Rival goals collide in Xanadu legal fight
The Record,  Sunday, March 21, 2004

George Zoffinger expressed optimism that Hartz Mountain Industries would drop a lawsuit that could delay -or even unravel — a proposed $1.3 billion entertainment, office, and retail project at the Continental Arena site. But the New Jersey Sports and Exposition Authority president now seems resigned to a court showdown over the Xanadu project next month.

Hartz Vice President and General Counsel Irwin Horowitz insisted that Hartz's protest over the process that led to the selection of the Mills/Mack-Cali joint venture was based on far more than selfish reasons. "Our interest here coincides with that of our tenants, with local motorists, with everybody's," Horowitz said. "Ten or 15 years from now, we'll still be in business. But will he have people climbing over cars on Route 3 to get here?"

"We're the ones who have to live here, now and forever," Horowitz added. "If [Zoffinger] is so concerned about us, why has the financial impact analysis never been made public? How come they never did a traffic analysis? Why wasn't the environmental impact statement already done by now? Yet he continues to try to perpetuate this notion that it's Hartz that's self-interested."

Hartz owns and manages the largest privately held commercial real estate portfolio in the United States, including 200 properties and more than 35 million square feet of space in the metropolitan area.

A hearing is scheduled in the Appellate Division of Superior Court on April 20. Hartz's complaints include an assertion that Xanadu was improperly chosen because environmental hearings on the plan had not been completed, and that the size of the retail component is beyond the scope of the sports authority's permitted uses for the land.

The New Jersey Meadowlands Commission will play host to an environmental public hearing about the Xanadu plan on April 30.

Source: The Record,  Sunday, March 21, 2004
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Xanadu proposal making progress
The Record, Saturday, August 30, 2003

After six months of negotiations, a developer's agreement has reached a stage where only technical reviews by attorneys on both sides remain before the document is signed. The board is expected to vote at its September 10th meeting.

The developer's agreement is a crucial document that outlines the financial details of the privately funded project, offer a construction sequence - the entertainment projects are expected to be built first - and allow Mills/Mack-Cali to complete deals with the dozens of entertainment partners. Office construction may not begin for several years, but an upturn in the commercial market could move that timetable forward. Mills' Xanadu pitch left open the fate of the arena - a flexibility that has proved to be beneficial because of the uncertain fate of the Nets and Devils.

The deal also would offer an updated site plan, explaining how the ambitious project would fit on a site that might still include the arena.

A court challenge by losing bidder Hartz Mountain Industries remains as a possible obstacle to construction beginning this year.

Secaucus-based Hartz contends that Xanadu, which it derides as a megamall because of its 600,000-plus square feet of retail space, will create a traffic nightmare for the Meadowlands region. Hartz also insists that Mills - a shopping center developer - has misled the public by downplaying its retail plans.

Hartz also says the sports authority exceeded its powers by approving such a project and that the selection process was flawed. It soon might argue those objections in a state appeals court.

Hartz was told by a Superior Court judge in March that it should wait until the sports authority had a deal with Mills/Mack-Cali before seeking a preliminary injunction against the project.  Both Hartz and Westfield recently lost an appeal that was heard in June by sports authority attorney Arthur Winkler.

The sports authority chose Mills/Mack-Cali as its developers in February after receiving six bids - two for NASCAR tracks - last summer.  Hartz's Expo Park multi-use proposal would have replaced the arena with a convention center, and Westfield's Arena Place plan would have downsized the building to a 6,000-seat performing arts venue.

Environmental impact hearings are planned for October, but Mills' offer to donate 600 acres of land in Carlstadt if Xanadu becomes a reality may help its case with environmentalists.

If there are no further delays, the entertainment phase of the project could open as soon as early 2006.

The selection of Mills was approved 9-2 in February, and acceptance of Winker's findings presumably is a formality.

Source: The Record, Saturday, August 30, 2003
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Overview

Continental Airlines Arena Site Redevelopment
With the intention of the Yankee Nets to move the Nets and Devils sports teams to Newark, NJSEA requested proposals for the 104 acre Continental Airlines Redevelopment.  The project was narrowed from six to three bidders late November 2002, with the finalists being Xanadu's $1.3 billion proposal -- which appeared to be the most ambitious.  See details below.

