The municipality that is home to the American Dream mall in New Jersey is suing its operator, saying it failed to make agreed upon payments in lieu of taxes.
East Rutherford’s lawsuit, filed Friday in New Jersey Superior Court, asserts that despite pulling in “hundreds of millions of dollars” in revenue since opening in 2019, the mall’s developer and operator, Ameream, refused to make payments due under a payments in lieu of taxes agreement between the borough, the mall, and the New Jersey Sports and Exhibition Authority.
The lawsuit seeks to recuperate $7.5 million in payments official said the developer should have made and lists the NJSEA, who owns the land and was to act as guarantor of those payments, as a defendant as well.
The payments in lieu of taxes stem from agreements with the developer and its affiliates to build on adjoining parcels owned by the NJSEA, according to the lawsuit.
East Rutherford’s suit argues that PILOT payments for those parcels were due once the mall and its associated entertainment venues opened in 2019.
Triple Five/Ameream maintains that, according to its agreement with East Rutherford, the payments in question are only due when the mall is fully opened to the public, including its extensive retail, entertainment, and dining sections.
Though the mall is open for shopping, dining and entertainment, American Dream says it is not fully open in the wake of the COVID-19 crisis, and the mall still has empty storefronts and unopened facilities.
“We intend to vigorously defend our position,” Jessica Griffin, the mall’s spokesperson, said.
East Rutherford’s lawsuit calls those claims “bad-faith assertions.”
The venue “has hosted millions of guests, generated hundreds of millions of dollars of revenue since 2019, publicly announced both its opening and a post-COVID-19 reopening, and touted visits from parties ranging from Governor Phil Murphy to Kim Kardashian,” East Rutherford’s lawsuit said.
“The truth is simple” the lawsuit said. “The defendants would prefer not to pay the borough because American Dream opened shortly before the COVID-19 pandemic, closed for a matter of months, and, according to widely circulated reports in the press, has struggled financially in the more than two years since it reopened post-pandemic.”
The former mayor of East Rutherford, Jim Cassella, who was in office when the development deals were inked, said a percentage of the mall’s earnings should have been returned to East Rutherford in the form of PILOT payments since it opened in return for tax incentives offered by the city.
“East Rutherford gets the first shot at that PILOT payment in that they get paid off the top of the money that’s generated,” he said, adding he was pleased about the lawsuit.
“I still believe it should have been done a year ago or even longer,” Cassella said.
The mall has struggled to meet obligation on more than $1 billion of municipal bonds and $1.7 billion in private loans taken by the company to finance the mall’s $5 billion development.
Debt-service reserves have been drawn down to make payments due on $800 million of PILOT backed bonds issued though the Wisconsin-based Public Finance Authority.
And bondholders have gone without payments due on $287 million of limited obligation grant revenue bonds. The developer blames a slow state grant distribution process.
The mall was recently granted a four year extension on its private debt after it struggled to pay back creditors.