Xanadu Good Deal? or Bad Deal? -- October 12, 2004

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Xanadu
Good Deal? or Bad Deal?
Xanadu Overview
[Link] to original proposals
New Jersey Sports & Exposition Authority [NJSEA] · Xanadu web site

The following appeared in the "Other Views" Section of The Record, Tuesday, October 12, 2004

Is Xanadu a good deal for New Jersey? Yes

By GEORGE R. ZOFFINGER and CARL J. GOLDBERG

IT HAS BEEN a long and arduous road but those of us entrusted with the responsibility to keep the New Jersey Meadowlands a premier entertainment center are close to fulfilling that promise.

Meadowlands Xanadu will be under construction this fall and with it, the New Jersey Meadowlands will once again redefine how a public agency can work with the private sector to fulfill its mission as a provider of quality sports and entertainment facilities for all New Jersey residents.

We are able to achieve this milestone, with all of its attendant economic benefits, because of a group of dedicated professionals and local stakeholders that worked together in a focused manner with only two goals in mind:

· The creation of an economic engine for southern Bergen County.

· The enhancement of one of the region's major destinations, the Meadowlands Sports Complex.

The team included the New Jersey Sports and Exposition Authority, the Meadowlands Commission, the Meadowlands Chamber of Commerce, the developers, the environmental community, state government employees, and state and local elected leaders.

Most of all, it included the public, who were given every possible opportunity to share their thoughts. This is the way the system is supposed to work. The benefits will be extraordinary.

Consider these benefits:

Jobs: Meadowlands Xanadu will create more than 19,000 construction jobs and when the project is complete, 20,000 people will be employed on a full- and part-time basis. The full-time positions are much more than low-paying service jobs. They include management, technical and specialty positions.
The office complex will have some of the best companies in New Jersey. The five vastly different "neighborhoods" that make up the entertainment complex will have television production studios that employ engineers, entertainers and supervisors. The hotels and restaurants will employ hospitality professionals, managers and culinary masters. Xanadu will be a great place to work close to home for New Jersey residents.
The environment: The Mills Corporation owns a nearly 600-acre tract of land just north of the Meadowlands. They have been going through the approval process to develop a shopping mall on this wetlands-sensitive property. With the building of Xanadu, this land will be deeded to a public trust and will never be developed. It will remain open space and there is every expectation that in years to come these wetlands will return to a pristine habitat for birds and other wildlife.
Rail: How many times has it been said that the biggest mistake made when the Meadowlands was built was not having rail access? That is changing. Engineering has already begun on a new rail line that will connect the Meadowlands with the Secaucus Transfer station and the Northeast and Jersey Coast rail lines as well as the Pascack Valley and Bergen County lines. This rail line is not being built for Xanadu, but Xanadu is the catalyst for its construction.
Consider for a moment what traffic will be like going into and out of New York City 10 years from now. This rail line will take a lot of this traffic off our roads, and commuters will be able to take a 26-minute train ride to Manhattan.

We don't intend to stop here. Light rail from the Hudson waterfront is next. Customers for Xanadu, Giants Stadium and the Continental Arena will all have transportation choices that will reduce congestion and improve access to all our facilities.
Roads: Rail will help, but road improvements are also necessary, both on site and off site. We have worked with the developers while also maintaining a clear vision on other required traffic improvements that will do more than just handle Xanadu traffic.
Property tax relief: Guess what? Just like all of us, Xanadu will pay property tax and a lot of it. This will help reduce the property tax bills in all 14 municipalities that are part of the Meadowlands tax-sharing district. Additionally, Xanadu will be making an annual payment to the Meadowlands Commission Municipal Assistance fund providing special grants to all Meadowlands communities. The state will also be helped by the significant sales and income taxes paid by the customers and workers.
Best of all, we project that a great majority of the sales taxes will be paid by out-of-state visitors, thereby having minimal impact on the business of local companies.

We have conducted the most open, accessible and transparent public process ever for a project of this type. There are detractors who want to stifle any perceived competition to their own properties. There are skeptics who believe this endeavor is too ambitious.

We believe that Xanadu epitomizes the cutting edge of sports and entertainment development in the nation. We take our trust in managing the Meadowlands very seriously and will work hard to make sure the public gets what it is entitled to: a world class Meadowlands.

George Zoffinger is president and chief executive officer of the New Jersey Sports and Exposition Authority. Carl Golden is the agency's chairman.

