Think the American Dream has had every problem a megamall could have? Dream on.
The New Jersey retail complex is at the center of a dispute with local municipalities, which allege it owes them at least $9 million, NorthJersey.com reported. The localities had negotiated payments with the shopping and entertainment venue at a time when visions abounded of consumers flocking to the East Rutherford site.
The crux of the dispute centers on the definition of “fully opened.” Hitting that status would trigger payments in lieu of taxes and other fees to the municipalities to help them deal with the impacts, primarily traffic. The mall welcomed its first customers in 2019.
But the Ghermezian family’s Triple Five Group, who own the mall, don’t think it is fully opened yet. Triple Five’s position, according to the towns in the dispute, is that fully opened means 100 percent occupancy, something that may never happen. Green Street recently put the mall’s occupancy in the low-80 percent range.
A spokesperson for the mall didn’t respond to the publication’s request for comment.
East Rutherford appears to be gearing up to try to collect. The borough claims to be owed $5.5 million, which would represent nearly 14 percent of its budget this year. It has an attorney exploring its options, the most aggressive tactic taken by one of the dozen municipalities that claim to be missing payments.
Triple Five has cut some checks to East Rutherford. It paid $1.5 million when it closed on the property and $2 million in PILOTs. It also paid for sewer costs and a new police station.
Financial problems are a dime a dozen for the mall.
Last month, Triple Five reportedly failed to make a semiannual payment on an $800 million municipal bond on time. A securities filing, meanwhile, recently revealed the mall lost $60 million last year, generating $173 million in revenue against $232 million in expenses.
The developer has been looking for a four-year extension to pay off $1.7 billion in construction financing. In February, the mall needed to draw on a reserve account to make a $9.3 million debt payment, leaving only $820 in the account.
This week, it was reported that bondholders may not be getting a scheduled $9.3 million payment on Aug. 1 because the state’s Economic Development Authority hasn’t approved the necessary paperwork. Bondholders criticized the mall for not submitting the statement sooner.
— Holden Walter-Warner