In May 2001, Governor McGreevey endorsed a plan to have the state float bonds of $165 million towards the $355 million Newark arena, but by July met overwhelming opposition in Trenton. Newark then parlayed a Newark Liberty Airport extension into the seed money to revise the $355 million arena in October.  The negotiations are bogged down.

There is controversy over moving the Nets and Devils sports teams  from an outdated facility to support Newark redevelopment.  In a poll conducted by Public Mind/ FDU from April 12-19, 2003, of 820 NJ registered voters,  61% called it a bad idea; 51% said they would be less likely to attend an event in Newark while 17% said they would be more likely to attend an event in Newark.

Challenges
Traffic, lost tax revenue, and a fear that existing businesses would be hurt by the Mills plan emerged as the main concerns expressed by mayors form Secaucus to Elmwood Park. Little Ferry Councilwoman Roberta Henriquez said that the other towns are going to get ratables -- what are we going to get, Traffic?  Mayor Dennis Elwell  was partial to the Hartz proposal because it was more sports retail and wouldn't compete with the existing retail.  East Rutherford officials were concerned about the effect on their municipal budget.  The development would mean more sewage treatment costs, more shoplifting cases in municipal court, more fire inspections and a bigger police presence.

Bergen County Freeholder Richard Mola (and Mayor of Elmwood Park), believes that at some time thy will change the plan and end up with a shopping mall.  Others predict more retail stores jamming southern Bergen roads just as Routes 4 & 17 are jammed by shopping malls in Paramus.

The Mills decision may cost Carlstadt the tax revenues (estimated to be $12 million) generated by a mall Mills had planned for the Empire Tract, but Mayor William Roseman suggested that the borough would receive a substantial amount in lieu-of-tax payments.

Runner-up Hartz Mountain believes they have the best insight on how to support this region which they have demonstrated over the last 35 years.  With their partner Forrest City, their plan was to create a convention center based complex.  In February 2003, citing their status as the single largest taxpayer within the Hackensack Meadowlands District, they formally protested the designation of Mills to develop the site.

Hartz, which has substantial retail interest in Secaucus, has expressed concern that nearly 600,000 square feet of retail space could harm nearby merchants.  They also suggest that the 1.6 million feet of entertainment space is really retail space in disguise, and question the agency's authority to permit significant levels of retail and the lack of public hearings. A hearing was scheduled for April 25, 2003.

Hartz sought a preliminary injunction halting the talks. Rulings by Judge Sybil Moses meant the NJSEA can continue to negotiate a developers agreement for Xanadu. Hartz attempt to have the court takeover jurisdiction over its protest of the bidding procedure was also denied. Hartz argued that the NJSEA was a local authority while Moses stated it was a state agency. A developers agreement is expected in May 2003.

Other challengers include Assemblypersons Charlotte Vandervalk (R-Montvale) and Alex DeCroce (R-Parsippany-Troy Hills) who reviewed (charter) laws passed in the1970's, and introduced legislation limiting retail space in the area to no more than 250,000 square feet.   Xanadu's plan lists 600,000 square feet, but Hartz insists the amount is several times higher.

Westfield (proposed an urban village w/scaled down Continental Arena), protested declaring that Xanadu would exceed the prescribed boundaries of the original request; that the minor league baseball park is the dimensions of a little league field; and that Xanadu would fill in an eight acres of tidal wetlands.

Green Party Assemblyman Matt Ahearn (Fair Lawn) considered proposing a bill blocking the sports authority from making any substantial change with its agreement with Mills, it the majority of the 14 towns in the Meadowlands district objected.  But the Office of Legislative Services issued an opinion on that bill, that the deal between NJSEA & Mill is none of the Meadowlands towns' business. Ahearn stated that this confirms his worst fears.  The state created this particular beast and it's selling its own bonds, it has it own obligations.  The state created an animal that it can't control. 

It is noted that the governor can block any sports authority action by vetoing the minutes and could remove the agency's chief executive if he didn't approve of that official performance.

