The developer of New Jersey's long-stalled American Dream Meadowlands project is considering a new strategy for the $1 billion in bonds it plans for the large-scale shopping and entertainment complex.
Triple Five Group, which replaced Xanadu as developer in 2013, has delayed a previously-planned spring sale of two sets of bonds for the project, including $675 million by the borough of East Rutherford, N.J. and $350 million from the New Jersey Sports and Exposition Authority.
The Edmonton, Alberta-based company said it is exploring with underwriter Goldman Sachs changes to the offering that include switching the $675 million deal to tax-exempt bonds from taxable and using a different conduit issuer.
"We are now of the belief that a tax-exempt offering, due to recent market shifts, may be the more favorable market for offering at this time," said Triple Five spokeswoman Debbie Patire. "We are working with the Borough, the State of New Jersey, Goldman Sachs and our financial advisory team to finalize the best path to bring a tax-exempt issuance to market as quickly as possible."
East Rutherford Mayor James Cassella said there is a strong chance the borough will not be issuing the $675 million bonds on behalf of Triple Five as originally planned and that Wisconsin's Public Finance Authority has been mentioned as a potential new conduit issuer.
PFA, which was created by the Wisconsin legislature in 2010, touts its ability to issue tax-exempt and taxable conduit bonds for public and private entities nationwide. It has issued nearly $4 billion of bonds for more than 150 projects in 40 states.
A call to the PFA was not immediately returned.
Cassella said it would be challenging for East Rutherford to issue the bonds as tax-exempt because of added regulatory requirements and expenses.
The municipality struck an agreement with the NJSEA in 2004 to draw down on an $8.6 million bridge loan from the authority to cover infrastructure, equipment and services associated with the retail project. The mayor said he expects a summer sale, but emphasized that with so many past delays nothing would surprise him in terms of a timetable.
Construction on the massive development next to MetLife Stadium was first halted in 2009 after a subsidiary of Lehman Brothers missed loan payments following a bankruptcy filing.
The mayor said no recent work has been done on the project.
"It would be a real uphill climb to get everyone on board and go through this process again," said Cassella. "I'm looking forward to hopefully something good finally happening over there soon."
East Rutherford, eight miles west of Manhattan, had its general obligation bond rating downgraded two notches to Baa1 in November 2012 by Moody's Investors Service due in part to revenue uncertainty from the American Dream project.
The New Jersey Economic Development Authority has estimated $3.2 billion of new construction funding from the development with plans for 2.3 million square-feet of leasable retail and restaurant space as well as a 346,100 square-foot amusement park with an indoor water park.
Separately, a new casino has also been proposed next to the planned mall at the Meadowlands Racetrack if New Jersey voters approve a referendum in November enabling such gambling venues to operate outside of Atlantic City.
