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Guest Opinion: American Dream Mall is a Financial Nightmare

BY THE NEW JERSEY SIERRA CLUB

The American Dream Mall in East Rutherford is facing more challenges. Ameream, LLC., the Triple Five company that owns the American Dream site, has filed a lawsuit against Villa Restaurant Group for breaching its contract. Villa Restaurant Group signed a lease in June 2015 to open a Green Leaf and Tony + Benny’s Pizza Parlor in the mall, but construction is still not complete. A number of construction companies have filed liens against the property saying that they are owed nearly $41 million for work completed.

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More than $1B in N.J. taxpayer money has been committed to American Dream Mall  (Photo Courtesy of American Dream)

“American Dream is trying to spin the facts to shift blame away from them. The American Dream/Xanadu Mall has not paid its contractors, but they are blaming two of the restaurants that are supposed to go in the mall. They are saying that Villa Restaurant Group, the owner of the two restaurants, has breached their contract because construction isn’t complete. However, the owners of the American Dream owe $41 million for work that construction workers have already done,” said Jeff Tittel, Director of the New Jersey Sierra Club. “This is a pattern with them, it’s not just the coronavirus that closed the mall and caused the problems. Retail is going to change dramatically because of the coronavirus, so there’s no guarantee that this mall will actually open or pay back all the funding it has received.”

 

The American Dream/Xanadu Mall was supposed to open in March 2020, but delayed the opening due to the coronavirus pandemic. The mall reopened on October 1, 2020 even though indoor amusement venues were allowed to start reopening in New Jersey as early as September. 

 

“The American Dream Mall is really a financial nightmare. It has had problem after problem after problem for almost 2 decades. They only had a partial opening in October, which many of the stores and attractions still under construction. Several of the proposed tenants like Forever 21 and Bath and Body Words were in financial trouble even before the pandemic. Tenants like It’Sugar and Barneys have filed for bankruptcy and will now have to be replaced,” said Jeff Tittel. “It is shameful that the owners of the mall are suing tenants for not opening when the mall itself has so many problems. Triple Five owes nearly $41 million for completed construction work, and they are facing a myriad of other financial issues as well like 2 missed mortgage payments and billions of dollars in construction loans.”

 

Triple Five, the developer of the American Dream Mall, missed two monthly mortgage payments for Mall of America in Minnesota earlier this year. Last year, Triple Five pledged 49% interest in Mall of America and another property as collateral for a $1.67 billion construction loan for the American Dream Mall in East Rutherford, NJ. In yet another setback, the American Dream Mall had to lay off about 100 employees earlier this month.

 

“Owner after owner, year after year, has pulled the same thing with contractors. From Empire Mall to Xanadu, Mills Corporation to Rockland Capital. This is just another financial problem in a long series of financial problems. American Dream just had to lay off over 100 employees, and the mall owners also missed two mortgage payments that are collateral for the American Dream. If they default on that mortgage, it affects financing for the American Dream, which then affects the financing that New Jersey put up,” said Jeff Tittel. “When the mall reopens, they will still have to follow social distancing protocols and limit the number of people. If people do want to go once it reopens, a daily visit to the mall is extremely expensive.”

 

The American Dream/Xanadu mega-mall is the largest public subsidized development project in state history.  The project received $350 million in direct state subsidies from EDA plus another $800 million for financing including $100 million for road improvements, bringing it up to $1.5 billion project.

 

“This project should be called the American Nightmare because it keeps getting worse. Every time there’s a problem with this mega mall, they make it bigger and throw more public money at it. This mall is jinxed, and unfortunately it is on state-owned land and financed with public money. We have backed this project with $1.2 billion of public money that could have been used for building schools, taking lead out of drinking water, or cleaning up our sites,” said Jeff Tittel, Director of the New Jersey Sierra Club. “We should really call them the American Scheme for all of the subsidies and money and loans that they got out of New Jersey taxpayers. Not only are they not creating jobs, but they aren’t paying contractors during the pandemic at a time of extreme financial uncertainty.”

 

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