East Rutherford sued American Dream, claiming the Meadowlands megamall has failed to make about $7.5 million in property tax-like payments owed to the borough.
In a March 3 complaint filed in New Jersey Superior Court in Bergen County, the municipality said the mall’s owner, Triple Five Group, initially agreed to make payments in lieu of taxes on property surrounding American Dream in exchange for the rights to develop a minor league baseball stadium, offices and a hotel.
Under the terms of those real estate PILOT agreements, payments to East Rutherford were supposed to begin once the $5 billion, 3.5-million square-foot shopping and entertainment venue opened in October 2019; however, East Rutherford claims American Dream hasn’t held up its end of the bargain, the lawsuit says.
According to the 38-page complaint, mall operators “have refused to make these contractual payments, dubiously asserting that American Dream – which 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 toured visits from parties ranging from Gov. Phil Murphy to Kim Kardashian – is not ‘open for business to the general public.’”
Although American Dream was paying the main PILOT for the entertainment, retail and recreation component, it since missed a $125,000 installment Feb. 1 — one of four annual due dates outlined in the agreement, the complaint states.
East Rutherford also says American Dream owes at least $200,000 for sewer service.
“The truth is simple: 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 lawsuit states. “But the Defendants’ business difficulties do not justify shifting their burden onto the Borough and Borough taxpayers. Defendants struck a deal, and must live up to it.”
The complaint also names the New Jersey Sports and Exposition Authority (NJSEA) – which owns the property where American Dream is located and serves as guarantor if the mall fails to make its PILOT payments – as a defendant. East Rutherford accused NJSEA of shortchanging the borough $525,000 on payments related to other facilities within the Meadowlands Sports Complex.
In a statement to NJBIZ, East Rutherford’s attorney Gerald Salerno, of Hackensack-based Aronsohn Weiner Salerno & Kaufman, said, “The borough communicated on several occasions with representatives of America Dream and the NJSEA in an effort to reach a resolution on these matters, and these efforts were unsuccessful. Given the clear contractual provisions of the financial agreements, the borough was left with no alternative but to commence this action.”
A spokesperson for the New Jersey Sports and Exposition Authority did not immediately respond to a request for comment.
Jessica Griffin, an American Dream spokesperson, told NJBIZ, “We intend to vigorously defend our position.”
Post-pandemic, Triple Five, which also owns the Mall of America and the West Edmonton Mall, has steadily added new retail stores, attractions and restaurants to American Dream, which now boasts a tenant lineup that includes Saks Fifth Avenue, Hermès, Saint Laurent, Tiffany & Co., Gucci, Dolce & Gabbana, Ferrari, Aritzia, H&M, Primark, Uniqlo, Sephora, Zara and H Mart.
American Dream is also home to Toys R Us’ global flagship store as well as DreamWorks Water Park, Nickelodeon Universe Theme Park, Legoland Discovery Center, Sea Life Aquarium, Big Snow ski park and the Dream Wheel.
In 2021, American Dream generated about $173 million in revenue, but its expenses totaled more than $232 million. It recorded $305 million in sales — far below the $2 billion Triple Five initially projected for the property’s first year of operations. However, the mall fared a bit better last year, reporting $422 million in gross sales, a 38.4% increase from the prior year.
East Rutherford’s lawsuit comes about a month after American Dream was sued by two junior lenders who provided $389 million worth of private loans that helped finance the mall’s construction.l