The following is Part II of a Christie Watch investigation into the American Dream mega-complex at New Jersey Meadowlands. In Part I, published yesterday, Christie Watch reported how Christie’s mentor, David Samson, former chairman of the Port Authority and founder of the powerful Wolff & Samson law firm, was involved with several Christie aides on nearly every side of the project. In Part II we continue the story, including how Wolff & Samson and its allies found the cash to restart American Dream.
Conveniently, when Lori Grifa, the Wolff & Samson attorney and former Christie appointee at the Department of Community affairs, left the DCA at the end of 2011 to return to Wolff & Samson, she brought Triple Five, the builder of the American Dream complex, with her as a client. Triple Five clearly expected the firm to get them the funding they needed to make the project a reality—and, so far, they haven’t been disappointed. Although construction has not restarted, an April agreement between the firm and labor unions appears to be one of the last remaining obstacles. Triple Five agreed to pour $1 billion more into the project—but only if the state came up with money from the public coffers. Perhaps they counted on the fact that, ever since taking office, Christie has supported huge corporate tax breaks to get companies to stay in New Jersey, and Wolff & Samson’s lobbyists worked hard to persuade state legislators to pass bills favoring those tax breaks. Many of Wolff & Samson’s clients ended up as recipients, and the largest tax break went to Wolff & Samson’s client, Triple Five and the Meadowlands Xanadu project, newly renamed as the American Dream.
Now, enter Michele Brown, yet another of Christie’s former assistant US attorneys. Brown is exceedingly close to Christie, who once improperly helped provide her with a personal loan. In 2009, Brown worked alongside Marra during the Big Rig III sweep that burnished Christie’s reputation as a tough prosecutor. Back then, Brown was suspected by some of secretly providing help to candidate Christie from her position at the US Attorney’s office, according to The Jersey Sting, a book by Ted Sherman and Josh Margolin, two reporters then with the Newark Star-Ledger. After he was elected governor, Christie appointed Brown to head New Jersey’s powerful Economic Development Authority (EDA). And it was Brown’s EDA that, in 2013, arranged the tax break for Triple Five. In November 2013, EDA backed a $390 million development grant for the project, telling the EDA board that the agency had coordinated closely with Marra’s NJSEA, the state treasurer and county officials to work out the financing package for the developer.
The EDA grant is part of the financing package arranged by Triple Five. It involves an incredibly convoluted and risky set of arrangements, according to which as much as $500 million in bonds issued by the tiny town of East Rutherford, New Jersey (population: 8,000), in turn will be sold to the Bergen County Improvement Authority, and then sold again. The BCIA is a quasi-autonomous body that helps its parent, Bergen County, and county towns access funding for projects.
At a meeting in March, 2013, advisers told the BCIA Commissioners, with some understatement, that the bond deal was “very large, very unique, very complicated.” The bonds from the EDA, which are to be paid by sales tax revenue derived at the project, and the BCIA-East Rutherford bonds, which are linked to property taxes from the developer, are tied together in a number of ways.
Jeff Tittel, director of NJ Sierra Club, told Christie Watch the whole financing scheme, with each part dependent on the other, “sure looks like a Bernie Madoff house of cards.”
There are two real dangers for taxpayers in all this. One is that the county will lose much needed tax revenues, as former Bergen County Executive Dennis McNerney warns. Triple Five and its supporters argue that the mega-complex is so unique and has so many activities that people will travel many miles to come there and spend money they otherwise would not. Thus the county will have a net gain of tax revenues. But opponents say that the project will simply divert money that would have otherwise been spent elsewhere in overbuilt North Jersey’s web of shopping malls and entertainment facilities.
Second, there is significant concern about how much the county, town and state are on the hook if the whole project goes bust. Who pays the legal fees if bondholders sue, and will insurers back the bonds if the company defaults? The company has assured East Rutherford and the BCIA that they won’t be on the hook. But, as the Bergen Record noted:
If issued, the bonds would be tax-free, which means investors would pay no taxes on the bond payments they receive. They also would be non-recourse bonds, which means investors must agree in advance that they understand the risks associated with the bonds and have no recourse to sue the borough or Bergen County should anything go wrong. Of course, labeling the bonds “non-recourse” doesn’t mean that if the bonds somehow lose tax-exempt status—thereby costing investors millions of dollars—those investors won’t try to sue anyway.
