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Appellate Division Criticizes DEP and Meadowlands Commission, But Affirms Permitting

Date : Wed, 17 Sep 2008 11:40:47 -0400

For Immediate Release
Contact: Jeff Tittel September 17, 2008 (609) 558-9100

Appellate Division Criticizes DEP and Meadowlands Commission, But Affirms Permitting

Today the New Jersey appellate division ruled that the state Department of Environmental Protection (DEP) did not follow a transparent and public process in issuing permits for the Xanadu megamall and must put these procedures in place in the future for this and other sites. Nonetheless, the court declined to stop the project from continuing forward. "Even though we didn't stop the project, we feel the court agreed with us that there were serious problems with both the permitting and the environmental reviews for the site," said Jeff Tittel, Director of the New Jersey Sierra Club. "We would rather have a real victory than a moral victory, but at least it keeps the door open for further action."

The court also ruled that the 5X hearing reports were guiding documents that the Sports Authority should have followed and suggested that the plaintiffs' appropriate recourse would be to sue the Sports Authority to force them to implement the recommendations in the reports. The Sierra Club disagrees with this ruling, believing that the 5X reports should also apply to state agencies like the DEP and the Meadowlands Commission.

"We will be looking at our options for further action," Tittel said. "We may appeal the case to the Supreme Court on the grounds that the 5X reports should have been followed by state agencies as well as the Sports Authority. Suing the Sports Authority for their failure to follow the 5X hearing reports is another possibility. Also, now that an aquarium is being proposed that will add 200,000 additional square feet to the project, cause more traffic, use more water and energy, and actually change the development site, we believe that the Environmental Impact Statement (EIS) and 5X report have to be reopened, and we will be pursuing that."

The rulings came in response to a suit filed by the Sierra Club, Environment New Jersey, and the New Jersey Environmental Federation against the DEP and the Meadowlands Commission as a result of their actions in the permitting process for the megamall.

Xanadu is the largest single project on the eastern seaboard, with more than 6.5 million square feet of commercial office space planned. It will generate at least a half a million car trips per day on local roads, causing massive gridlock and air pollution. "Every day will be like a double game day," commented Tittel. "This project should be called Xantac for all the ulcers it will give the drivers in northern New Jersey."

Xanadu will also add storm water pollution, impacting the Hackensack River, and use more energy and produce more greenhouse gases than any building in New Jersey. "This project is so bad that even the Bush Administration - both the Environmental Protection Agency and the U.S. Fish and Wildlife Service - opposed it," noted Tittel.

Since the original decision, many ethical questions have also come to light about Xanadu. There have been numerous conflicts of interest with the site, including those surrounding Gary Rose, and $900 million of public funding has gone into this giant mall project at a time when the state doesn't even have money for open space or hospitals. [See attached documents for more information.]

"Xanadu is one of the most outrageous projects ever designed in New Jersey, and with the worst environmental impacts," concluded Tittel. "We're going to continue fighting."





















1. Real Estate Taxes

                        a. Why is Xanadu, being developed by a private commercial real estate company from Virginia, being granted an exemption from real estate taxes?

b. The New Jersey Meadowlands Commission estimated that full taxes on the Xanadu Project would be $26,000,000 per year.

c. Pursuant to the Developer's Agreement, Mills is to pay an average of $5,000,000 in lieu of taxes per year, for the first 5 years. Mills' payment to the Sports Authority is limited to that amount even if the Sports Authority is required to pay more than that to the Borough of East Rutherford or other municipalities.

d. Why would the NJSEA agree to pay any taxes above the base amount paid by Mills?

e. Why do Mills' financial projections show them paying the Sports Authority $3,400,000 per year PILOT payments while they project collecting from their tenants "equivalent real estate taxes" of $14,971,056 per year?

f. Why should the taxpayers forego real estate payments to subsidize Xanadu by foregoing $11,571,056 per year in tax payments made to Mills by it's tenants?

2. Empire Tract

a. Why is the NJSEA paying Mills $26,800,000 for a useless/valueless piece of wetlands?

b. Why, without benefit of appraisal, is the NJSEA paying Mills $45,000 per acre for wetlands, when the New Jersey Meadowlands Commission pays $10,000 per acre?

3. Foregone Profit Participation

The agreed upon profit participation payment to be paid to the NJSEA and the public provides Mills with the right to:

a. Recapture all their prior expenditures on the failed Empire Tract Development (approximately $127,000,000) plus all of its costs associated with the Xanadu Development with a 25% internal rate of return before the NJSEA and the public share in any revenues.

b. Why is the NJSEA requiring to repay Mills $127,000,000 for its ill-conceived and failed plan to develop the Empire Tract?

4. No Rent for 15 Years

a. The Mills' initial proposal proclaimed a $160,000,000 up-front payment. This payment has been steadily reduced, by $26,800,000 for the NJSEA payment to Mills for the Empire Tract and $34,000,000 for the NJSEA to make a bond difference payment. Therefore, the proclaimed $160,000,000 has already been reduced to at best $95,950,000.

b. Pursuant to the Lease, the NJSEA and the public receive no rent for the first 15 years of the lease.

c. Why should the NJSEA agree to receive no rent for the first 15 years of their lease? While receiving no rent, the NJSEA may in fact have continuing expenses for additional PILOT payments and other operating expenses that they are required to pay as a result of Xanadu.

