Jones Lang LaSalle

Meadowlands Redevelopment Difficulties Continue

By Brianne Harrison

LYNDHURST, NJ-In a letter sent to EnCap October 5, the State Environmental Infrastructure Trust informed the developer that it could no longer draw from the nearly $300 million in publicly supported low-interest loans that were issued to cover the costs of the Meadowlands project. EnCap was also instructed to withdraw three pending applications for almost $3.5 million in withdrawals from the loan pool.

This is the latest setback for the once-promising project, which sought to place luxury housing, hotels and golf courses on land that was formerly used as landfills. According to Christopher Gale, an official with the New Jersey Meadowlands Commission, EnCap was chosen to remediate and redevelop the site because “it was judged at the time that they had unique experience from their landfills-to-golf project in Houston.” The project he refers to is the successful Wildcat Golf Club, an $18-million two-course club on the site of a former landfill.

EnCap began remediating the site in 2004. Work ground to a halt earlier this year, however, as costs began spiraling out of control and the Department of Environmental Protection slapped EnCap with a $1-million fine for failing to control methane emissions from the site. EnCap requested permission to replace the contractor responsible for cleaning up the site, Mactec Development Corporation, but the request was rejected by state officials. Mactec has since left the site and has filed claims seeking $25 million in back payments from EnCap.

In an effort to cover the rising costs of the project, EnCap attempted to raise almost $400 million by issuing bonds backed by future property tax breaks the company expected to receive from North Arlington and Rutherford. The state rejected the proposal.

In light of EnCap’s continuing financial difficulties, the Meadowlands Commission issued two letters, on September 10 and October 5, threatening to terminate EnCap’s development agreement on November 20 unless the company resumes work on the site and pays a $16 million security guarantee. According to the Meadowlands Commission, EnCap has not yet responded to the letters.

The day after the first letter from the Meadowlands Commission was issued, the DEP issued an Administrative Order and Notice of Civil Administrative Penalty Assessment, listing many violations of state environmental protection laws at the Meadowlands site. These violations include:

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• Failure to properly fence the project area, with the result that waste continues to be illegally dumped at the site
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• Placing dredged material that did not meet requirements as cap material
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• Failure to place necessary decontamination equipment at the site, resulting in contaminated soil being tracked out of the site and onto nearby roadways
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• Failure to confine the excavation to a size consistent with the number of pieces of digging equipment and trucks at the site
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• Excavating waste without properly disposing of it
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• Failure to control surface water run-off
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• Allowing fill material to erode into a nearby creek
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• Failure to maintain or acquire certain necessary permits
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EnCap was given seven days to acquire the necessary permits and to address many of the violations. In addition, the DEP issued a $3.3 million demand for payment to cover the cost to the state of disposing of dredged fill dirt from the site. In 2004, EnCap promised to arrange for the disposal of the fill dirt. According to the DEP, EnCap is currently appealing the fines and the AONOCAPA.

According to both the Meadowlands Commission and the DEP, it has not yet been determined what will become of the project if EnCap’s development agreement is revoked. Repeated calls and e-mails to EnCap seeking comment were unanswered.

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