EDA Task Force Should Investigate American Dream/Xanadu

The New Jersey Sierra Club sent a letter to Ronald K. Chen, chairman of the Economic Development Authority Task Force, asking for an investigation of the American Dream/Xanadu project. Gov. Murphy created the task force to investigate mismanagement of $11 billion in tax incentives provided to businesses by the EDA. The American Dream/Xanadu project received $350 million in direct state subsides from EDA. Two public hearings have been held by the task force, with much of the focus on businesses in Camden that received a total of $1.6 billion.

“Of all the projects out there funded by the state, the biggest one of all that needs to be looked at is American Dream/Xanadu. Gov. Murphy talks about the problems in EDA and the need for reform, but he forgets to mention American Dream/Xanadu. We have asked the task force to make the project a priority in their investigation. The American Dream mega-mall in the Meadowlands, formerly called Xanadu, is the largest publicly subsidized project in state history, yet Gov. Murphy continues to support it. The EDA provided $350 million in direct state subsidies to the project, and it’s still not open,” said Jeff Tittel, director of the New Jersey Sierra Club. “Investigating what’s happening in Camden and other places is good, but the task force also has to investigate American Dream/Xanadu.”

The Canadian-based Triple Five company, which owns the Mall of America, took over the long-stalled Xanadu project in 2010. The financing structure for the American Dream/Xanadu project includes a complicated mix of private financing, public subsidies, tax breaks and bonds.

“The task force needs to look at all of the games that Triple Five has played to finance this project. They had to go from state to state for $800 million in public bonds because they couldn’t get the money here. They acted like contortionists getting around the Local Finance Board that wouldn’t approve the bonds. They finally got the money from the Wisconsin Public Financing Authority. To support the project a special bill had to be passed allowing the Meadowlands Commission to take out bonds specifically for a mall. The public will always be on the hook for this mall. We will lose hundreds of millions of dollars in revenue because the American Dream will be paying off bonds with that money instead of paying taxes. New Jersey will lose revenue because the mall will cost essential services like police and fire, but they won’t be paying taxes, creating a bigger hole,” said Jeff Tittel, director of the New Jersey Sierra Club. “This whole financing scheme is something Bernie Madoff would be proud of, and Gov. Murphy continues to go along with it.”

A corporate audit of the EDA ordered by Gov. Murphy showed that American Dream/Xanadu received subsidies and tax breaks of $1.15 billion, far more than any other company under the EDA program. The incentives include $100 million in road improvements, $180 million for a rail line, $300 million in property tax exemptions, and $31 million in toll money. EDA provided $350 million in direct state subsidies.

“As he criticizes wasteful subsidies elsewhere, Gov. Murphy doesn’t seem to be bothered by the mega-mall. The state has poured more than a billion dollars into that black hole of a project and it will continue to cost even more. American Dream/Xanadu got $300 million in property tax exemptions, nearly $300 million for road improvements and a rail line, and another $31 million from tolls. EDA gave $350 million in direct state subsidies. Triple Five didn’t even pay anything for the billion-dollar property. They got it for free,” said Tittel. “The taxpayer money supporting a needless mega-mall could have been better spent on fixing lead pipes, or helping fund the Gateway tunnel, or investing in advanced technology. The American Dream/Xanadu mall has done nothing but suck up money and put environmentally sensitive areas at risk for development, and we still don’t know when it will open.”

Gov. Murphy launched the EDA probe in January after a state comptroller audit was highly critical of the management of the tax incentive program. The EDA has approved more than $11 billion in grants and tax breaks designed to attract and retain businesses.

“We have opposed the American Dream/Xanadu project from the start, and we were right. The state of New Jersey has been wasting a lot of the $11 billion in tax breaks and subsidies at the expense of critical programs that help the middle class and the environment. This is money that should be going toward open space and cleaning up toxic sites. The EDA program is a giant giveaway to corporations that don’t need it. Gov. Murphy should be going after the EDA, but he can’t leave the American Dream/Xanadu project out of it. The corporate subsidies for that project are the biggest waste of all,” said Tittel. “The EDA Task Force must investigate the American Dream/Xanadu project and other sites that received subsidies as well, not just in Camden.”

The American Dream/Xanadu mall sits partly on wetlands in an environmentally sensitive area prone to flooding. Meadowlands resources are important for flood control, fisheries, and migratory birds.

“The American Dream/Xanadu site flooded during Hurricane Sandy. The area is increasingly vulnerable to the effects of sea level rise and storm surges. Studies have shown the entire area will end up under 3 feet of water. The EPA and Fish & Wildlife under President George W. Bush opposed the project because of environmental impacts on clean air and water, and wildlife,” said Tittel. “The EDA should not be investing in a project so prone to flooding and so damaging to the environment.”

The 3-million square foot retail and entertainment complex in the Meadowlands is supposed to open sometime later this year after many years of delays. The project is expected to add more than 150,000 cars a day to the region.

“The task force needs to look at EDA’s own economic projections for the project, which do not support the incentives. They anticipate about 10,000 permanent full-time and part-time jobs from the mall, most paying less than $20,000 a year. Those jobs will come from other malls losing business or shutting down because of American Dream/Xanadu. Economist reports show malls in Paramus, Jersey City and Elizabeth will all be negatively impacted by the Meadowlands mega-mall,” said Jeff Tittel, director of the New Jersey Sierra Club. “The American Dream should be called the American Scheme. Gov. Murphy is criticizing wasteful projects only in certain places, not everywhere else, while he keeps praising the mall, even showing up there to tout its benefits. He won’t be able to fix the EDA program and other needless tax breaks if he keeps pretending the American Scheme is a good investment.”