Back in September the Ghermezian brothers from Edmonton, Canada, finally acquired the partially completed, but empty and basically derelict, mega-mall outside Rutherford New Jersey, just across the river from Manhattan.
Last week the Borough Council of the town of East Rutherford approved the components of a deal with the Ghermezian’s to help finish the project.
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Council voted 5-1 to approve the deal, which will bring substantial payments to the town, both up front and over the life of the mall.
Once all the i’s are dotted, and all the t’s are crossed, in the legal and contractual obligations to be applicable between them, the town will then have the authority to issue US$550 million of municipal bonds to help pay for finishing it.
In exchange the town will receive $20 million upfront to repay debt associated with the borough’s new police and court building. The town will also get $164 million over the project’s first 20 years in payments in lieu of taxes, plus another $1 million upfront and payments for the next decade to repay sewer costs.
Whilst these bonds are to be non-recourse beyond the project itself, the East Rutherford Council last week did not quite go ahead and issue the new bonds on the spot, until one or two outstanding details are ironed out.
While the momentum for moving forward remains strong, one significant item still on the to-do-list is provision by the Ghermezian’s, to the town, of an insurance policy for the town’s legal bills, just in case somebody ever sued the town anyway in the event of a future default.
Good contracts make good friends to be sure, and there is nothing wrong with being meticulous and careful, as this gets ready for take off now.
“The Council and the Mayor have been very clear that they have a no-cost, no-risk policy, ” said Richard Allen, the Borough Attorney, in a statement worthy of a re-election campaign.
Triple Five and the town have also not yet agreed on how much the municipality should be reimbursed whenever its police or fire crews need to respond to calls from the new mall.
However now we are down to this level of minute municipal details there can be a lot of confidence the project is going to proceed.
American Dream Meadowlands Mall – America’s largest shopping centre
The goal of the Ghermezian’s company Triple Five is to restore, complete and substantially improve the concept for the mall and to make it one of the finest destination malls anywhere in the world.
It will have 5 million square feet of rentable space when it is finished, with indoor skating rink, indoor ski hill and even a large performing arts centre for lavish entertainment programs. DreamWorks will brand an amusement park and water attraction at the mall as well.
Triple five’s two existing mega-malls, one in Edmonton and one in Minneapolis, each get 70 million visitors a year and this new third one, now renamed American Dream Meadowlands, will become America’s largest shopping centre when it is finished.
Last month the State of New Jersey also approved its own package of state tax breaks totaling US$390 million to support the new project.
About the Ghermezians
The Ghermezian family is a family of Canadian Jews who came originally from Iran.
Like many Iranian emigrants the head of the family, Jacob Ghermezian, who died in the millennial year 2000 when he was 105 years old, left Iran in 1959 at the time of the fall of the Shah and subsequently came to Canada in 1964 with his four sons. The four, Eskandar, Nader, Raphael and Bahman then grew what had been a family rug business into a major real estate and construction empire.
The family’s existing business holdings include the 4.9 million square foot Mall of America in Bloomington, Minnesota, close to the Minneapolis-St. Paul international airport and the 5.3 million square foot West Edmonton Mall in Edmonton, Alberta Canada. Other ventures include a Trust company and hotel interests.
The Ghermezians’ net worth has been variously estimated at around US$2 billion, though no one really knows for sure as the family carefully guards it own privacy including about financial matters. Accordingly, Forbes Billionaire’s list just does not mention them at all.