Developers for the American Dream Meadowlands project, a mega-retail and entertainment complex on Route 3 near the MetLife Stadium, have tentatively cut a deal with Deutsche Bank to provide an approximately $700 million loan toward the $1.7 billion that remains to finish the project, reported the Wall Street Journal earlier this month.
Canada-based developer Triple Five Group, which stepped in at the end of 2010 after the $3.7 billion project switched hands many times, has yet to take control of the site from lenders, but expects to soon, according to the article. Before the project stalled near its completion in 2009, $1.9 billion had already been invested.
The former Xanadu complex was supposed to further solidify the Meadowlands as a tourist and entertainment destination and generate residual business and millions of dollars in revenue for the region, which includes Secaucus and North Bergen, but various financial problems slowed the project before new backers stepped in.
Representatives for the developer would not confirm or deny the Wall Street Journal reports.
“A lot of progress is made every day. It is not just visible and not public.” – Alan Marcus
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Moving completion date
The long-awaited project will not be open by the Super Bowl 2014 championship game in the Meadowlands, but that doesn’t seem to worry the developer, even though the destination had been pitched as a potential major draw for the area during that time.
“I believe the facility will be available for Super Bowl-related activities but the retail entertainment complex will not be open,” said Alan Marcus, an executive with a public relations firm that represents the developer. He said being open for the 2014 Super Bowl is not that important given that the American Dream Project will be open for many years beyond that event.
The complex was supposed to open its doors in 2008. The 2008 debut was then pushed to August 2009, then again to 2010.
Permits needed to resume construction
“We are pleased with the progress that is being made and are optimistic the permitting approvals will come in the near future,” said John Samerjan from the New Jersey Sports and Exposition Authority (NJSEA), which is the landlord of the site, last week.
The developer is also optimistic about getting final approval on regulatory environmental permits to begin construction on the water and amusement parks section. The Amusement Park and Water Park Project required a number of Federal, State and regional permits, approvals and certifications.
The Environmental Protection Agency had objected to the proposed 22-acre expansion of the project in Dec. 2011 because it required a formal wetlands-mitigation plan from the developer since part of the water and amusement park complex is to be built on five acres of wetlands.
Marcus said the developer plans to purchase wetlands credits and a swamp will be preserved to offset building on environmentally-sensitive land.
“We anticipate that we will come to a successful completion in 30 to 90 days [regarding the regulatory permits],”said Marcus. “It is moving along pretty well.”
The developer still has to get tenants to lease its retail space, which spans 1.7 million square feet.
Progress behind the scenes
“A lot of progress is made every day. It is not just visible and not public,” said Marcus. He said that the developer is waiting to clear a number of steps on the project before making any major announcements.
The project recently received government approval of its traffic plan.
Once the environmental permits get approval, representatives said that construction will resume and include work within and outside of the existing structure in addition to building the water and amusement parks area.
Developers anticipate the construction will generate 9,000 construction jobs, which Marcus said will likely be filled by Hudson County workers.
The company expects to attract 40 to 55 million visitors a year.
“Hudson County certainly will benefit,” said Marcus. He said developers anticipate many of the 15,000 permanent full-time positions will be filled by people from the area.
The administration of Gov. Chris Christie has stated the complex will generate tens of millions of dollars in sales and payroll taxes for New Jersey and will generate significant revenue for surrounding municipalities.
Financial hurdles
Originally expected to be financed by the Maryland-based Mills Corp., Xanadu ended up being backed by Colony Capital, a private equity firm, after it became apparent that Mills would be unable to finance the project as planned. Colony Capital took over in August 2006, committing up to $500 million of equity. Colony also arranged for construction loan financing to help fund building costs.
But in March 2009 a subsidiary of Lehman Brothers – which had been one of Xanadu’s financial backers – went bankrupt. The collapse sent the project into a tailspin as the recession also affected other financial supporters of the project. Making matters worse, the recession also hurt Xanadu’s ability to draw struggling retailers and other businesses to the complex.
Colony Capital found itself in need of $500 million to finish the project. The project floundered. In 2010, a consortium of lenders that had financed Xanadu wrested control of the project from Colony Capital.
The state of New Jersey stepped in to salvage the stalled project early on last year. The project became eligible to receive a $350 million tax break after the state legislature passed a bill in June under the state’s Economic and Redevelopment Growth program. The tax incentives have not received final approval.
Adriana Rambay Fernández may be reached at afernandez@hudsonreporter.com.