BUSINESS & ECONOMY

Reporters Take Critical Look at American Dream Megamall

The mall moldering in the Meadowlands began with a vision of Xanadu. But over 13 years and three owners its devolved into something that resembles an epic eye sore. Gov. Chris Christie himself called it “by far the ugliest damn building in New Jersey and maybe America.” Three reporters collaborated on the epic job of investigating what happened to the American Dream. The result is a five part series called Mall Madness. Anchor Mary Alice Williams spoke with reporters Susan Berfield of Bloomberg Businessweek, Ilya Marritz of WNYC and John Reitmeyer of NJ Spotlight.

Williams: Thanks all of you for being with us. John, how and when did Xanadu morph into the American Dream?

Reitmeyer: It morphed, I guess, after Gov. Christie took office, so that was in early 2010. By 2011, Christie made the decision that he wanted to turn what was the shell that had been left by two prior developers, what was known as Xanadu, into something new and something bigger. He brought in a development company called Triple Five, which is best known for owning the Mall of America in Minnesota. And Triple Five came in and decided they wanted to go big. They expanded the concept that the former Xanadu developer had laid out and started embarking on a new plan that would really emphasize amusements. So it had already been this blend of retail and entertainment, and they went really big on the amusement, so we’re talking about a water park, amusement park, ice skating rink, observation wheel…

Williams: …and the ski slop thing.

Reitmeyer: And they wanted to keep the ski slope involved as well.

Williams: Susan, you spoke with the¬†Ghermezian family. They’ve had some successes, the Mall of America. They’ve also had flops. Did anyone check their background?

Berfield: It doesn’t seem so. We talked to a couple of people who were hoping they heard from New Jersey and never did. Specifically somebody down in Maryland, in Silver Spring, who negotiated with Triple Five, the Ghermezian’s, for about a year. In the end he walked away from the project and he told us that he’s been waiting for a phone call but hasn’t gotten one.

Williams: Ilya, you got to sit down, along with Susan, with Don Ghermezian. What was your takeaway after that conversation?

Marritz: Well they’re all in. The Ghermezian family says we’re going to be here for 100 years, we are completely committed to this project, we’ve never taken anything this far and then walked away. The many delays that New Jerseyans know about and complain about and the delays that caused us really to do these stories, they’re not going to matter once this thing opens. Nobody is going to remember that it’s five years later, 10 years later, 15 years later. But what they’re going to think is this is an incredible destination. And they’re really emphasizing kind of one-of-a-kind entertainment, one-of-a-kind retail that you just got to go to the Meadowlands to see.

Williams: Let’s talk about this idea of being internet-proof. Shopping is migrating online so retail is less important, than say when the Mall of America was opened. And the Mall of America was opened in a place that everyone in Minnesota knew very well because it was Viking Stadium. This one is just a vacant marsh in the Meadowlands. It’s not an automatic for people to get there, and frankly it’s kind of a tangle town to get there. Where’s my question in all this? How is this internet-proof?

Berfield: You know, what Don Ghermezian told us is that the entire complex is evenly divided between entertainment and retail and that the entertainment is there to draw people in and to get them to go shopping. And that the entertainments that John just kind of outlined, you know, are things obviously you have to be present to do. And their hope is that families from the region will come, that international tourists will want to be there and that on your way to the ski slope you have to walk through a faux Alpine village where they’re selling lots of luxury goods.

Williams: For winter weather, I presume. Does any of this make economic sense right now?

Reitmeyer: Well I think that was one of the big questions that we tried to explore. How does a concept that was first put on the drawing board a decade ago when things were so different. You know, we might get products delivered to us by drone in a year or two ordering off of our smartphone. So how does this make sense? They’re not going to open until the fall of 2018 even. And what Triple Five representatives stressed to us is experiential, that the way that you make this work from an economic perspective is you have to draw people to the location by giving them an experience. So like what Susan talked about, you come down from the ski slope and you realize that you don’t have the nicest skis. You walk to the store and you buy new skis. I mean, I think that’s a big question whether that will actually work or not and that this will be the test model of it.

Williams: John, you mentioned that Christie had slammed it, but once he took office he was behind it and in fact offered EDA [Economic Development Authority] incentives. What are those incentives?

Reitmeyer: So the program that the company is taking advantage of is called the ERG. It’s an economic redevelopment program, it’s an economic incentive program where basically they decide that you’re going to build a project, it’s going to be good for New Jersey but you don’t have the financing to complete construction so you can qualify if you meet their standards. You can qualify for a construction loan that allows you to take tax revenue that you will collect once you open.

Williams: In other words no money changes hands unless this thing is a success.

Reitmeyer: Absolutely, so we should make that clear. This is pledged revenue that they will be, that they will get a rebate on, it’s sales tax revenue, over the next 20 years.

Williams: So the state doesn’t actually have any financial skin in the game yet?

Marritz: Well, the state has improved the roads around the area. They created the rail link to Secaucus Junction. The Port Authority did it, so quite a few things have been done to ease this along. There’s a lot that’s attractive about this model of pledging future tax receipts, but there’s a few things that make it really questionable, too.

Williams: Which are?

Marritz: For example, future tax receipts — we don’t know what the economy of New Jersey is going to look like for the next 20 years. That’s a problem for the next governor and legislators decades from now, potentially, to deal with. If this mall ends up drawing a lot of traffic away from other New Jersey malls that remit 100 percent of their sales taxes to Trenton, and this mall only remits 25 percent of the sales tax receipts to Trenton, it’s kind of like shooting yourself in the foot. You have to ask yourself is this a smart way to do development. Many people would say yes it is, but I think if you do it you want to know what the downside is.

Reitmeyer: And remember real quick that we’re in a state that has trouble affording things. They’ll argue that this is at least something. That if nothing happened there you get nothing out of nothing so at least this is something. But at the same time we’re in a state right now that can’t afford to make pension payments, school funding payments.

Williams: Susan, are the taxpayers on this for any reason and are we going to be on the hook for something?

Berfield: The taxpayers aren’t on the hook, but as Ilya and John have said there’s revenue that potentially is coming in. Say it opens a success, you’re not getting all of the benefits of that for the people of New Jersey.

Marritz: And I think if it is not a success, what are the chances that it’s going to land right back in the lap of the State of New Jersey? I think the chance is 100 percent. It’s on state-owned land.

Williams: Lightning round predictions. Is this thing going to open?

Berfield: [Laughter] John’s going first…

Reitmeyer: I don’t think we know yet. So the financing, we don’t have an announcement yet on financing. They need $2.65 billion for construction and some of that is through a bond sale and we don’t yet have an announcement on either the construction loan or the bond sale.

Marritz: Ask me again in January. That is when they say they’re going to announce the financing.

Williams: Susan?

Berfield: Yeah, I’m waiting to see what happens in January. They’ve made a lot of promises.

Williams: Thank you, all three of you. Great reporting. Thanks for being here.