The developer of the long-stalled American Dream mall and entertainment complex at the former Xanadu site in the Meadowlands has missed another key deadline this week with the delay of a crucial $1.15 billion bond issue.
State officials who’ve been helping to usher the project through to completion say this latest delay should only be temporary, attributing the holdup to the complicated nature of developer Triple Five’s latest effort to raise the billions of dollars it needs to fully resume construction at the state-owned site near the New Jersey Turnpike in East Rutherford that’s known for its large and oft-derided multicolored buildings.
But still unclear is exactly how big of a setback the delay will prove to be. Triple Five executives suggested in court documents filed in late September in the face of a lawsuit that unsuccessfully sought to block the bond sale that the stakes were extremely high. Missing this week’s deadline could risk “default and/or foreclosure and the likely failure altogether of American Dream,” the developer’s court documents said.
Spokesmen for Triple Five did not comment on the delayed bond sale yesterday, which was first reported in a story published by The Record newspaper. A spokesman for Gov. Chris Christie, whose administration has put up more than $1 billion in state tax incentives to help get the project to the finish line, pointed to comments the governor made several months ago about American Dream’s fate now resting in the hands of the Canada-based developer and its ability to find investors.
Triple Five, the owner of the sprawling Mall of America in Minnesota, took over the project from another developer in 2011 but has faced numerous delays and missed deadlines, including the shelving of another planned bond sale last year.
But over the summer this year Triple Five seemed to have been reinvigorated, winning approval from two different state agencies for yet another version of its complex state-assisted finance package. The developer’s latest financing plan involves raising $350 million via the sale of tax-exempt bonds backed by a tax incentive authorized by the New Jersey Economic Development Authority and another $800 million by selling tax-exempt bonds backed by a regular payment in lieu of taxes from the developer under state redevelopment law.
The New Jersey Sports and Exposition Authority and the Wisconsin Public Finance Authority are both being utilized to facilitate the tax-exempt component of the bond sale, which involves nonrecourse bonds that state officials have promised will shift all risk to potential investors, not taxpayers, in the event the project fails.
Triple Five, meanwhile, has been planning to raise another $1.5 billion in a related transaction from private investors. Taken together, company officials have said the financing package would raise the cash it needs to resume construction at the sprawling site in the NJSEA-owned sports complex. The proceeds would also help Triple Five pay off a prior construction loan that comes due in early November, company executives said in documents submitted to the state Superior Court’s Appellate Division after an unsuccessful legal challenge mounted in September by a group that opposed the developer’s use of the state tax incentives.
Despite the strong statements made by Triple Five executives in the court documents, a spokesman for NJSEA suggested in a statement yesterday that the delay of the bond sale beyond the early November deadline may only be temporary.
“The NJSEA is working diligently through the complex and multifaceted document preparation and review process,” the statement from spokesman Brian Aberback said. “This intricate process involves several entities and it is important that the NJSEA conduct a thorough and comprehensive analysis prior to taking the next step toward the completion of American Dream.”
“The Authority expects the public offering of the bonds to take place this month,” the statement said. Other questions were referred to Triple Five’s spokesmen, who did not comment.
If the project does remain on schedule, it would mean a mid-2018 opening for American Dream, which represents an expansion of the Xanadu complex once envisioned by Mills Corp. and Mack-Cali Realty Corp. and later taken over by another developer, Colony Capital. Triple Five’s latest plans are more ambitious than the original Xanadu concept, calling for a 3-million-square-foot complex that will feature retail stores, restaurants, movie theater, indoor amusement park, ski slope, ice rink, Ferris wheel, aquarium, and 18-hole miniature golf course.
Christie, who once called the vacant complex “the ugliest damn building in America,” had at one point boldly predicted American Dream would open by early 2014, just as the state was preparing to host the National Football League’s Super Bowl at MetLife Stadium, also located in the state-owned sports complex.
Facing questions last June about the project’s subsequent delays and setbacks, as well as the likelihood that American Dream now wouldn’t open until after he leaves office in early 2018, Christie said it was no longer a “front-burner” issue for his administration.
“We’ll keep plugging away, but I think it’s really, quite frankly, now in the hands of the developers and the credit markets and who’s willing to invest and who’s not willing to invest,” Christie said at the time.