July 24 (Bloomberg) -- Less than seven months before the National Football League’s 2014 Super Bowl comes to New Jersey, the American Dream Meadowlands entertainment and shopping center should be preparing for an onslaught of visitors to the region.
Instead, wire fence and weeds surround the unfinished project, whose facade of multicolored rectangles fronting the turnpike was once called the “the ugliest damn building in New Jersey, and maybe America,” by Governor Chris Christie. Holdups over financing, property control, lawsuits and labor contracts have stalled the $3.7 billion, decade-old project.
Plans for the mega-mall about 10 miles west of Manhattan near the Meadowlands Sports Complex include the nation’s first indoor ski slope and a theme park. Christie, who approved state grants for the project, had expected it to open before the Super Bowl, which organizers say may pump $550 million into the area’s economy. Now he says his hands are tied as the developer and the NFL’s New York Jets and Giants argue in court over traffic.
“I personally can’t do anything more than what’s already been done,” Christie told reporters on July 17. “We’re within a window now where I think it would be very difficult to have anything significant open in time for the Super Bowl.”
Christie, 50, is the fourth governor to deal with the project that is on its second name and its third developer. Formerly known as Xanadu, the mall in the shadow of MetLife Stadium, the Izod Center and the Meadowlands Racetrack in East Rutherford has been plagued by delays and financing difficulties since Mills Corp. was picked to help build it in 2003.
Mills, now a unit of Indianapolis-based Simon Property Group Inc., ran out of money and Thomas J. Barrack Jr.’s Santa Monica, California-based Colony Capital LLC took over in 2006. Construction foundered again after a Colony backer, Lehman Brothers Holdings Inc., entered bankruptcy in 2008. A group of five lenders assumed control of the development in August 2010.
Triple Five Group, an Edmonton, Alberta-based developer, agreed with Christie in December 2010 to take over the project. It planned to invest $1.76 billion, after $1.9 billion was spent by previous companies, to create a 7.5 million-square-foot (697,000-square-meter) retail goliath that would be the world’s largest mall. After objections from the Jets and Giants, the project’s size has been cut back to 2.8 million square-feet.
Triple Five, owned by Edmonton’s Ghermezian family, scrapped the Xanadu name and veered from the retail-heavy plan, adopting the entertainment component from two of its properties, the Mall of America in Minnesota and the West Edmonton Mall. In May 2011, it projected American Dream would open in 2013 and would attract 55 million visitors a year. Since then, the company has scaled back its forecast to 40 million visitors.
Its plan called for attractions including a skydiving simulator, an ice-skating rink and domed-over water park, along with 250 shops and 70 restaurants. In May, it received permission from the New Jersey Sports and Exposition Authority, which owns and controls the site’s land, to add a glass-enclosed theme park inspired by DreamWorks Animation SKG Inc. movies.
The mall site is near MetLife, an 82,500-seat, open-air stadium that opened in 2010. The New York Football Giants Inc. and New York Jets LLC sued Triple Five and the sports authority on May 30, saying the mall “will clog the complex’s already congested transportation networks.” Triple Five, as Ameream LLC and Ameream Developer LLC, countersued, accusing the teams of obstructing the development.
The company, meanwhile, continues to negotiate with lenders that still hold the reins on the project. Alan Marcus, a Triple Five spokesman, said it plans to resume construction next month.
More than a third of the $1.76 billion in financing would be in the form of incentives and tax-free borrowing, pending approvals from state and local governments.
Key to the financing is the Bergen County Improvement Authority, which hasn’t seen revenue projections and tax valuations for its biggest-ever deal. Triple Five is urging the authority to be the conduit issuer of $600 million in bonds tied to a state development grant and payments in lieu of taxes.
“We really can’t even explain anything to our commissioners because we haven’t received anything,” Robert Garrison, the authority’s executive director, said on July 18.
Marcus said Triple Five is working on state approval for the bonds, and declined to release any revenue projections. The developer, he said, is looking for “the right-priced money.”
Without a tax-exempt municipal-bond commitment, “we would not be able to complete, in private markets, the capital structure necessary to complete the project’s financing,” Tony Armlin, a Triple Five vice president, said at an authority meeting on Feb. 21.
Joel Brizzi, a councilman of 18 years in East Rutherford, a borough that’s reviewing its financing role, said he remains optimistic the project will be finished. If construction begins next month, Brizzi said by telephone July 18, “you go down with a weed wacker and spray, and you throw mulch down and next thing you know, it looks pretty.”
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