A state appeals court yesterday sharply rejected all the arguments made by a group that opposes the state-assisted finance plan for the long-stalled American Dream megamall in the Meadowlands. The ruling should now clear the way for developer Triple Five to raise the cash it needs to resume work on the massive retail and entertainment center later this year.
The three-member Appellate Division panel did not mince words while issuing its decision, saying the arguments made in legal briefs by the New Jersey Alliance for Fiscal Integrity, the group attempting to block the developer’s complicated finance plan, relied “to a great extent on mischaracterizations of the financing.”
“After reviewing the briefs and the record submitted on this appeal, we conclude that those arguments are without merit,” the ruling said.
Triple Five had warned in its own court filings that any delay caused by the legal challenge could derail the entire project, and a top executive praised the ruling after it was issued by the court late yesterday afternoon.
The New Jersey Sports & Exposition Authority’s vote earlier this month in favor of a $1.15 billion state-assisted component of the developer’s finance plan brought on the legal challenge filed last week by the alliance, which has never identified its supporters.
According to the plan that was approved by the NJSEA, the developer will raise $350 million by selling tax-exempt bonds through the NJSEA and the Wisconsin Public Finance Authority, with the bonds backed by future sales-tax collections provided via a tax incentive that’s already been approved by the state Economic Development Authority. Another $800 million will be raised by selling tax-exempt bonds that will be backed by a regular payment in lieu of taxes from the developer under state redevelopment law.
State officials have justified their approval of the tax incentives by saying the project will create much-needed jobs and tax revenue for the region. The bonds will be sold as nonrecourse bonds, meaning the full risk will fall on the investors instead of the taxpayers of either New Jersey or Wisconsin.
Triple Five plans to combine the cash raised through the state-assisted finance package with another $1.5 billion in financing that’s being secured at the same time in a related transaction from private investors. Taken together, the $2.65 billion in proceeds will then be used to resume construction at the sports complex located in East Rutherford and to help pay off a prior construction loan that comes due at the beginning of November, Triple Five officials said in legal filings.
If everything stays on schedule, the developer envisions a mid-2018 opening date for what it’s calling American Dream Meadowlands. Once known as Xanadu, the mall project goes back over a decade and has already involved two prior developers. Triple Five’s latest plans call for a 3-million-square-foot complex that will feature retail stores, restaurants, a movie theater, indoor amusement park, ski slope, ice rink, Ferris wheel, aquarium, and 18-hole miniature golf course.
In its legal briefs, the Alliance for Fiscal Integrity claimed Triple Five’s finance plan violated state public-finance laws and other regulations, including a 1994 executive order. It also argued the bond sale would violate the state constitution unless it won approval from New Jersey voters.
But Triple Five and the NJSEA countered with a joint brief that accused the group’s lawyers of lacking a full understanding of the sophisticated finance plan, and they also requested that a ruling be issued by the end of this week to ensure the broader financing deal could move forward as approved. The brief also questioned whether the group’s backers were competitors in the regional retail market, instead of those worried about preserving the state’s fiscal purity. The alliance, which was registered using federal IRS rules, does not legally have to disclose information about its backers.
In its ruling, the three-judge appeals panel agreed with Triple Five and the NJSEA, rejecting in detail each argument that had been made by the group’s lawyers. The judges said most of the issues that were raised in the group’s appeal were matters of policy and not law.
“It is not our role to pass (judgment) upon the wisdom of actions taken by the executive and legislative branches of government,” the ruling said. “We concern ourselves only with the legality of those actions.”
Tony Armlin, Triple Five’s senior vice president of development and construction, praised the ruling in a statement issued to reporters, saying the developer was pleased with the outcome of the case.
“Now that this frivolous claim has been dismissed, American Dream — a world-class retail, tourist and entertainment destination that will serve as the economic engine for the region — will be completed,” Armlin said.
Bruno Tedeschi, a spokesman for the alliance, said the group was still digesting the 16-page decision. Brian Aberback, a spokesman for the NJSEA, also declined comment when reached yesterday.