From NorthJersey.com:
Top aides OK’d risky EnCap deal
Senior officials in the McGreevey and Codey administrations signed off on a $212 million loan for the troubled EnCap golf project, even though subordinates warned that the cut-rate financing was a risk for New Jersey taxpayers and bad policy for the environment.
Documents reviewed by The Record show that lawyers from the politically connected DeCotiis firm of Teaneck scored the massive loan for EnCap Golf Holdings in December 2005 despite concerns about the developer’s shaky credit and long history of missing payments and breaking promises to state agencies.
The Department of Environmental Protection, which contributed $105 million to the EnCap financing package, even exempted the developer from providing more than minimal collateral.
The bottom line: The biggest loan the DEP has ever made to a private developer is backed only with $13 million in borrowed cash and the promise of future tax revenues that may never materialize as the massive landfill-to-links project teeters on the brink of collapse.
The developer is months behind in payments to its subcontractors, and on May 17 the state Attorney General’s Office found EnCap in default of the terms of its deal with the New Jersey Meadowlands Commission. EnCap has until next Friday to submit a revised landfill cleanup budget — or else the project could be canceled.
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EnCap, the records show, initially failed to disclose plans to collect hundreds of millions from public bonds backed by future tax revenues, or PILOTs, that would be generated by the 2,500 houses, hotels and other businesses scheduled to be built as part of the luxury golf village. In separate agreements with EnCap, Rutherford and Lyndhurst ceded large shares of those future revenues to the developer.State officials, who had been scrambling to find sufficient collateral for the loan package, were shocked to discover that EnCap hadn’t told them there was a potential mountain of cash that could be pledged to back the loan.
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Less than two years after the loan was approved, the EnCap project is in default and threatening to unravel.Under the direction of Corzine, the DCA’s Local Finance Board has all but rejected EnCap’s PILOT bond application.
The future of the Meadowlands dumps — ugly and contaminated orphans set amid some of the world’s most valuable real estate — seems as uncertain as ever.
This really seems to be a case of government at its worst. Campbell, McCormac, Hart and Levin need to give answers about this, and probably for this.
This really sounds like cronyism on steroids and the fact that it happened is an embarrassment not just to the state, but the newspapers that cover it.
The Record deserves some credit for putting this story together, but they and the Ledger really should have been on something like this in real time. Anytime you start with an entity with a history like Encap, everything they are involved in needs to be watched closely.
Finally, some credit needs to be given to the DEP employees like Wolfe, who made it clear for anyone paying attention that this train was running off the rails.