Tuesday, March 28, 2017

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Xanadu Doomed, or just Delayed?

XanaduThis year was to mark the year that Xanadu, a 2 million square foot entertainment/shopping complex, was to open in the New Jersey Meadowlands. Promising an indoor ski slope, tunnel-diving, movie complex, and warehouse-sized shops, the project has few cheerleaders.

Bergen county residents call it “structural graffitti” with its proposed Pepsi Globe Ferris wheel blocking the Manhattan skyline.  Senate President Richard Codey says it’s “yucky-looking,” and the FAA wonders if the Ferris wheel will interfere with air traffic control.

Then there’s the timing: a Disney-meets-Vegas inspired retail center in the midst of a recession?

What’s worrying however is that it won’t matter. “The largest retail and entertainment complex in the United States” partially owes its existence to subsidies, bonds, and taxpayer-financed site remediation.  Can taxpayer life-support be far behind?

Xanadu is a hybrid: last decade’s euphoric consumerism kept alive by misplaced government bets.

The vision belongs to partially to the New Jersey Sports and Exposition Authority, a state agency that oversees New Jersey’s tracks and stadiums. The Meadowlands has been a government target for economic redevelopment for decades. Xanadu is the most recent attempt to fill unused parking lots next to the stadium. The vision also belonged to a real estate developer, the Mills Corporation, which has since backed out.

While not directly subsidized,the $2 billion center is being built on state-owned land, and nearly $80 million is being spent on transportation. Site remediation has cost $2 million. The NJSEA received a $160 million 15-year lease from the private developer Xanadu Meadowlands.

Today, the main players are in financial difficulties. Real Capital Analytics put the project on its “Troubled Assets List.” The NJSEA is in the red. Years of using surplus track betting revenues to finance stadiums, convention centers, and the authority’s penchant for issuing bonds have come to a screeching halt.

Now scheduled to open some time next summer, as Jeff Tittel, executive director of the New Jersey chapter of the Sierra Club notes, “We’ve given millions in incentives, tax breaks and transportation on a project that was pushed through because of political connections — not because we needed it.”

Consumer preferences will reveal how much it is loved or loathed next summer, in theory. Unless the state decides it is “too big to fail.”

Here’s a report from the Star-Ledger on Xanadu:

Ledger Live: Meadowlands Xanadu – A boon or boondoggle?