A New Jersey board has given the go-ahead for an $800 million bond sale from a Wisconsin-based conduit issuer to finance the completion of a long-stalled mega mall.
The Local Finance Board approval Wednesday came a day after the New Jersey Sports and Exposition Authority voted to allow American Dream Meadowlands developer Triple Five Group to team up with the Public Finance Authority for two tax-exempt bond issues. Triple Five, which replaced Xanadu as developer in 2013, had previously planned to issue $675 million in taxable bonds through the borough of East Rutherford, N.J. and $350 million from the NJSEA, but instead opted to explore a tax-exempt transaction through the PFA due to market shifts.
PFA was formed by the Wisconsin legislature in 2010 and has issued nearly $4 billion of bonds for more than 150 projects in 40 states. Scott Carper, a program manager for the PFA, said the issuer received an application from Triple Five on Tuesday and is still compiling the details. He said the goal is for financing of the deal to close in mid-September.
"The PFA is very excited to be assisting with such a great project," said Caper. "This is exactly why the PFA was created back in 2010 to be a resource for local government to help spur economic development across the country."
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 New Jersey Economic Development Authority has estimated that the American Dream development will result in $3.2 billion of new construction funding. Plans call 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.
East Rutherford Mayor James Cassella said the newest financing arrangement is a positive for his local government since the bonds are non-recourse.
"We're still going to receive the financial benefits of the project without having to issue the bonds," he said. "This is the best case scenario."
East Rutherford, which is located eight miles west of Manhattan, had its general obligation bond rating downgraded two notches by Moody's Investors Service to Baa1 in November 2012 due partly to revenue uncertainty from the American Dream project. The municipality had struck an agreement in 2004 with the NJSEA to draw down on an $8.6 million bridge loan from the authority to cover infrastructure, equipment and services associated with the development.
