the group that stepped forward last month to oppose the project is calling on the NJSEA to pull back its approval, citing several technical flaws that it says are embedded in the current version of the financing plan. A letter sent to the agency last week by the group’s lawyer, Thomas Calcagni, a former director of the state Division of Consumer Affairs, outlined ways he believes the plan is at odds with state redevelopment law and an executive order covering bond sales that was issued by former Gov. Christie Whitman in 1994. Calcagni also said the NJSEA by law was required to give the public 48 hours of notice via published newspaper ads before it took action on August 25 but that deadline was missed.

“In light of the emergent nature of this application, the Alliance respectfully requests that NJSEA grant or deny a stay no later than Monday, September 12. If the NJSEA has not acted by then, the Alliance will make an emergent application to the Appellate Division,” Calcagni wrote.

Bruno Tedeschi, a spokesman for the group, said as of Friday it had not received a response from the NJSEA. A spokesman for the agency declined comment when asked about the group’s letter on Friday, citing the potential for pending litigation.

Tedeschi declined to identify the group’s members or financial backers when asked for more information by NJ Spotlight. The New Jersey Alliance for Fiscal Integrity was registered using federal IRS rules, thus it does not legally have to disclose information about its backers. A press release issued by the group last week offered little in the way of background, saying only that it is a “non-profit organization consisting of taxpayers and business owners.”

“The donors at this time wish to remain anonymous as is their right under the law,” Tedeschi said.

Still, the group’s initial press release from late August that first announced its opposition to Triple Five’s state-assisted financing plan may offer some clues. Quoted in the release were conservative state Sen. Mike Doherty (R-Warren) and a leader from the state chapter of the Americans for Prosperity Organization, which has ties to the billionaire conservatives Charles and David Koch. But also quoted in the release was Gordon MacInnes, a former Democratic state senator from Morris County who now leads New Jersey Policy Perspective, a liberal think tank based in Trenton.

Meanwhile, the leader of the Meadowlands Regional Chamber of Commerce, which supports the American Dream Meadowlands project and is predicting it will be a major economic driver for the region, has also jumped into the fray on the side of the developer.

Jim Kirkos, the chamber’s president, suggested the opposition to the bond sale could be coming from rival businesses or others who would stand to lose out when the new mall opens its doors to the public. He said lawyers and financial experts from several government agencies, including the NJSEA, have already fully analyzed every aspect of Triple Five’s finance plan.

“Unfortunately, we cannot ignore that this faceless group is throwing money and lawsuits around to protect its unstated interests and fear of competition,” Kirkos said.