Editor’s Note: East Rutherford passed a budget last night with a 17% municipal tax hike (or an average $400 property tax increase) to cover the financial hole left by NJSEA.
While construction on American Dream Meadowlands is not slated to begin any time soon, the megamall is already proving to be a mega-menace to surrounding communities.
A recent article in the South Bergenite indicated that the New Jersey borough of East Rutherford, the home of American Dream Meadowlands (ADM), has yet to pass a municipal budget due in part to a missing $3 million payment from the New Jersey Sports and Exposition Authority (NJSEA) for an upfront Payment in Lieu of Taxes (PILOT) owed by Triple Five, the developers of American Dream Meadowlands.
Here’s the back story: Since the state took over the Meadowlands property in East Rutherford, the NJSEA, which is the governmental agency that oversees the Meadowlands, entered into an agreement with the borough to provide “21 percent of East Rutherford’s total tax levy as compensation for the facilities constructed on this property.”
According to East Rutherford Mayor James Cassella, there were additional agreements in 2006 made between the borough and the NJSEA for up to $8.6 million in advance for expenses incurred from the construction and operation of ADM (then known as “Xanadu Meadowlands”). East Rutherford has never sought to enforce that agreement until now.
Cassella says East Rutherford “fronted the money” for a new 28,000 square foot police station and for sewer hookups to the mall and even hired additional police officers, all to support ADM and in expectation of receiving revenue owed to East Rutherford by NJSEA. As a consequence, the borough is now “saddled with significant debt” hence, the demand for the $3 million.
According to Alan Marcus, spokesman for Triple Five (and also adviser and campaign strategist for Bergen County Executive Kathleen Donovan) East Rutherford will not see a penny until ADM opens for business stating that the time for PILOTs to be made have not been triggered. However, the opening date is yet to be determined. While Marcus stated that the project is progressing, completing the permit process and financing, the NJSEA has yet to approve the required amendment to its Master Plan which is needed to give the project the green light. Approving this amendment is not without issues as there remains a legal dispute between the Giants/Jets and NJSEA as to the affect American Dream will have on game days. Finally, questions still remain as to whether Triple Five has secured the final bricks in the project’s complicated financing scheme. In July 2011, Governor Christie signed into law a bill which made American Dream eligible for tax incentives under the Economic Development Authority’s Economic Redevelopment and Growth (ERG) Program; however, this was only the beginning. As of this summer, Triple Five still needed over $1 billion even after Deutsche Bank agreed to provide a $700 million loan.
Sadly, the financial woes associated with American Dream will be a nightmare for New Jersey. The additional traffic associated with ADM’s 55 million expected annual visitors is destined to strain the budgets and quality of life of the other 13 surrounding municipalities and the state: more congestion, increased wear and tear on roads and bridges and the need for greater police presence to name of few. Triple Five is relying heavily on mass transit to relieve some of the traffic burden, calling for regular rail service and minimal increased bus service, but the developers have yet to offer any financial subsidy to the already underfunded NJTransit. Local mayors and the Hackensack Meadowlands Municipal Committee passed resolutions calling for both a comprehensive traffic study as well as a developer contribution to NJTransit’s operating costs. Triple Five has yet to provide either.
As it stands now, without the PILOT and NJTransit subsidy, the taxpayers of East Rutherford and New Jersey, as a whole, are on the hook for the demands of ADM. Many issues remain outstanding, but one thing we know for sure is that even though American Dream has yet to be built, it is already squeezing budgets.