For Immediate Release
June 27, 2011 Contact Jeff Tittel, 609-558-9100
Xanadu Bailout: An Ugly Building Has Turned into Dirty Deal for Taxpayers and the Environment
The New Jersey Senate, in one of its largest tax giveaways ever, will be subsiding Xanadu megamall with hundreds of millions of taxpayers dollars. Under this bill there is no limit on the amount the subsidy will be; the more the developer spends the larger the subsidy will be. Even if the developer wastes money, the taxpayers will still be subsidizing it. This comes at a time when the state is in a financial crisis according to our Governor and cannot afford to clean up contaminated sites, remove underground storage tanks, or redevelop brown fields. But now the state is moving forward with massive tax breaks for the Xanadu project even after three developers have tried and failed.
"This is the American Scheme, because it is about taking care of developers at the expense of the taxpayers of New Jersey. Today the Senate took the side of special interests over the financial health of our state," said Jeff Tittel, Director of New Jersey Sierra Club. "Teachers, police, and fireman are being laid off, but we are going to give hundreds of millions of dollars in corporate welfare to a Canadian developer."
Earlier this year Governor Christie announced a deal with the new mall developer that will allow Triple Five to use tax increment financing. It turned out Xanadu is not covered by the New Jersey Stimulus Act and now the Legislature is rushing to pass these tax breaks through bill S2957, which passed the full Senate and Assembly Budget Committee today. These tax breaks would allow for tax monies to be re-invested into the development rather than paid to the state while the facility will still require state and municipal services such as police.
Triple Five is receiving $200 million based on a $1 billion cost to finish Xanadu but the subsidy could go up to $350 million or higher, as the developers plans on expanding the mall, potentially driving the cost up to $1.7 billion. There is nothing in this legislation to cap the subsidy at $200 million.
If the project is a success there is no mechanism for the state to recuperate some of the money it has invested in the site such as profit-sharing. We are giving away New Jersey's most valuable piece of property. Instead of collecting rent or ensuring there are cost recuperation mechanisms, New Jersey is offering the developer subsidies. There is no assessment of the financial condition of Xanadu so the money could just go to line the developer's pocket. National studies have shown that these types of subsides do not bring any new jobs, all they do is enrich the developers.
Requirements for mitigating the environmental impacts of this project have been waived. They have been exempted from stormwater requirements. The developer will not be required to implement green building techniques such as reducing water or electricity use and does not have to use renewable energy such as solar. The Xanadu/American Dream project will generate more than 150,000 cars a day, gridlocking an area of the state already overburdened with traffic. Priority wetlands have already been filled on site and when Xanadu is completed it will be the largest producer of greenhouse gas emissions in the state. This project is not just a financial disaster, but also an environmental disaster.
"New Jersey keeps throwing away more good money instead of coming up with a real plan for the site. We keep subsidizing developer after developer with a failed business model. The white elephant is becoming a larger blue whale," said Tittel.
Xanadu will now receive $1.25 billion in public subsidies and tax breaks. Including:
* Up to $350,000,000 in state subsidies
* $100,000,000 of roadway improvements
* $31,000,000 of taxpayer tolls for turnpike access Xanadu
* $180,000,000 for a rail line to Xanadu
* $300,000,000 in property tax exemptions
* And special legislation to give it a liquor license
"This will be the American nightmare with more traffic, more impacts to the environment and more costs to taxpayers. It is Christmas in June for Triple Five as we give more money to our national symbol of pay-to-play," said Tittel. Received on 2011-06-28 06:58:44