American Dream’s $1.15 Billion Muni Bond Issue Challenged AgainBy
Resolutions authorizing bonds violate state law, group says
Legal briefs scheduled to be filed Sept. 23 in Appellate Court
A nonprofit organization representing business owners and taxpayers asked a court for a second time to halt the planned sale of $1.15 billion in tax-exempt bonds to finance American Dream, an unfinished mega mall begun more than a decade ago in the New Jersey Meadowlands.
The New Jersey Alliance for Fiscal Integrity, which has refused to disclose its backers, filed a “notice of appeal” Wednesday with the Appellate Division of the Superior Court of New Jersey, saying the resolutions authorizing the bonds violate state law.
The New Jersey Sports and Exposition Authority, which owns the mall site, voted last week to readopt resolutions for the sale of bonds on behalf of Canadian developer Triple Five Worldwide, after amending resolutions that the nonprofit said were passed by “flawed procedures.” The agency had originally approved the debt sale on Aug. 25.
The bonds will allow the Edmonton, Alberta-based developer, which also owns the Mall of America in Minnesota, to complete the 2.9 million square-foot American Dream project. An $800 million series of bonds is backed by payments by the developer in lieu of taxes, or PILOTs, and another $350 million is payable by state grants Triple Five will receive if the project meets sales tax revenue targets. The grant payments are subject to appropriation by the state legislature.
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.
The Sports and Exposition Authority is selling the debt to the Wisconsin Public Finance Authority, which will issue its own debt secured by the PILOTs and grants to investors. The Wisconsin agency is an “economical and efficient” way to bring the bonds to market, Tony Armlin, Triple Five’s vice president of development and construction, said at a meeting last month.
The New Jersey Alliance for Fiscal Integrity said in a letter Tuesday to sports and exposition authority chairman Michael Ferguson that state law prohibited using payments in lieu of taxes as collateral for bonds issued by another state.
“The WPFA’s bonds, however, will lack any substance of their own and serve as a mere shell,” the letter said. “In other words, the NJSEA continues to seek to do indirectly, through this thinly-veiled two-step process, something that is not even contemplated by the RAB financing law.”
In addition, state law prohibits the agency from issuing bonds whose payments are subject to to appropriation by the legislature without getting power to do so by the legislature, the group wrote. Appropriation-backed bonds can only be used the fund the repair and improvement of existing facilities not new ones, the letter said.
The bond resolutions also violated New Jersey law because they were issued without public notice and comment, the group said.
Briefs are scheduled to be filed by both parties on Sept. 23.