Xanadu: Good deal for New Jersey? No

By EMANUEL STERN

The New Jersey Sports and Exposition Authority's vote to enter a lease agreement with Mills for the development of the Xanadu mall is a failure of each of the publicly stated objectives for the redevelopment of the Continental Airlines Arena site and a deeply disappointing abuse of the public trust.

When it selected the Xanadu mall as the redevelopment plan for the Continental Airlines Arena, the authority noted 10 specific winning elements of the proposal:

Promise: That it was primarily a "family entertainment center" with less than 600,000 square feet of retail.

Truth: Of the 2.4 million square feet of development announced, just 890,000 square feet is committed to be entertainment, leaving a prospective retail component of 1.5 million square feet - exactly the amount Mills Chairman Larry Seigel reported to shareholders in August.

Promise: That Xanadu would make a one-time $160 million upfront payment for rights to the land.

Truth: The payment will be reduced by at least $26.8 million, is subject to conditions and will likely come in installments instead of up front.

Promise: That it would result in the donation of the 600-acre Empire tract and $25 million in cash for its ecological mitigation.

Truth: The Empire tract was instead purchased by the authority for $26.8 million (despite being valued at $5.8 million using the Meadowlands Commission's standard), and the promised mitigation has been forgotten. This equates to a $51 million savings for Mills, whose costs are now being borne by the public.

Promise: That it would require no public funding and would reduce the authority's debt dollar for dollar.

Truth: Including rail lines and road improvements, publicly funded expenses to enable the Xanadu project total more than $473 million. In addition, far from reducing its debt, the authority's board authorized a new $165 million bond funding for infrastructure improvements related to Xanadu, bringing the total pre-groundbreaking cost overruns taxpayer burden for Xanadu to a mind-numbing $638 million.

Promise: That the region would be protected from negative traffic impacts as a result of the developer paying for improvements.

Truth: Mills is paying only to create direct access to the site, improve interior roads and build parking lots, with government agencies paying for other projects. The state acknowledges it does not have a plan in place to deal with the 100,000 cars a day the site will generate upon completion. Xanadu's traffic impact on Route 3 has never been studied.

Promise: That the Continental Arena would be redeveloped because the teams were moving to Newark.

Truth: Contrary to the authority's promises in its request for proposals, it now is opposed to a Newark arena and advocates the continued competitive operation of the Continental Arena - a formula that undermines the viability of both arenas.

Promise: That it would not compete with existing, tax-generating, local businesses.

Truth: Look no further than Xanadu's 32-screen movie complex when there are seven theater complexes with 67 screens within a five-mile radius, not to mention more than 190 retail stores being shown on their plans, including multiple department stores.

Promise: That it would conform to environmental standards.

Truth: The state ignored environmental mitigation recommendations from the Meadowlands Commission and waived some of its most basic requirements to speed permits for Xanadu. Permits were processed just five days after the public-comment period on Xanadu was closed. The state obviously never read, considered or addressed the hundreds of pages of objections it received.

This lease signing is the latest stage of a gambit that dares interested parties to sue and dares the courts to provide discovery that might reduce the power of authorities. While the authority colors Hartz Mountain's litigation as "obstructionist," Westfield Corporation, the Borough of Carlstadt, private citizens and various retailers each have brought cases.

New Jersey Public Interest Research Group, Sierra Club and the transportation powerhouse, Tri-State Group, have voiced opposition to the Xanadu mall and seem poised to litigate as well. The authority already acknowledged that the substance of the pending litigation has resulted in a prospective inability for Mills to proceed with the project, perhaps explaining why the authority can't afford to release bid documents to the public despite already having been sanctioned twice by the courts for withholding them.

Rather than take its role as the protector of this region's interests seriously and honestly report its intentions, the authority has endeavored to mislead the community and avoid revealing material information until it is too late for meaningful public input. Among dozens of examples of this tactic, up until the very week of the lease signing, Mills was said to be "donating" the Empire tract and only on the day the lease was signed was it revealed that, in fact, Mills would be paid $26.8 million for the land.

The authority intends to leave us with the Xanadu mall, one of the largest in the country, to be constructed without sufficient traffic studies, planning, oversight, or adherence to generally accepted regulations and procedures.

Ultimately, this is the story of an authority that has neither demonstrated that it has the charter or the legislative right to construct a megamall.

Like Parsons and E-ZPass before it, the Xanadu mall has all the earmarks of a time bomb that will explode long after the current authority administration leaves the scene, irrevocably snarling traffic and spoiling the quality of life for residents and businesses.

Emanuel Stern is president and chief operating officer of Hartz Mountain Industries, which lost its bid to develop the site. Hartz has filed suit to overturn Xanadu's selection.