Municipal bond investors may soon give a jolt to a long-stalled retail and entertainment complex in New Jersey's Meadowlands, which would feature the nation's first indoor ski slope.
The American Dream Meadowlands project in East Rutherford was first proposed in 2003, but construction ground to a halt six years later after a subsidiary to Lehman Brothers missed loan payments following the former Wall Street giant's bankruptcy.
Triple Five Group took over the development from Xanadu in 2013 and East Rutherford, N.J. Mayor James Cassella is now pushing for the project to finally become a reality with proceeds from $675 million in bonds. The East Rutherford Borough Council introduced an ordinance on May 19 to authorize the sale of $675 million in bonds on behalf of Edmonton, Alberta-based Triple Five and Cassella is hoping for final approval sometime this summer.
"It's an economic engine that could spur other economic development," said Cassella, a Republican who has served as East Rutherford mayor for 20 years. "It will bring in revenue for the state through the sales taxes it would generate."
East Rutherford officials discussed a financing agreement to issue $550 million in bonds two years ago; since then, Cassella said, the plan has evolved to include an additional $125 million and the option to go with a taxable sale.
Cassella said the plan now is to issue taxable bonds since the tax-exempt route would result in more federal tax compliance requirements that would increase costs.
Developer Triple Five would repay the bonds; Cassella said East Rutherford, population about 9,000, would not be on the hook for the debt.
He would like the New Jersey Local Finance Board to approve the financing agreement at its June 10 meeting, which would allow East Rutherford to finalize the bond sale in July.
Triple Five officials declined to comment on the bond proposal.
The website for American Dream Meadowlands said a highlight of the project will be the first indoor ski and snowboard park in the Western Hemisphere. Other unique features include an indoor water park, amusement park, an observation wheel with view of the Manhattan skyline, an aquarium and a performing arts center for live concerts.
The Borough of East Rutherford, in Bergen County, had its general obligation rating downgraded by Moody's Investors Service to Baa1 from A2 in November 2012 due in part to revenue uncertainty from the American Dream project.
The municipality struck an agreement in 2004 with the New Jersey Sports and Exposition Authority (NJSEA) to draw down on an $8.6 million bridge loan from the agency to cover infrastructure, equipment and services associated with the large retail project. The NJSEA oversees the Meadowlands Sports Complex, which is anchored by MetLife Stadium, home of the National Football League's New York Giants and New York Jets.
The NJSEA and New Jersey Local Finance Board did not respond to calls seeking comment on their roles with the American Dream Meadowlands proposal.
Moody's analyst Josellyn Yousef said both Bergen County and East Rutherford would benefit financially from American Dream from payments in lieu of taxes revenue along with income tax proceeds from additional jobs that would be created. She said Triple Five's strong record of development projects with the Mall of America in Minneapolis and West Edmonton Mall in Canada offers some potential benefits to the area and sales tax revenue for New Jersey.
"If they have some similar amount of success it could prove very beneficial," said Yousef. "Potentially I could see sales tax revenue benefiting the state."
Professor Marc Pfeiffer, assistant director of Rutgers University's Bloustein Local Government Research Center, is bullish on American Dream because of its unique attractions and the potential to draw visitors from all over the northeast by car and train.
Some state lawmakers are pursuing legislation to authorize casinos in New Jersey outside Atlantic City;
Pfeiffer said a casino on the Meadowlands property would also enhance the area as a destination site beyond football.
Pfeiffer added that if adequate train transportation can be set up to the Meadowlands many New York City tourists could heading across the Hudson River as part of their vacation.
"I think the developers are fiercely smart people who clearly know they are doing as evidenced by their past projects," said Pfeiffer. "I think it's going to be incredibly successful."
New Jersey State Sen. Richard Codey, D-Livingston, recalls working to try and salvage Xanadu when he served as acting governor from late 2004 to early 2006 and questions whether project can still be viable a decade later.
"We should have exchanged that Xanadu for neverland," Codey joked referring to how long the project has been discussed. "It's embarrassing to the state."
Codey said a heavily retail-oriented development like American Dream likely won't generate excitement in a state already saturated with malls. He added that the indoor ski slope plans are unique, but does not see that as enough of a drawing card and that it may still only be attractive in the winter season.
"It's not going to make or break the state," said Codey, who served as New Jersey senate president from 2004 to 2009. "If this doesn't happen soon it may be time to wave up the white flag."
Cassella said the water park and ski slope could in particular attract visitors from around the New York City metropolitan area. He sees the bond proposal with Triple Five as the last hope to put the finishing touches on this long-awaited retail development.
"If there is any company that can do it, it's Triple Five," said Cassella. "I think if this doesn't happen it is back to the drawing board."