WNYC's Bob Hennelly is an award-winning investigative journalist. While at WNYC he has reported on a wide gamut of major public policy questions ranging from immigration and homeland security to power outages and utility mergers.
Stucknation: Christie's Xanadu Nightmare Becomes Someone's 'American Dream'
Friday, May 06, 2011 - 04:34 PM
You're an ambitious, high-profile Republican governor of a state in chronic budget crisis and in a nation with a sputtering recovery. The state's corrupt "pay to play" politics, left you a two-million-square-foot mall monstrosity named Xanadu that's yet to open. Its exterior is violently ugly and it is built on state land so close to the Big Apple that its value is through the roof. Worse yet, in just three years, the eyes of the world will be on the monstrosity because your brand new NFL stadium next door is hosting the Superbowl in 2014.
Who are you going to call? Who can fix this? The Air National Guard?
New Jersey Governor Chris Chrsitie dialed Triple Five, the Canadian developer of the Mall of America. The firm is a privately held, multi-faceted conglomerate owned by the the Ghermezian family, a can-do-clan of Persian Jews who left their native Iran in the 1960s for Montreal.
By 1981, they placed themselves on the mall map with the opening of their five million square foot West Edmonton Mall in Alberta, BC. They make mega malls into stand alone international tourist destinations that they say end up boosting the broader region where they are located. But invariably they also solicited some form of public subsidy and special consideration to pull it all off.
On Tuesday Gov. Christie told a crowd of reporters in the cavernous Xanadu shell that Triple Five's re-branding of the ill-fated mall as the "American Dream Meadowlands" was about more than just shopping.
“You have to give people a sense of optimism and hope that things are changing here. When we took over here in 2009 there was a real sense both in this region and across the state that this type of large-scale, private development couldn't happen again.”
Of course Christie attributes Triple 5's interest in the Meadowlands to his commitment to lower taxes and less regulation. He did sweeten the invitation with $200 million dollars in economic development aid funded by sales tax revenue from the complex once it opens. And he hopes he can get them to takeover the Sport's Authority's aging 20,000 seat Izod arena that's right next door to Xanadu.
Last summer Governor Christie told reporters that if the state extended any public subsidy to a developer to finish Xanadu he would see to it that taxpayers benefited from the deal in a tangible way. When pressed on that question at last week's Triple Five presser he said details and terms where still being worked out.
State Senator Loretta Weinberg, a Democrat from Bergen County, wants Governor Christie to release the terms of the deal and more specifics on the development itself.
“I remain concerned that this megamall development could become a nightmare for Bergen County residents and State taxpayers who will be footing the bill for needed public infrastructure improvements and development incentives for years," said Weinberg. "We ought to engage State taxpayers and local residents in a discussion of the merits and pitfalls of expanding Xanadu’s footprint, and investing more funds into an already costly development."
Christie's remarks at the "American Dream" event harkened back to a Reaganesque kind of optimism in the face of some long odds. The former Mills Corporation and than Colony Capital spent more than $2 billion dollars on Xanadu and neither could get it done.
Throughout New Jersey and the entire country, malls of every description are vacant and falling into disrepair. It's a kind of a Great Recession blight woven throughout our landscape. Bloomberg and Reuters reported that in the first quarter of this year vacancy rates at American malls were at their highest rate in a decade.
And than there's global warming and the role mallification might play in it.
To make the redo of Xanadu fly, you have to suspend the gravity of conventional wisdom with the razzle dazzle of show business At Christie's press conference there was just such a showman - Nader Ghermezian, the avuncular chairman of Triple Five now in his 70s. What he lacks in physical stature he makes up with in world-class salesmanship.
In halting dramatic voice he drew the reporters in. "Today we are proud to announce that we will be developing the world's largest and most comprehensive, retail, entertainment, amusement, recreation and tourism project ever built," said Ghermezian. "This project, by measurement, bar none does not exist anywhere."
Even though the concept of the 'shopping mall' is historically linked to the American experience these days the list if the world's ten largest malls are dominated by Asian projects.
The largest is New South China Mall in Donneguan, China at 6.46 million square feet. By comparison Triple Five's West Edmonton Mall in Alberta is 5.3 million and the company's Mall of America in Minnesota is 4.2 million square feet.
