After missing its own deadline for completing a major bond sale last year, the developer of the American Dream Meadowlands megamall project said this month was the new target date for the bond issue. But now, as the last full week of January begins, there are no signs that the financing is on the verge of closing.
Representatives for Triple Five, the developer of the long-planned retail and entertainment complex in East Rutherford, said they had no update on the planned $1.15 billion bond sale when asked about its status last week. A spokesman for the New Jersey Sports & Exposition Authority, a state agency that has been working closely with Triple Five on its finance plan, declined comment on the bond sale last week and instead referred questions back to the developer.
[related]If another financing delay is looming, it would mark just the latest in a series of setbacks for Triple Five, the Canada-based owner of Minnesota’s Mall of America that Gov. Chris Christie brought to New Jersey in 2011 to try and revive a long-delayed project that was already abandoned by two prior developers. Another delay would also raise new concerns that Triple Five won’t be able to raise the more than $2.5 billion in overall financing that it says is needed to fully resume construction at the sprawling site in East Rutherford to meet a planned fall-2018 opening.
First launched under the name Xanadu in 2003, the megamall project is aimed at generating new economic development for a Meadowlands region in north Jersey that for decades has suffered through the decline of horseracing and, more recently, the closure of its once popular indoor sports arena. And under Triple Five, the original Xanadu design plan has been ambitiously expanded to emphasize entertainment elements like a full-size ice-skating rink and indoor theme park. That redesign will help to make the complex “Internet-proof” in the face of competition from online retailers, Triple Five president Don Ghermezian said during an interview last month.
Triple Five, meanwhile, is also planning to give a makeover to the massive, multicolored buildings that right now dominate the 90-acre site off the New Jersey Turnpike.
To help finance construction, company officials have been trying to raise $1.5 billion through a private loan. But Triple Five’s complicated finance plan also includes the issuance of $1.15 billion in tax-exempt bonds that would be backed by $350 million in state tax incentives and local redevelopment tax incentives worth up to another $800 million. Both the NJSEA and a public-finance authority based in Wisconsin are also being used to facilitate the issuance of the tax-free bonds.
But the bond sale has been delayed numerous times, with officials blaming unfavorable market conditions and a lawsuit that was filed last year by a group that sought to block the state from assisting the bond issue. The most recent delay occurred in early November, when Triple Five missed a deadline for closing the bond issue that company executives had listed in court documents in the face of the lawsuit.
The court documents also said that missing the November deadline would risk “default and/or foreclosure and the likely failure altogether of American Dream.” But several weeks later company representatives said the project was still alive and they listed this month as their new target date, saying in a statement that they would “expect the bonds to go to market in January after the New Year.” Asked for an update last week, Triple Five representatives told NJ Spotlight they had nothing new to report.
Brian Aberback, a spokesman for the NJSEA, also referred questions about the status of the bond sale to Triple Five, marking a change from November, when Aberback said the agency was still “working diligently” on the finance plan and a complex financial review process. Triple Five’s finance plan won final approval from the NJSEA during a series of public meetings that were held over the summer.
The American Dream project was the source of a five-day reporting series that was published last month by NJ Spotlight, WNYC and Bloomberg Businessweek. The series scrutinized, among other topics, the Canadian family that owns Triple Five; how the company plans to run a successful mall at a time when online shopping is dominating the retail economy; and how Christie and his political allies have benefitted after Triple Five was selected to revive the stalled development project in 2011.
If American Dream is eventually able to open its doors to the public, the state Economic Development Authority has calculated that it would provide a net benefit for New Jersey totaling $730 million spread out over two decades. That breaks down to roughly $36 million a year, which is about one tenth of 1 percent of the state’s overall $34.5 billion spending plan for the current fiscal year.
The EDA’s long-term projections also indicate that most of American Dream’s roughly 10,000 permanent jobs — counting both full- and part-time positions — would pay less than $20,000 a year. But Triple Five has far loftier economic projections for the project, promising 23,000 jobs created or supported once the megamall opens, $50 million in annual tax revenues from construction, and another $133 million from the permanent jobs.