A New Jersey appellate court rejected an effort to block a $1.15 billion bond sale to complete the long-stalled American Dream shopping and entertainment development at the Meadowlands in East Rutherford.
A three-judge panel in the state's Appellate Division dismissed an appeal from a newly formed nonprofit group that attempted to block the bond transaction claiming that that the New Jersey Sports and Exposition Authority used "flawed procedures" when approving the bond issuance. The New Jersey Alliance for Fiscal Integrity filed its appeal Sept. 23; the appellate court's decision, handed down late Tuesday, says the NJSEA complied with the law.
"The NJSEA bond sale terms will put the buyer clearly on notice that these are non-recourse bonds, not backed by the full faith and credit of the state, and the bondholder takes the sole risk of non-payment on its investment," the court ruling said.
The alliance, which is a 501c(4) organization, attempted to overturn a 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 (PFA) to market to investors. The transaction will include $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 property, which is next to MetLife Stadium. Triple Five opted for a tax-exempt transaction through the PFA, citing market shifts, after previously plans to issue $675 million in taxable bonds through the borough of East Rutherford and $350 million from the NJSEA.
"This challenge is over and we can now focus all of our efforts on closing the project financing and completing the construction of this world-class retail and entertainment destination," Tony Armlin, senior vice president of development and construction at Triple Five, said in a statement.
Triple Five officials did not provide a timetable for the bond sale, for which Goldman Sachs is the lead underwriter, but said they hope the American Dream development can open in early 2018. The developer said using Wisconsin's PFA as a conduit issuer will provide the most efficient and cost effective strategy to bring the bonds quickly to the market.
Construction of the American Dream development was first halted in 2009 after a subsidiary of Lehman Brothers missed loan payments following a bankruptcy filing when Xanadu was the developer. 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.
"After years of frustration and challenges the NJSEA is pleased that the American Dream is now poised to become a reality," said NJSEA spokesman Brian Aberback. "This vital project can now proceed with putting thousands of people to work and ultimately providing visitors a world class entertainment and shopping experience."
The New Jersey Alliance for Fiscal Integrity did not respond to requests for comment on the court decision