No public meetings were held. Many legislators are concerned with environmental, mass transit and revenue sharing.  Area retailers feel threatened.  The Committee for a Better Meadowlands presented a petition of  2,300 local businesses to Assemblywoman Rose Marie Heck (R-Hasbrouck Heights), and Assemblyman Anthony Impreveduto (D-Secaucus), opposing the construction of a megamall in the Meadowlands.


Mass Transit
A transit connection could benefit hundreds of thousands of people, but it will also cost hundreds of millions of dollars -- who will pay?

NJSEA founding member Ray Bateman expressed concerns about the project as "Gridlock City".  He stated that he did not believe that even mass transit can save the area from being swallowed by the plan -- the development is too big for the site.

There is no mass transit money in the Mills plan, and they have been vague about their willingness to contribute beyond the $65 million for infrastructure improvements. Considering the billion dollar package and expected payouts, NJSEA is reluctant to ask for additional mass transit money and suggested Trenton as a source. Assemblywoman Rose M. Heck (R-Hasbrouck Heights)said, "I don't think at the present time that there;s any money to pay for this.  We'll basically in a state of emergency right now for dollars.

The Governor's office stated, "We should not be looking to the state coffers for help a this point in time, although that doesn't mean that the state won't be committed to helping to plan for mass transit at the site.

Rep. Steve Rothman suggested that it would be poor planning and irresponsible to choose a project that assumes the state or federal government would provide several hundred million dollars and that the redevelopment would have to be self-sufficient regarding transportation needs.

With a developers agreement and groundbreaking expected soon, NJSEA believes the project should be started before mass transit plans are in place.  According to NJSEA's traffic consultant Edward and Kelcey, $65 million in road improvements will take care of potential traffic headaches. This idea of breaking ground before a transit plan is in place concerns local legislators form both parties.  They are skeptical that the new service roads and changes to Route 120 will be sufficient to handle the expected increased traffic.

Assemblywoman Loretta Weinberg (D-Teaneck) stated that the whole Bergen delegation on a bipartisan basis supporting the idea of a rail link.  There is a lot of work to do on this issue.

Assemblywoman Heck thinks Xanadu is a potential gold mine for the developer and wants it to ante up for most of the mass transportation costs. And many of her colleagues agree.

George Zoffinger, President of the NJSEA said, "It's time for people to stand up and acknowledge that the biggest mistake in the history of the Meadowlands was not getting mass transit in here when we started 30 years ago.  Let's get united.  Let's produce a plan.  Let's get it done".

The Assembly light rail panel sponsored a Meadowland mass transportation summit April 14, 2003 to address mass transportation concerns.  The NJSEA stated that it wants a consensus for one rail plan, then push for funding.


Riverkeeper
The Hackensack River Keeper was created in 1997 to protect and defend the environmental quality of the eco-system of the Hackensack River area.  Working with the Hackensack Meadowlands Partnership, they have been discussing with the NJSEA and each of the three finalists of the redevelopment site.  Riverkeeper Capt. Bill Sheehan stated that they have meticulously evaluated each proposal.  Mills donating the Empire Tract would allow the property to be deeded to the Meadowlands conservation Trust, ensuring permanent preservation.  The Riverkeeper has consistently opposed any plans to fill the 600 acre wetlands tract.

The Riverkeeper fully supports the upcoming environmental review process.  It will be a joint effort with the Riverkeeper, NJ DEP and Meadowlands Commission.  All involved say they are committed to preserving the remaining 7,000 acres of marshes within the Meadowlands District.

About the Empire Tract:  It is the largest piece of unbroken open space in the Meadowlands
It's natural drainage patterns and links to the Hackensack River were long ago severed by tide gates turning a teeming marsh into dry land covered with non-native reeds prone to catching fire.  Mills will give the state $25 million for restoration. The tract could become part of the 8,400 acre ecological part the Rep. Steve Rothman proposes.  

It was Mills suggestion of turning the Empire Tract into a wetlands mitigation bank.   Such operations turn wetlands into "Credits" which can be sold to developers who need the right to fill in wetlands on other properties.  Mill bid said the state could sell more than $88 million in credits.  Environmentalists panned the idea and are opposed to anything that would damage wetlands or to preserver one property only to allow marches to be paved elsewhere.

