The tentative future of the $1.3 billion Xanadu retail/entertainment complex currently under construction off Route 3 has come under close scrutiny, as the financial problems facing one of its developers, Mills Corp., have recently been made public.
According to published reports, the Virginia-based Mills Corp. said its 2005 earnings would be significantly lower than they had expected. Mills also cut 77 jobs recently, and announced that J.P. Morgan Securities and Goldman Sachs had been hired to research a potential sale of the company or some of its assets. It was additionally reported that the company would push back the March 16 deadline to file its 2005 annual financial statement.
In further company structure changes, Mills named Mark S. Ordan as its new chief operating officer last week. Ordan was to reportedly start the new position on March 6 and assume control of real estate operations.
Xanadu, a 2.2-million-square-foot project in East Rutherford, was set to include a minor league baseball stadium, bowling center, movie theater, and many other recreational and retail facilities. But newspaper reports have speculated that financial restraints could result in a more retail-based change.
Because Secaucus residents could be impacted by potential jobs at the complex, as well as by potential traffic, local officials have watched the changes to the site closely over the years.
Last week, Secaucus Mayor Dennis Elwell said he hopes that the recreational plans for Xanadu will not be scaled down due to Mills’ financial issues.
“What concerns me now is that it seems it is starting to fall by the wayside,” Elwell said. “I would hope [Xanadu] would remain what it was planned to be. From the beginning it was ported to be a sports and entertainment complex. The thing we’re concerned with is that the recreational aspects of the plans are adhered to.”
But Elwell said it seems unlikely that Mills will end its role in the project.
“The question I raised is, ‘Have they put all their money into it?’ And the answer has been yes,” Elwell said. “They’ve met their financial obligations. I don’t see how they could back out. There is an agreement, and I doubt the state of New Jersey would allow anyone out of that.”
George Zoffinger, president of the New Jersey Sports and Exposition Authority, echoed the mayor’s sentiment in a newspaper report a week ago, in which he pointed out the developers would not likely walk away after having already put more than $600 million into Xanadu.
However, not all officials involved are as optimistic. According to published reports, State Sen. Henry McNamara, R-Wyckoff, and Bergen County Freeholder Elizabeth Randall made a request last Friday to Gov. Jon Corzine that the construction be halted until an investigation into the stability of Mills Corp. is completed.
One of McNamara’s concerns was Mills’ future financial stability, including an agreement to make annual payments of $10 million to go toward police protection and traffic compensation that could occur once the complex is opened.
Elwell said road changes are being made to alleviate concerns and for right now plans are proceeding. He still believes the impact will be a positive one.
“We have to give time and allow for progress,” said Elwell.
Secaucus Town Administrator Anthony Iacono said that he is taking a wait-and-see approach with a project that big and varied.
“Until it actually gets built,” he said, “it’s always going to be a question mark.”