New Jersey Calls Do-Over on Mega Mall Debt Authorization VoteBy
Non-profit threatened to file a law suit to block debt sale
Agency plans $1.2 billion issue for American Dream project
A New Jersey agency has scheduled a new vote on granting $1.2 billion of tax-exempt bonds to the developer of American Dream, the unfinished mega mall in the Meadowlands, after a non-profit group threatened to file a law suit to block the sale.
The New Jersey Sports and Exposition Authority, which owns the mall site, will vote Sept. 15 to readopt resolutions for the sale of bonds on behalf of Canadian developer Triple Five Worldwide, according to a meeting agenda. The bonds will allow the Edmonton, Alberta-based company, who also own the Mall of America in Minnesota, to complete the 2.9 million square-foot American Dream project. About $350 million of the debt is backed by grant money and another $800 million is payable from payments by the developer in lieu of taxes, known as a PILOT.
“It’s unfortunate that the NJSEA thought they could pull the wool over the eyes of New Jersey taxpayers by approving $1.15 billion in bonding for a failed mall during an emergency meeting in the dog days of August,” said Bruno Tedeschi, a spokesman for the non-profit New Jersey Alliance for Fiscal Integrity, in an e-mailed statement.
Last week, the non-profit cited "flawed procedures" used to push the plan through and demanded the sale be put on hold. The group said it would file an emergency lawsuit in the state court appellate division if the agency didn’t act by Sept. 12.
The non-profit group said the bond resolutions approved by the NJSEA board at its Aug. 25 meeting didn’t state the principal terms of the bonds, including interest rates and maturity dates, in violation of state law. In addition, the resolutions failed to explain why the bonds were being sold privately to a Wisconsin agency rather than through a competitive bid process and that NJSEA failed to give adequate public notice of the Aug. 25 meeting.
The New Jersey agency is selling the debt to the Wisconsin Public Finance Authority, which will market the unrated bonds to investors.
“No PILOT revenue stream or sales tax rebate stream has ever collateralized a bond issue of another state, and neither of the laws authorizing Redevelopment Area Bonds or Economic Redevelopment and Growth bonds allows it," the non-profit said in e-mailed statement last week.
The project, abutting the New Jersey Turnpike west of Manhattan, has failed to make several promised opening dates as developers ran out of cash. It now anticipates opening in mid-2018.
— With assistance by David Voreacos