NJSEA's George Zoffinger said the conservation groups "have a seat at the table".

Environmentalists were unhappy that Mills would might be allowed to fill in the eight acre Cedar Creek wetlands for Harrods Department Store, H&M Clothing Store and a 500 room hotel. The Riverkeeper said that the swamp is protected by a 1972 court case.  Mill spokesperson said the the Empire Tract was an adequate trade-off, but that their development plans are not contingent on the property


Other
A Record Editorial (2/13/03) expressed concerns over the following:
Traffic: Avoiding making highways Route 3 & Turnpike into parking lots -- citing Exit 7/Great Adventure and NY thruway Harriman Exit/Woodbury Commons.
Shopping: With a bevy of attractions critics fear the plan could become a mega-mall.  Should an attraction fail, there would great pressure to convert the facility to stores.. A covenant should be included to prevent this from happening.
Sunday Shopping: Agreements should be made to abide by Bergen County Sunday blue laws.
Environment:  Mills has promised to address all major environmental concerns.
The editorial also credited Mills deeding the Empire Tract and promised $25 million towards restoring the trash-riddled property.  This could help Rep. Steve Rothman's proposed 8,400 acre nature refuge become a reality.
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A Herald News Editorial (2/13/03) expressed concerns over the following:
The lack of public input.  There should have been general public meetings to present its case before the NJSEA board voted. The public has the right to question the size of the project and its impact on the environment, traffic and the surrounding shopping centers.

The state has a history of buying into grand ideas that promise reduced taxes and increased revenues -- "we have all been down that E-Z Pass lane before".

There is still no deal on a Newark Arena.  There are no guarantees that the regional economy will be able to sustain Xanadu, or any other large scale redevelopment in the Meadowlands.
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There was concern over the NJSEA's board members lack of local roots. A nine-member advisory committee, made up of people who live and work in Bergen County, provided input & local officials were invited to briefings.

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NY Giants, the largest Meadowlands Sports Complex tenant, endorsed the plan in December 2002.
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Leaders of the Meadowlands Regional Chamber of Commerce applauded the decision.   Although few members are downtown businessmen, they felt the fear of Mills gobbling up local downtown's is unfounded and their track record for developments have been ancillary to downtown's.
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Sources:
Record, February 9, 12, 13, 17 & 22,  2003; April 3, 29, 2003
The Leader, February 27, 2003
Herald News, February 13, 2003


Previous Proposals before Xanadu concept was selected
NJSEA committee picks Xanadu 2/11/03. Board  officially decided about 2/12/03
Next step: developers agreement of this 104 acre site could take months.
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Click for larger image
   

Xanadu Package Overview
The Mills Corporation (Arlington, VA), and Mack-Cali Realty Corporation (Cranford, NJ)

Xanadu is visually compelling multi-use attraction incorporating family entertainment, office, and hotel uses. The diverse components will intensify existing sports complex uses and introduce new, related and complementary participatory sports and recreation uses, entertainment and education venues, and complementary leisure uses.

Snow Dome Alpine ski resort with real snow, slopes, chair lift and lodge; Ice Place ice skating and suitable for professional hockey and figure skating practice & competition; Meadowlands Area YMCA w/swimming;  indoor surfing, and extreme skate park; UnderWater World Aquarium where you take a walk on the ocean floor;  a wildlife museum to get up close to local animals; a 8,000 seat stadium for Bergen River Dogs lacrosse and the Bergen Cliff Hawks minor league baseball team; Hooptown basketball courts; Formula One Indoor Racing for individuals, teams and leagues; PBS Kids Pavilion with favorite characters in an interactive setting; Wannado where kids learn by doing g in a city built to their size; House of Blues live entertainment; Cooking school; Grand Movie Place; luxury spa;  fine dining, and night life of Jillian's arcade, bowling alley, billiard parlor.

