Despite concerns that a series of financing delays had doomed the project for good, the developer of the long-stalled American Dream Meadowlands megamall has now secured $1.67 billion in private financing to help relaunch its construction.
While the project is not out of the woods yet, another key element of its complicated finance plan — a $1.15 billion bond issue — could also be completed in a matter of weeks, officials said yesterday. That would put the behemoth complex, located on a state-owned site along the New Jersey Turnpike in East Rutherford, on schedule to open to the public in early 2019.
What remains to be seen is whether this will be another false start for Triple Five, the project’s developer, or a major turning point. Two different state agencies provided final approval for American Dream’s bond financing last summer, only to see the project stall after the developer missed several key deadlines, including last year in November, and earlier this year in January. Still, Gov. Chris Christie, who brought Triple Five onto the project in 2011 after two prior developers failed, hailed the new developments yesterday, saying it was “about time.”
“The big hurdle was the financing that they just got,” Christie said when asked about the American Dream project following a news conference in the State House on recent improvements in the state’s unemployment rate. “We’ll see what happens, but I think there’s no other way to look at that but as a positive development for the state,” he said.
It began as Xanadu in 2003
First launched under the name Xanadu in 2003, the megamall 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 the Izod Center, its once popular indoor sports arena.
Under Triple Five, the owner and operator of Minnesota’s Mall of America, the original Xanadu design plan has been ambitiously expanded to emphasize more entertainment elements, like a full-size ice-skating rink and indoor theme park. That redesign will help to make the three-million square-foot complex “Internet-proof” in the face of mounting competition from online retailers, Triple Five president Don Ghermezian said during an interview last year.
Triple Five, meanwhile, is also planning to give an exterior makeover to the massive, multicolored buildings that right now dominate the 90-acre site off the New Jersey Turnpike, a façade that prompted Christie to once label the complex the “ugliest damn building in New Jersey.”
To help finance the stalled construction, company officials had been trying for months to raise more than $1.5 billion through a private loan. A statement issued by Triple Five late Friday indicated that it has now secured a total of $1.67 billion in private financing, led by J.P. Morgan.
“The construction loan paves the way for the completion of American Dream and allows us to aggressively move forward with the construction and opening of the project,” Ghermezian said in the statement.
Bond sale delayed several times
But Triple Five’s complicated finance plan also includes the issuance of $1.15 billion in tax-exempt bonds, to be backed by $350 million in state tax incentives and local redevelopment tax incentives worth up to another $800 million. Both the New Jersey Sports & Exposition Authority and a public-finance authority based in Wisconsin are also being used to facilitate the issuance of those bonds.
Despite winning approval last summer from key state agencies, including the NJSEA, 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 last missed deadline passed in January, with no comment coming from Triple Five or NJSEA officials.
But in the wake of Triple Five’s announcement last week, Wayne Hasenbalg, the NJSEA’s president and chief executive, said the agency is now hoping that a public offering for the $1.15 billion bond issue “will take place by the end of this week, with an approximate closing in mid-June.”
“For far too long we have been saying there is light at the end of the tunnel for the many years this project, through multiple developer groups, has tried to become a reality,” Hasenbalg said in a statement. “Finally, we are nearing the sunlight and Triple Five has demonstrated they are providing their own resources to back up the commitment they made from day one to bring this exciting project to the State of New Jersey.”
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-economic benefit for New Jersey of $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 $34.6 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.
While answering reporters’ questions yesterday, Christie also touted the economic boost that’s expected to occur this summer once construction at the site resumes. He also said the closing of Triple Five’s private financing “says something positive about the state’s economy as well.”
NJ Spotlight, an independent online news service on issues critical to New Jersey, makes its in-depth reporting available to NewsWorks.