5. Free Use of NJSEA Land

a. After the awarding of the development to Mills, the NJSEA without any additional consideration, granted Mills the right to use 4,500 parking spaces adjacent to Giants Stadium.

b. Why should the Mills without any additional payment to the NJSEA be allowed to use in excess of 30 acres of publicly owned land?

6. Free Hotel Site

a. After Mills was designated Developer and after the public review process had ended, Mills was granted the right, without any additional fee or payment, to develop a hotel adjacent to the Meadowlands Racetrack.

b. Why should a private development company be given lucrative and valuable development rights that were never offered or made available to other bidders or interested parties?

7. Naming Rights

a. The "naming rights" for public facilities are significant revenue generators of the government and the public. The naming rights for Continental Airlines Area themselves were sold for in excess of $25,000,000.

b. The NJSEA gave up the right to sell the naming rights to Mills

c. Why would the NJSEA give away to the Mills the lucrative naming rights?

8. Mills' Control of Entire Sports Complex

a. Pursuant to the Developer's Agreement between Mills and the NJSEA, Mills has the right to review and approve any and all future agreements by the NJSEA not only for the Arena Site but for the full 750 acre Meadowlands Sports Complex.

b. Why should and legally how could the NJSEA allow a private developer to control government land for 75 years?

9. New Jersey Department of Transportation

a. By letter dated November 2003, the New Jersey Department of Transportation identified that as a result of the Xanadu Project $100,000,000 of roadway improvements will be needed. The NJDOT identified that $35,000,000 would come from the NJDOT with the balance coming from the NJSEA.

b. Why is the government subsidizing a private commercial development by paying for development required roadway improvements?

10. New Jersey Turnpike Authority

a. As part of the Xanadu Project, the New Jersey Turnpike Authority has committing to expend $31,000,000 of taxpayer toll money to improve access to the Xanadu Project.

b. Why should a government entity spend $31,000,000 of public money to pay for roadway improvements necessitated by a private real estate development and thereby subsidize a private company, Mills?

11. Port Authority - Rail

a. The Port Authority has committed to expend $150,000,000 of taxpayer/tollpayer monies to develop a rail line to the Xanadu Project.

b. Why, and how, could the Port Authority of New York and New Jersey commit to expend $150,000,000 of public tax/toll monies on a rail line to service and subsidize a private development?

c. How could the Port Authority agree to expend $150,000,000 of taxpayer/tollpayer monies on a rail line that is some 5 miles from the Hudson River and unrelated to any Port Authority activities?

12. Competition With Existing Businesses

a. One of the basic premises of the RFP issued by the NJSEA for the Continental Airlines Arena Site was that any proposed development would generate new economic activity and would not compete with existing businesses in the Meadowlands Region. In response to this, Mills alleges that they are primarily an "entertainment center."

b. If Mills is an entertainment center, why would they be allowed to go back to the NJSEA Board in October 2004 to get an authorization for 874,000 sq. ft. of retail space, an approximately 40% increase in their original proposal?

c. In addition to the 874,000 sq. ft. of now admitted retail, why has the NJSEA also allowed another 265,000 sq. ft. of space that is not committed by Mills and will therefore be retail?

d. Why would the NJSEA now allow the Mills to develop approximately 1,200,000 sq. ft. of retail space when it was not permitted pursuant to the RFP to develop a project that was significantly retail or one that would compete with local businesses?

e. Why would the NJSEA allow Mills to develop the largest movie complex (approximately 28 screens) in the country when it is not supposed to compete with existing businesses?

f. What impact will this theater have on the existing theaters in Clifton, Secaucus and North Bergen, which are also located along Route 3?

            g. Why has the NJSEA allowed the Mills to continuously modify and change their plans from those originally approved pursuant to the RFP process?


1. Roadway Improvements $100,000,000.00

                       (NJDOT November 2003)

           2. New Jersey Turnpike Authority 30,000,000.00

                       (Reconstruction of Exit 18)

           3. Rail Link $150,000,000.00

                       (Port Authority NY & NJ)


                       (Public Subsidy - Transportation) $280,000,000.00

           4. Purchase of Empire Tract 127,000,000.00


           5. Claimed Exemption from Property Taxes $299,420,000.00

                       ($14,971,000.00/yr. - 20 yrs.)

           6. NJEDA Approved Bonds for Xanadu $200,000,000.00



                       (Public Subsidy - Non-Transportation) $626,420,000.00

                       COST TO TAXPAYERS

                       FOR XANADU SHOPPING MALL $906,420,000.00


NOTE: This Cost to the Taxpayers is in Direct Violation of the NJSEA Request for Proposal mandate that there were to be no public subsidies for the Arena Development Project and Mills Proposal which stated "This proposal does not seek any State financial aid." (NJSEA 31437).

Becca Glenn, Program Assistant New Jersey Sierra Club

145 W. Hanover Street Trenton, NJ 08618

609-656-7612: phone

609-656-7618: fax

Received on 2008-09-17 08:50:02

New Jersey Sierra Club, 145 West Hanover St., Trenton, NJ 08618, USA
tel: 609 656 7612, fax 609 656 7618
or email Nicole Dallara, Outreach Coordinator, at

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