Harrods Department Store, H&M Clothing Store and hotel to located at Cedar Creek wetlands.
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Xanadu's menu

Xanadu's developers Mills Corp. and Mack-Cali say that the $1.3 billion project at the Continental Arena site would feature 2.2 million square feet of office and hotel space, 2 million square feet for entertainment use, and 600,000 square feet for retail. A partial list of the attractions:

Twenty-story indoor snow dome including ski lifts

• UnderWater World shark exhibit and seafood restaurant; 3,000-seat concert venue
• Resort-style spa, minor league baseball/lacrosse stadium
• ESPN Skate Park for "extreme" sports, such as BMX biking
• Wannado, a mini-city where children role-play at various occupations
• Indoor surfing wave pool and water park
• Formula One indoor motorsports park
• New Jersey Sports Hall of Fame
• New Jersey Music Hall of Fame
• Giant movie theater complex, with 30 or more screens and a film studio
• Wildlife museum
• Culinary institute, with broadcast studio and cooking school
• Farmer's market
• Fashion area with catwalks, live modeling shows, and European-style cafes
• Environmentally themed restaurant with working volcano
• Circus and clown school

  Source: Mills/Mack-Cali

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The Proposal
Build and to sprawl across the arena site, over Route 120 and into the Giant Stadium parking lot.
It will take about six years to develop.

- Size: 4.8 million sq.ft.;  . 4.46 million square feet is split almost equally between entertainment/retail (recreation & entertainment 1.5 mil. sq.ft.; retail 700,000 sq.ft.), and office/hotel (offices: 1.7 mil. sq. ft in four buildings; hotel: 500,000 sq.ft/520 rooms).

- Jobs - 13,000 permanent & 10,000 temporary; 6,000 to work in retail & entertainment phases
- Costs $1.2 billion;
- Annual NJ Revenues: $27 million in leases, $100 million in taxes/with a promise of $860 million in overall tax revenues during the first 10 years.
-Economic impact by 2012 estimated at $2.3 billion per year

The proposal offers a $160 million lump-sum payment upon sighing the developers agreement in lieu of payments for the first 15 years of a proposed 75 year lease. ($160 million just happens to be the remaining debt of the Arena site.  NJSEA said the savings on interest payments would be $250 million for the authority and taxpayers.)

The Mill plan promises a tenfold increase in tax payments to East Rutherford, as well as the 13 other Meadowlands towns.

Mills Corp. to give 600 acre Empire Tract for state preservation; $65 million pledge towards roadway & infrastructure improvements; Promise of $860 million in revenues during first 10 years of operation; and flexibility of leaving Continental Arena intact if necessary.

Mills stated that it will not try to overturn Bergen County's' blue laws.

Mack-Cali would develop the 1.8 million square feet of office space and a hotel.



Previous to this decision ...
   

 
Continental Airlines Arena site Redevelopment
With the intention of the Yankee Nets to move the Nets and Devils sports teams to Newark, NJSEA's President George Zoffinger sent out request for proposals to more than 100 businesses nationwide early last summer.

In response to the Master Developer Request for Proposals, the New Jersey Sports & Exposition Authority [NJSEA] on about October 1, 2002, held a presentation to include an overview of the proposals followed by discussions on general land use, convention center, transportation, environmental impact and other concerns.  [Proposal overviews & illustrations]

The project was narrowed from six to three bidders late November 2002, with final offers due Dec. 30, 2002. NJSEA finalists were [Mills  Xanadu, Arlington VA] [Hartz Expo, Secaucus NJ] [Westfield Arena Place, Sydney Australia]
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New Jersey Sports and Exposition Authority Board Members

The NJSEA consist of a 14 member unsalaried board.  Eleven of the 14 seats are set aside for members of the public who are appointed for four years by the governor.   The other three seats are reserved who serve by their official position.

There are two vacancies, and 12 participated in the voting process. Nine voted for Xanadu, two voted against (Ray Bateman & Candace Straight), and Susan Bass Levin abstained (citing state oversight role as Chairwoman, NJ Meadowlands Commission).

There is concern over the boards lack of local roots. A nine-member advisory committee, made up of people who live and work in Bergen County, provided input & local officials were invited to briefings.

The board's role is to confirm the choice of a four-member subcommittee (Forgione, Schmelzer, Goldberg and Zoffinger), and it requires only seven votes for the boards endorsement.

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The Xanadu Experience -- www.meadowlandsxanadu.com
Web-site was re-launched August 2004 and provides more details
Official ground breaking was scheduled for September 2004
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