An opponent of the bond financing plan for the American Dream megamall in East Rutherford, N.J. is going to court to block the transaction.
The New Jersey Alliance for Fiscal Integrity filed a
The alliance is a nonprofit 501c(4) organization, a designation that permits political activity without requiring disclosure of donors.
The alliance's
It wants the sports and exposition authority to not issue the tax-exempt bonds for American Dream, accusing the entity of using "flawed procedures" when approving the sale.
Its appeal seeks to overturn the Aug. 25 vote by the NJSEA that authorized the sale of the bonds on behalf of American Dream developer Triple Five to be then purchased by Wisconsin's Public Finance Authority to market to investors.
The planned non-recourse bond transaction includes $800 million connected to a payment-in-lieu-of-taxes agreement between Triple Five and East Rutherford with the remaining $350 million backed by state-approved tax breaks on anticipated sales tax revenue at the site.
"This bond deal is an illegal shell game designed to dupe the taxpayers of two states into paying for the construction of a private mall for wealthy developers," NJAFI spokesman Bruno Tedeschi said in a statement. "In their haste to rush this through in the dog days of August when they thought nobody was paying attention, the NJSEA acted in violation of several state laws that would make the issuance of these bonds extremely problematic."
Among the legal arguments is that the authority illegally "designates American Dream's PILOT payments as collateral for another state's debt issue."
It also argues that the bond resolutions did not state the principal terms of the bonds, including interest rates and maturity dates, which violates New Jersey law. The organization claims that NJSEA resolutions failed to explain why the bonds are being sold privately to a Wisconsin agency rather than through a competitive process in the open market required by an
"If these bonds are issued and found to be illegal, giving back the money would be a fiscal nightmare and an indelible blot on New Jersey's credit rating and fiscal reputation," Tedeschi said. "We hope the NJSEA will give serious consideration to the issues we raised and act appropriately."
If not, the organization plans to move forward with the appeal.
Triple Five, which replaced Xanadu as developer in 2013, opted for a tax-exempt transaction through the PFA due to market shifts after it previously planned to issue $675 million in taxable bonds through the borough of East Rutherford and $350 million from the NJSEA. Construction of the development, which is located next to MetLife Stadium, was first halted in 2009 after a subsidiary of Lehman Brothers missed loan payments following a bankruptcy filing. Project highlights include 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 and an indoor ski slope.
The press offices for Triple Five and the NJSEA did not respond to requests for comment.
