The New Jersey Meadowlands Commission last week ended development plans with EnCap Golf Holdings LLC for the Meadowlands remediation project. It also denied Donald Trump’s request for additional time to secure financing to cure EnCap’s bond and loan defaults and to clean up the site.
In 2000, the commission granted development rights to EnCap, now renamed Cherokee Investment Partners II, in return for environmental remediation work on the 1,300 acres in northeastern New Jersey. Development plans included residential and commercial projects along with a golf course.
State officials now say that EnCap did not have the financial backing or knowledge to execute the clean-up work. Eight years later remediation on the Meadowlands has yet to be completed.
Wachovia Bank NA, as the letter of credit provider, now holds $314 million of bonds and state loans that were issued for the remediation project and are now in default.
In 2005, the New Jersey Environmental Infrastructure Trust and the Bergen County Improvement Authority sold a combined $209.8 million of bonds on behalf of EnCap. The state Department of Environmental Protection granted EnCap a loan for $104.9 million.
To move forward with the cleanup, the Meadowlands Commission will use $6 million of EnCap funds in an escrow account created for the remediation project and also pursue a performance bond supplied by AIG Insurance worth $148 million.
“My primary objective always has been to ensure that the contractually obligated remediation be carried out,” Gov. Jon Corzine said in a news release. He said the commission “will pursue that objective by the legal remedies available to ensure speedy completion of the needed environmental remediation.”
In January, Trump took over the clean-up project on behalf of EnCap, with the company agreeing to pay the Trump Organization $18 million over three years. The real estate mogul has said he would finance 100% of the total costs for the mixed-use development. In exchange, he is seeking development rights that would allow multiple high-rise residential projects. Original development plans called for low-rise housing.
Michael Cohen, a Trump attorney and manager of the remediation project, said state officials made an error in not granting an extension.
“We believe it’s a mistake on their part, but the fight is really a fight between the state and EnCap,” Cohen said. “It’s really not a fight with Mr. Trump.”
