Real Science for Real People:
Don’t Let Mills Off the Hook for Sustainable Development
By Dr. Beth Ravit
To write this column, I would like to trade in my “scientist hat” and return for a moment to the “retailer hat” that I wore for almost three decades. There have been numerous press articles since the beginning of this year about the financial condition of the Mills Corp., the lead developer in the Meadowlands Xanadu project. Although the financial problems Mills is facing have only surfaced in our local press in the past month, the company has been the subject of concern within the financial community since its surprise announcement on Nov. 2, 2005 that its third quarter earnings report would be postponed and that its earnings would be “substantially below expectations.”
A month prior to this vague earnings warning Mills announced the resignation of three top executives - their Chief Accounting Officer, Chief Operating Officer, and an Executive Vice President. Earlier in the year Mills had restated 2003 earnings, postponed 2004 earnings reports to adjust for accounting charges, and reported operating losses in 2004 versus profits in 2003 (retailtrafficmag.com). In its financial filings with the SEC on Jan. 6, 2006, Mills announced that it would restate audited (2000 through 2004) and unaudited (2005) results, discontinue 10 projects, reduce its management by 17 officers, appoint a new Board member with financial expertise to the audit committee, and appoint a new head of asset management. An accounting consultant has also been hired to help implement financial changes and controls. The projected cost of these actions is $77 million. As a result of the financial restatements Mills is in default of certain provisions in its line of credit and some project-related loan criteria.
The big question is how do these financial problems affect the Meadowlands Xanadu project? In the January 2006 announcement Mills said that it will focus its efforts on projects that are “most likely to enhance shareholder value,” projects that include Meadowlands Xanadu. The company must now convince its investors, employees, development partners, and the public that it can continue forward with these existing projects. My visit to the “Investor” page of the Mills web site found the statement that the company is “committed to sustainable growth.”
Hackensack Riverkeeper has encouraged and supported Mills in its promise to make the Meadowlands Xanadu a “green” project because we also support sustainable growth. It would be inexcusable to use the current financial problems as a rational to cut development costs or renege on the commitments made to the citizens of New Jersey and the Meadowlands Environmental Community - to build Xanadu in compliance with green building practices.
In addition to damaging the fragile Meadowlands ecosystem and the company’s credibility with the local community, a non-green project would be a grave financial mistake for Mills. Many “green” technologies are now well proven and cost effective, both in the short term (the actual cost of installation) and the long term (life-time cost savings due to lower maintenance and energy costs). Some of the “green” technologies we discussed in our Spring 2005 issue of Tidelines that would be applicable to Xanadu include solar panels to generate electricity (30% of a project’s long-term cost) coupled with the use of natural lighting and energy efficient lighting fixtures. The complex could use “green roofs” to help manage stormwater and increase energy efficiency, recycle treated waste and stormwater for non-drinking water use (a great way to make snow for the indoor ski slope!), and include recycled building materials into construction and furnishing materials such as carpets.
We urge the new members of Mills management team to support the company’s vision of sustainable growth, and to work with Hackensack Riverkeeper to honor the company’s commitment to make Xanadu a model of ecologically responsible retail development.
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