American Dream Meadowlands project bond sale faced with legal challenge
NorthJersey.com, September 21, 2016
The New Jersey Alliance for Fiscal Integrity filed a four-page letter to the New Jersey Sports and Exposition Authority on Tuesday formally requesting a stay in the issuance of $1.15 billion in American Dream Meadowlands bonds pending a court decision. The NJSEA responded with an Application for Permission to File an Emergent Motion.
The alliance’s filing to NJSEA Chairman Michael Ferguson from attorney Thomas Calcagni notes that the agency indicated that the issues raised recently by the alliance would be “completely addressed” by the revised resolutions approved by the agency board on Sept. 15. But Calcagni says that did not happen.
“Based on the statements made and actions taken by the NJSEA at that meeting, and having had tthe opportunity to review the content of Resolutions 2016-46 and 2016-47 (the “New Resolutions”), it is clear that the efforts of the NJSEA to remedy the litany of procedural and substantive defects that plagued Resolutions 2016-37 and 2016-38 (the “Old Resolutions”) fell short. Accordingly, the Alliance again respectfully requests that the NJSEA stay the effectiveness of the New and the Old Resolutions and not issue the PILOT-backed and ERG-backed bonds pending the Alliance’s appeal.”
A. The NJSEA’s Actions Belie Any Notion of Transparency.
To be clear, it was only after the Alliance highlighted that the Old Resolutions violated the Authority’s enabling statute (N.J.S.A. 5:10-lO(d)) because they failed to state the RAB or ERG Bonds’ maturities, dates, and interest rates, that those essential terms now appear in the New Resolutions. More telling is the NJSEA’s justification for this material omission – these terms had not yet been finalized with the Wisconsin Public Finance Authority (“WPF A”) and, therefore, could have not been included in the Old Resolutions. Even if that were true, N.J.S.A. 5:10-IO(d)’s procedural requirements dictate that the NJSEA must wait until these requisite bond terms are firmly in place before taldng [sic] any formal action to move forward with the Bond’s issuance, especially given the admitted “complexity and size of the financing structure.” (See Exs. 1 and 2, §2). As such, the NJSEA’s attempt to prematurely approve more than a billion dollars in public financing, at a “Special Meeting” held without proper notice in violation of the Open Public Meetings Act, and through resolutions that fail to disclose the core elements of the transaction, leaves no about the NJSEA ‘ s desire to rush the bonds to market and keep the public in the dark.
Here is another issue the alliance has:
B. The New Resolutions Violate Executive Order 26.
The NJSEA’s belated attempt to feign compliance with Executive Order 26 (Whitman 1994) (“EO 26”), too, is contrived and unavailing. Through an OPRA request, the Alliance has confirmed that the NJSEA violated EO 26 by not submitting to the Treasurer within five days of the approval of the Old Resolutions its justification for electing to forego the competitive process strongly preferred by the State and instead pursue what it incorrectly calls the kind of “negotiated sale” contemplated by EO 26.
The group also obects to the “non-negotiated” sale of the bonds to a Wisconsin agency, which it says can only occur if the agency offers a detailed explanation as to why that would happen. The lack of an underwriter – who could negotiate the best price – also is met with objection,
Another issue is whether Redevelopment Area Bonds (RAB) regulations dictate tthat they can be issued with an out-of-state agency:
“Under the current structure, the NJSEA will first issue up to $800 million in RAB Bonds collateralized by PILOT payments to be made by Ameream, LLC to the Borough of East Rutherford.
The NJSEA will then sell the $800 million in RAB Bonds to the WPFA, which will in turn issue bonds. The WPFA’ s bonds, however, will lack any substance of their own and serve as a mere shell containing the rights, including those related to the PILOTs and cash flow, of the NJSEA’s RAB Bonds. Thus, the WPFA’ s bonds will be sold to the public and, by extension, will be collateralized by the same PILOT payments collateralizing the NJSEA bonds. In other words, the NJSEA continues to seek to do indirectly, through this thinly-veiled, two-step process, something that is not even contemplated by the RAB Financing Law.”
Another issue reiterated is whether the Trenton-based Local Finance Board must reapprove the bond sale given the changing conditions (note: this seems like a lesser hurdle given that that the agency could call a special meeting and check off this box).
Yet another point of contention is whether the sports authority has the ,,, [sic] well, authority to issue contract bonds.
The sports authority quickly reacted on Tuesday, filing that Application for Permission to File Emergent Motion.
The court granted that motion later on Tuesday while requiring the alliance this morning to file “any amended notice of appeal.” Their “merits brief and appendix” are due Friday morning, while the sports authority and Triple Five have until Friday afternoon to produce their paperwork.