Corzine SLAPPs Sierra Club Over Xanadu

For Immediate Release
Contact: Jeff Tittel November 18, 2008 (609) 558-9100

Corzine SLAPPs Sierra Club Over Xanadu

Last Friday the Corzine Administration's Sports and Exposition Authority (NJSEA) went to court against the Sierra Club, the first time in state history where a governmental agency has attacked an environmental or community group with a SLAPP suit.

"SLAPP" is a legal term meaning Strategic Litigation Against Public Participation. SLAPP suits are a tactic often used by developers to intimidate environmental and community groups and deter them from opposing their projects. With the NJSEA retaining private counsel for the suit, their court costs will run to around $8,000 to $12,000 - for a suit that seeks to recover only $4,000 in court costs. As a project that has received $900 million in subsidies from various state agencies, $4,000 also seems to be an insignificant amount to be concerned about.

"This suit is clearly intended solely to harass the Sierra Club," said Jeff Tittel, Director of the Club's New Jersey Chapter. "Going after citizen groups for exercising their constitutional rights is something you would expect in Putin's Russia or Franco's Spain - not in New Jersey."

The Sierra Club has been an outspoken critic of the Xanadu megamall development. It is currently involved in litigation over the project and has appealed to the New Jersey Supreme Court. "If the Corzine Administration gets away with this, it will make it very difficult for community, environmental, or other citizen groups to express opposition to or litigate against governmental action in the future," explained Tittel.

If the State of New Jersey wants to spend its time suing to recoup money, Tittel suggests a number of options. "Why don't they go after Encap for the $250 million that has been wasted there or Lehman Brothers for the $180 million the state invested there? How about going after Ford Motor Company for dumping in Ringwood? State agencies have never gone after polluters or developers in the way they are now coming after the Sierra Club."

SLAPP suits are also often used to scare off investigations. "What is this administration trying to hide?" asked Tittel. The Sierra Club has previously noted ethical issues with Mills, Colony, Dune, Goldman Sachs, and members of the administration, as well as other conflicts of interest with members of the Sports Authority. It has also commented on the developers being in the room and participating in the writing Department of Environmental Protection permits for themselves and questioned what Tittel calls the "fishy aquarium" that is part of the project.

"We already know that this has been a major pay-to-play operation, with the vendors that are involved here giving millions of dollars to the Democratic Party. This is the largest, ugliest, dirtiest project in New Jersey's history," Tittel concluded.

The Xanadu project comprises 6.5 million square feet of office and commercial space. It will generate more than 120,000 cars a day, gridlocking an area of the state already overburdened with traffic. It has already filled in priority wetlands and will become, when completed, the largest producer of greenhouse gas in the state. Two Bush Administration agencies - the Environmental Protection Agency and the U.S. Fish and Wildlife Service - have opposed the project, citing its impacts on air quality and the environment. Tittel calls it "the biggest symbol of overdevelopment and pay-to-play in the country."

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Attachments:

Taxed Costs Motion Summary of Motion Xanadu Public Subsidies Costs to the Public of Xanadu

Summary of Motion

           The New Jersey Sports and Exposition Authority ("NJSEA"), a state agency, recently sought to recover various court costs from the Sierra Club, a non-profit citizens group, in the Xanadu development litigation. The Sierra Club and other involved public interest groups wish to briefly describe the potentially dangerous precedent set by NJSEA's actions.

           As part of its litigation strategy in the Xanadu case, NJSEA submitted a massive, 4,297 page Appendix to the Appellate Division. The vast majority of this Appendix consisted of material already submitted to the court; technical data irrelevant to any issue; and thousands of pages of material that was never cited by any party. Hundreds of pages were duplicated within the Appendix itself. In short, NJSEA's Appendix was an acute waste of both the parties' and court's time and resources.

           NJSEA now seeks to recoup $4,387 from Sierra Club to cover the costs of that Appendix.[1] In essence, NJSEA-a state agency with over $1.2 billion in assets-is spending state funds on a legal strategy designed to sap the Sierra Club and other public interest groups in New Jersey of their already modest resources. Appellants had no personal or financial interest in the case; like other public interests groups, their overriding concern is to protect the public health and welfare. Should NJSEA prevail in their request, it would seriously chill public legal advocacy by markedly raising the price of litigation.

NJSEA's request would be suspect enough had its appendix been carefully tailored to the case at hand, but, as already noted, no such Appendix existed. NJSEA's strategy was instead to deluge the parties with thousands of pages of redundant or irrelevant material. While taxing costs to public interest organizations would be damaging no matter what the size or content of NJSEA's filings, it would be especially detrimental where, as here, NJSEA seeks to subsidize its particularly voluminous, ill-tailored Appendix. State agencies should not use state funds to discourage public advocacy. NJSEA's request for costs is an aggressive move against New Jersey's public interest community and its vital access to the state's court system.

[1] It is worth noting that NJSEA first sought to assess over $12,000.00 in costs against Sierra Club and other appellants, but the Appellate Division Clerk's office informed them that they were permitted to assess no more than $1.00 per page irrespective of how many copies of their appendix they had to file with the court.

PUBLIC SUBSIDIES - XANADU

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?

COST TO TAXPAYERS XANADU SHOPPING CENTER

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)

                       SUBTOTAL

                       (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

                       SUBTOTAL

                       (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

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[1] It is worth noting that NJSEA first sought to assess over $12,000.00 in costs against Sierra Club and other appellants, but the Appellate Division Clerk's office informed them that they were permitted to assess no more than $1.00 per page irrespective of how many copies of their appendix they had to file with the court.

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