The New Jersey Sports and Exposition Authority on Tuesday
took several steps to get completion of American Dream Meadowlands, the
shopping and entertainment complex, back on track when it approved the issuing
of up to $1.15 billion in bonds for the stalled project, with a Wisconsin
agency likely being the actual conduit for the financing.
The sports authority, at a packed special meeting at its
headquarters in Lyndhurst, agreed to submit an amended application to the
state's Local Finance Board regarding the bonds that Canadian developer Triple
Five needs to resume work on the East Rutherford mega-complex. The Local
Finance Board is expected to take up the matter at its meeting on Wednesday.
Tony Armlin, Triple Five’s vice president of development
and construction, shakes the hand of Bob Satriano, a representative of a
carpenter's union as Alex Lopez, a carpenter union representative, looks on at
a special meeting of the New Jersey Sports and Exposition Authority in
Lyndhurst on Tuesday, Aug. 9, 2016.
The sports authority approved two resolutions related to
American Dream's financing. In the first resolution, the sports authority said
it is willing to issue $800 million in non-recourse bonds that the borough of
East Rutherford had originally been set to issue for American Dream.
Non-recourse means bond buyers do not have the option of seeking restitution
from the issuers of the bonds even if the project fails. In May the East
Rutherford Borough Council voted to shift responsibility for issuing that set
of bonds to the sports authority, and that's one of the matters before the
Local Finance Board.
The sports authority previously had agreed to issue $350
million in bonds for American Dream, so if in fact it does take on the
borough's bond obligation it will bring the total to $1.15 billion in bonds for
the agency.
"I want to emphasize to everyone ... that there is
nothing in this that puts the taxpayers or any New Jersey entity at risk,"
said Bob Yudin, a sports authority commissioner. "If this project should
fail, the only people at risk are the bondholders."
The second resolution essentially grants Triple Five
permission from the sports authority to ask the Public Finance Authority of
Wisconsin to act as the public issuer of the two sets of tax-exempt bonds,
according to that resolution. The Wisconsin agency is one of a few state-based
authorities that have the statutory power to issue tax-exempt bonds for
projects outside its own borders.
There have been countless delays in the American Dream
project, with the most recent holdups over the financing needed to compete it.
"I'm comfortable that if we don't take these
actions, this project will not be completed," said Steven Plofker, a
sports authority commissioner. "It is necessary that we take action
today."
But on Tuesday after the sports authority meeting Triple
Five filed its application with the Public Finance Authority for the American
Dream bonds, according to Tony Armlin, the company vice president of
development, and the Wisconsin agency confirmed that it had received it. The
Wisconsin agency will be able to get the bonds to market quickly, Armlin said.
The developer is also looking to close on $1.5 billion of
private financing, a senior construction loan, for American Dream by the end of
this month, working with JP Morgan Chase & Co. and Deutsche Bank AG, Armlin
said. Triple Five is targeting the end of September for the issuing of its more
than $1 billion in bonds, which will be underwritten by Goldman Sachs Group
Inc., Armlin said.
If that goes according to plan, construction on the
stalled project would resume in September, Armlin said, with a planned opening
of American Dream in the summer of 2018.
About a half-dozen local union leaders spoke at the
meeting to urge the sports authority to pass the resolutions, including Rick
Sabato, president of the Bergen County Building and Trades Councils.
"We started this project and it came to a standstill
because of the financing,'' Sabato said. "We need to get these resolutions
passed today. We have about 5,000 jobs waiting in the wings to get this done.
That's construction jobs ... Once they open, it will probably be another 18,000
jobs."
One audience member who opposed the actions on American
Dream, Don Evanson of Secaucus, told the sports authority that malls are
closing and struggling across the country. But Sabato disputed that North
Jersey had that issue, saying the Westfield Garden State Plaza and The Outlets
at Bergen Town Center, both in Paramus, and The Shops at Riverside in
Hackensack are all doing renovations in order to compete with American Dream.
"In Bergen County, the malls are not failing,"
Sabato said. "We just ripped the whole back of the [Riverside] mall off to
put up a movie theater."
The $800 million portion of the bonds that will be
reviewed by the Local Finance Board relates to a payment-in-lieu of taxes, or
PILOT, agreement Triple Five has with East Rutherford. And the state Economic
Development Authority has already approved the other $350 million of the bonds.
"When we close, they [Wisconsin] buy those two
streams of bonds and then they issue them publicly, we don't," Wayne
Hasenbalg, president of the sports authority, said after the meeting.
"They're going to be the public issuer, we're not."
East Rutherford had been slated to issue $675 million in
bonds for American Dream, but the dollar amount on that group of bonds has
risen to $800 million for a variety of reasons, Armlin said.
"The financing markets have changed, they've heated
up so the cost of borrowing is more expensive," he said.
"Additionally, we have an extended-construction-project situation. That's
impacted some of our construction costs. We've incorporated more design
improvements related to tenants and their interest in the project. We have a
phenomenally successful leasing program going on right now."
State Senate President Stephen Sweeney, D-Gloucester,
told The Record's Editorial Board on Tuesday that he believes American Dream
will be successful if it ever opens.
"It's got to get done,'' Sweeney said of the
project. "I've seen the numbers [economic projections], and it made sense.
It's like a tombstone right now. To leave it sitting there, it's just an ugly
reminder of a failed project.''
The resolution regarding the $800 million in bonds also
says the sports authority hasn't made a decision on whether it will issue that
debt. The sports authority would have to hold another meeting to vote on
actually issuing the bonds, Hasenbalg said.
Source: North
Jersey.com
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