MEADOWLANDS UPDATE

The Star Ledger
Letters to the Editor
May 16, 2008
 
Project should continue
 
Rutherford Mayor John Hipp misrepresents the facts in your May 10 story “Meadowlands builder insists it will stick with the project.” In fact, a group of financial institutions has invested $253 million in the project. It is these private investments that are at risk. The private institutions, including Cherokee, provided the capital to purchase bonds worth $210 million, and Cherokee invested another $43 million. The state has no obligation to repay the bonds, and they won’t affect the state’s credit rating if defaulted.
 
The investors have helped to clean up nearly 50 percent of the landfills, paid the towns $9 million in fees and supported important town projects. They have not made a cent and risk losing their entire investments.
 
That’s troubling to these institutions, and it should trouble the state and the towns. If this project goes forward, the Meadowlands would be cleaned and the state and towns absolved of legal liability. Redevelopment would add important revenue to the towns – estimated at $20 million a year at completion – reducing the need for tax hikes. The project has shown tremendous progress recently, and its full promise is in sight. Why stop now?
 
-James Dausch, East Rutherford
The writer is EnCap manager.

The Record
Letters to the Editor
May 15, 2008
 
EnCap limits public's financial risks
 
"EnCap's manager blaming Corzine" (Page A-1, May 10) apparently does not understand the nature of the Meadowlands redevelopment project's financing.
 
It says that $300 million of the project costs were paid by "public bonds." The bonds are secured by collateral posted by institutional lenders, not by the state or its taxpayers. Private financial institutions — including Cherokee Investment Partners, the major investor in the redevelopment project — have invested more than $210 million in the project by purchasing bonds, which they still own. Cherokee invested an additional $43 million to fund environmental remediation costs and other items. The state has no obligation to repay the bonds, and they will have no impact on the state's credit rating in the event of default.
 
The $58 million that the state invested in the project will be repaid with brownfield reimbursement funds unless the state rejects development of the site.
 
The state inspector general has found that the state has no obligation to repay the bonds, and because of this the bonds would have no impact on the state's credit rating.
 
Regarding the PILOT (payments in lieu of taxes) bonds that the state agreed to in 2004 and 2005, the article claims that EnCap would receive a "$450 million cash-out." This statement grossly overstates the amount of PILOT funds and their purpose.
 
In fact, these funds will support environmental remediation, schools and other public benefits. Any proceeds would be applied against project costs and would not go to EnCap — as the state agreed to when the project was refinanced in 2005. PILOT bonds are purchased by private institutions, and the state has no obligation to repay the bonds. For this reason, PILOT bonds are a common financing tool used in communities across the country.
 
The PILOT agreements have been a critical part of the financing plan for the Meadowlands cleanup. With them, the progress made to date can continue. The promise of a clean, safe and productive Meadowlands that benefits the region and its towns is in sight. Why is the progress being stopped now?
 
James Dausch
East Rutherford, May 12
The writer is manager of development for EnCap.