Triple Five says its ultimate build out of the complex, including the adjacent state-owned 20,000-seat Izod Center, and a possible hotel complex, will bring the total size of the project in at 7.5 million square feet, which Triple 5 says would make it the largest in the world.
In the first phase, Triple 5 is going to add another million square feet to Xanadu's existing 2 million square foot footprint. There will be a one-of-a-kind indoor amusement park under a glass dome with a view of the New York City skyline. There will be Hawaii themed water park with six foot waves, a 16-story indoor ski slope, and 26 screen movieplex.
“Half of the people that they are going to come to this projects are going to be from out of town, tourists, nationally and internationally,” said Ghermezian. He predicts the complex will draw 55 million people a year, and said his company's Mall of America in Minnesota is a well-established international destination. They offer 70 travel packages originating from 34 countries on 5 continents. Triple Five also says the project would employ almost 9,000 construction workers and create 35,000 permanent jobs.
And Ghermezian's says the prospects are even brighter with Newark Liberty Airport so close. He said Triple Five would work behind the scenes to encourage airlines to expand their Newark layover time for international flights and offer passing through tourists a way to check their bags at the Mall and have an easy link back to the airport.
Of course there were no critics at the presser. Observing it all was Captain Bill Sheehan, the Hackensack River Keeper who was glad to see some kind of progress on the moribund site. But he looked incredulous. In the age of global warming how could reporters not have asked about the impact of this mega-mall - purportedly visible from space - on the environment?
“I have some concerns about the extraordinary amount of energy this is going to use. We can’t move something like this forward thinking that it’s the 1900s,” said Sheehan.
NJ Sierra Club Chapter Director Jeff Tittel, a longtime Xanadu critic, was not invited to the rollout. By Tittel's calculation, between a $200 million dollar rail-spur and the infrastructure rebuild, the public already has $900 million invested in the mall project. He says Chrsitie's decision to sign off on something on the scale of the American Dream/Meadowlands had to be considered in the context of Christie's controversial decision to kill the rail tunnel under the Hudson between New Jersey and New York.
"The American Nightmare Mall will be the biggest source of greenhouse gasses in NJ after the Governor," said Tittel. "The Governor can give $200 -$350 Million to subsidize a mall, but will kill a mass-transit project. The irony is the tunnel could have been used to get people to the mall - now they will have to drive gridlocked Northern New Jersey. The developer should change the name to Xantac because of all the ulcers it will give to taxpayers stuck in traffic."
Triple Five spokesperson Maureen Bausch says Mall of America has a solid environmental record going back twenty years. "Our building in Minnesota was green even before it was cool to be green," she said. "We recycle over 70 percent of everything we use in that building, from the food in the food court that goes to the pig farmers, to all of our garbage."
But the environmental debate aside, what does a governor do with two million square foot white elephant? Evidently he has to find a three ring circus.
Economist James W. Hughes, Dean of the Bloustein School of Planning and Public Policy at Rutgers, was a critic of the initial public-private partnership that spawned Xanadu.
He says New Jersey is malled out. "In 1990 we had 20 square feet of retail space per capita. By 2010 it had doubled to 40 square feet. We are just an 'over stored' state and nation," said Hughes.
Dean Hughes said for the American Dream to fly with international customers boosters would have to count on a weak dollar. He concedes that if you are going to build any mall with the odds of making it it has to be the world's largest. "You would at least have a unique asset and by being unique like that it could grease the financial skids."
But Wharton Marketing Professor Steven Hock thinks Chrsitie's making a supersize mistake. Hoch says he understands Christie's political reasons to 'go bigger or go home' but says there is no business justification.
"I don't see 7.5 million square feet mall as an international draw in New Jersey. I just don't see it. There are so many other things going on," Hock says referring to the metro region's existing dynamism.
Hock predicts that if American Dream is built it will further undermine the rest of the region's retail space market. "It is just going to transfer the problem on to a whole bunch of other people," says Hock.
Well isn't that what politics is all about? What's Governor Christie supposed to do? Leave it vacant until the Superbowl as a shrine to the bankruptcy of American and global consumerism?