The Christie Administration is in the final stages of closing a deal with a new developer to revive the moribund Xanadu retail and entertainment complex in the Meadowlands.
An official close to the deal said the state could provide as much as $400 million in economic development bonds to help the developer complete the $2 billion project. Xanadu was supposed to open before the recession but stalled because of management issues and the economy.
The new developer is Triple Five group, the owners of the Mall of America. The name will be changed to "American Dream@Meadowlands." The official said an announcement had been planned for Thursday but had to be postponed until early next week.
Talks continued between Triple Five and the lenders who took over the vacant Xanadu from Colony Capital, which replaced the Mills Group - the original developer.
Triple Five's Mall of America is twice the size of the current Xanadu footprint and includes over 500 stores and an aquarium. Triple Five, a Canadian based multinational held by the Ghermezian family, also owns the massive West Edmonton Mall in Canada. Four out of 10 of Mall of America's visitors are tourists.
From it's inception, Xanadu's proximity to the brand new Jets/Giants stadium, the troubled Meadowlands racetrack and the 20,000 seat IZOD Arena were all supposed to reinforce the Meadowlands as a major tourist destination. The hope is that Triple Five can make that happen for the Meadowlands before the 2014 Superbowl comes to town.
Last summer, Republican developer Jon Hanson led a fact-finding panel that looked at both ways to improve the fortunes of Atlantic City and options for the state to jump start Xanadu. Governor Chris Christie also wanted the panel to find a way to shrink the money-losing Sports and Exposition Authority, which was saddled with running both the racetrack and Izod Center.
A separate deal to have another private entity take over the Meadowlands racetrack is underway. Boosters of the Meadowlands makeover hope that Triple Five will take the Izod Center off the state's hands as well.
The project was built on state land and the original developer, the Mills Corporation, paid $160 million in advance lease payments to the financially troubled New Jersey Sports and Exposition Authority, which owned the land. Mills, a national developer that made major campaign donations to both political parties, eventually ran into financial and regulatory troubles. By 2006, Colony Capital, a privately held development and gaming company, took over but was unable to raise the money it needed to complete the project, and the banks foreclosed.
Jim Kirkos is the CEO of the Meadowlands Regional Chamber of Commerce, and he welcomed news of a possible deal. He said the massive multi-colored exterior of Xanadu — visible from the Turnpike — was instantly unpopular with the public, and the fact it stood incomplete for years made matters worse.
"It has been a real black eye for us in the Meadowlands - negative criticisms over the color of the building and the long delay," said Kirkos. "It has damaged the psyche of what goes on here in the Meadowlands, and quite frankly it does have an effect on economic development."
Kirkos said he has met the Triple Five team and was impressed
"They get the entertainment component, they get the destination component," he said. "That is what has us so encouraged."
In the summer, when Christie released the Hanson panel report, he said the panel had determined there still needed to be an additional $800 million spent on top of the $2 billion already spent by the two previous developers to complete the stalled project. Chrsitie said any public subsidy or bond offering would have to produce tangible benefits for the people of New Jersey.
"Now listen, if we can't come to an equitable deal and an opportunity for the taxpayers of New Jersey to participate, I am going to have to go to alternative two because I am not going to throw good money after bad and have there be no upside for the people of the state," Christie said.
Jeff Tittel with the Sierra Club is a long time critic of the project. He opposed it early on because it created a development zone that he said would undermine existing retail centers and further degrade the Meadowlands environment.
"It is the most valuable piece of property the State of New Jersey owns, and instead of being paid for the use of this property, we are going to be subsidizing them to the tune of at least $180 million, and maybe a couple of hundred million more," said Tittel. "At a time the state of New Jersey is laying off teachers, firemen, policemen, we have cut the clean energy programs. So we are giving out corporate welfare for an ugly mall at the same time we are cutting back on core programs. "
By Tittel's math, the state and entities like the Port Authority have already ploughed $900 million into the Xanadu project. The Port Authority and New Jersey Transit did spend close to $200 million dollars on a couple of mile rail spur line from Hoboken to the site that is now only used when there are major events at the existing Sports Complex.