Like an arms dealer that sells weapons to all sides in a many-sided conflict, Wolff & Samson has been intimately involved with the financial operations of all these government agencies and private entities. While the law firm may not have officially advised either the county, the town of East Rutherford, the Bergen County Improvement Authority or the EDA on these specific bonds, it has done extensive bond and legal work for all of them. In fact, it is the top bond counsel in the state, advising on over 30 percent of all public financings in the first half of 2013.
Consider Wolff & Samson’s record: Since 1982, Wolff & Samson is one of a select group of law firms that serve as bond counsel to the EDA. The firm is bond counsel to Bergen County on tens of millions of dollars of school, hospital and general obligation bonds. Wolff & Samson has acted as bond counsel to the BCIA on a number of cases, including one involving the area’s major medical center. Wolff & Samson has also acted as special legal counsel for the authority, defending it in sex and employment discrimination cases. Wolff & Samson has acted as the lawyer for Bergen County. And a Wolff & Samson lawyer, Arthur Goldstein, was counsel to the transition team of Bergen County Executive Kathleen Donovan, a Republican, after her 2010 election.
Also involved is Alan Marcus, a major power broker and real estate mogul in Bergen County and North Jersey. Putting the icing on the Meadowlands cake, Marcus ran Donovan’s election campaign and headed her transition team. He is the spokesman for Triple Five.
Perhaps Wolff & Samson can find weasel-worded legal justifications for its many-sided involvement in the American Dream boondoggle. But to most outsiders, it looks like a conflict-of-interest web, especially by coming before the BCIA and East Rutherford representing Triple Five, a company that is seeking millions of dollars in funding?
In January the Bergen County freeholders urged the county executive not to award any more contracts to Wolff & Samson. In early March, they called on Samson to resign from the Port Authority chairmanship. (He did, of course, resign.) A week later Wolff & Samson gave up its lucrative role as lawyer for both the county and the BCIA.
Jim Tedesco, a Democratic Bergen County Freeholder, now the Democratic candidate for county executive, pressed for Samson’s resignation. In an interview with Christie Watch, Tedesco said:
David Samson failed New Jersey and Bergen County as Chairman of the Port Authority. He fostered a culture that put politics above the public good and ultimately compromised the safety and well-being of Bergen County residents. Mr. Samson’s first priority should have been to seek out the facts—not help seek retribution against the one person with the courage to stand up and reopen the lanes. The ethical cloud surrounding Samson also called into question ties his law firm had to Bergen County government. How could anyone vote to award Wolff & Samson legal work that is funded by taxpayers after he showed such disregard and contempt for Bergen County residents? Mr. Samson does not represent the values and ideals of Bergen County and as such the Freeholder Board voted to no longer accept any resolutions from County Executive Kathe Donovan that awarded work to his firm.
Triple Five also has to find equity investors for the project. They enlisted Macquarie Group Ltd. as adviser on that quest, and they will be putting as much as $100 million of their own money into it, too. David Samson is very familiar with the company, a huge multinational firm that provides banking, financial and advisory services on a host of industries including real estate, energy and infrastructure, since Wolff & Samson is the lawyer for a Macquarie company that owns oil storage tanks at the Bayonne Bridge. And when Samson chaired the Port Authority, a Macquarie-led consortium won a $1.5 billion contract to design, build, finance and maintain a replacement of the Goethals Bridge. US Attorney Paul Fishman, who is investigating Bridgegate, has already subpoenaed Port Authority documents relating to David Samson and the Macquarie contract.
Beyond the conflict of interest issues related to Wolff & Samson is the very real question of whether public funds and resources should be used for yet another New Jersey mega-mall.
Jon Whiten, deputy director of the think tank New Jersey Policy Perspective told Christie Watch:
The use of public dollars to back private investment that might not occur on its own is not a bad thing on the face of it. There are any number of important projects undertaken by private entities that could truly benefit an area and may be worth public financial support: housing projects that would help people find affordable homes, supermarkets and other shopping amenities that would reach people in underserved areas or smart-growth commercial projects that would help get more people onto mass transit, just to name a few. The difference between those kinds of projects and the American Dream project is pretty clear. While the former offer a clear benefit to society and the residents of New Jersey, we’ve yet to figure out what real benefit—beyond a few thousand construction jobs and thousands of permanent low-wage jobs—that this megamall will bring to the Garden State.
But this past April Christie, Triple Five executives and labor unions held a splashy press conference at the complex to announce that, with labor agreements now in place, the project was about to move forward and would be ready to open in the fall of 2016, when of course Christie hopes to be in the White House, far away from ugly mess sitting beside the NJ Turnpike.