(Bloomberg)—A New Jersey town sued the American Dream mall and entertainment complex over its refusal to make about $7.5 million in property tax-like payments and $400,000 for sewer service.
American Dream’s owner Triple Five Group agreed to make the payments in lieu of real estate taxes to the borough of East Rutherford on land surrounding the mall in exchange for rights to build a hotel, minor league baseball stadium and offices. The payments to East Rutherford, home to the $5 billion project, were supposed to commence once the mall opened to the public, according to a March 3 complaint filed by the town in Superior Court of New Jersey.
The borough said in the lawsuit that American Dream has “dubiously asserted” that the complex — which has hosted millions of guests and touted visits by reality television stars like Kim Kardashian — isn’t open for business to the general public.
“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,” the town said in the complaint.
Jessica Griffin, a spokeswoman for American Dream, didn’t provide an immediate comment.
American Dream, located across the Hudson River from New York City, opened the doors of its entertainment complex in October 2019, almost two decades after a mall on the site was first proposed. Five months later, the pandemic spurred lock-downs to contain the public-health emergency and postponed the opening of the mall’s retail stores until October 2020.
In November, lenders led by JPMorgan Chase & Co. gave American Dream a four-year extension on repaying $1.7 billion in construction borrowing. The mall also has $800 million of municipal-debt backed by payments in lieu of taxes. American Dream has made payments on the bonds but is challenging its tax assessments, which would reduce the payments.
About $300 million of municipal bonds backed-by state grants issued for the project have missed two interest payments.
East Rutherford also sued the New Jersey Sports and Exposition Authority, which guarantees American Dream’s obligation to make the payments in lieu of taxes. The authority owns the title to property in East Rutherford known as the Meadownlands Sports Complex, where American Dream is located.
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