A judge has slashed the assessed value of New Jersey’s American Dream megamall by roughly $850 million following an appeal by the development's landlord.
The ruling Thursday by New Jersey Tax Court Judge Michael Gilmore takes the assessed property value of the 3.5 million-square-foot complex down to about $1.65 billion from $2.5 billion. The assessment for the 2025 tax year had already been cut in March, when the borough of East Rutherford dropped it by $800 million from $3.3 billion to the $2.5 billion. The two reductions add up to a roughly 50% decrease in the shopping-and-entertainment hub's assessment.
American Dream, owned by mall landlord Triple Five Group, has been battling with the municipality for years now over its annual tax assessments. The property, which cost an estimated $5 billion to build, debuted in 2019. Sitting in North Jersey's Meadowlands, American Dream includes not only stores but also an indoor amusement park, an indoor water park, an indoor ski slope and a large observation wheel with climate-controlled gondolas.
Gilmore ruled on the assessment only for the 2025 tax year, with American Dream winning its appeal. But the assessment determines how much bondholders will receive in payments-in-lieu-of-taxes for the $800 million in tax-exempt bonds issued to help finance American Dream's construction. The lower assessment will likely translate to lower payments to bondholders, drawing out the time it takes for them to be paid back.
In its appeal, American Dream argued that East Rutherford's methodology for making its assessment had "fundamental flaws and errors." For example, the borough treated American Dream's retail leases "as standard triple-net leases despite being aware that the retail leases at the property are modified gross leases," according to the appeal.
In a prior tax dispute with the municipality, American Dream claimed it was being assessed at greater values than The Mall at Short Hills, Westfield Garden State Plaza, the Willowbook mall, The Shops at Riverside and Six Flags Adventure — all located in the Garden State — combined.
American Dream and East Rutherford Borough Attorney Gerald Salerno declined to comment Friday on the ruling. Nuveen, which owns most of the American Dream municipal bonds backed by the PILOT payments, didn't return an email from CoStar News seeking comment.
The tax court's ruling was earlier reported by Bloomberg.
The complex, which took about two decades to come to fruition, obtained $1.7 billion in construction financing as well as roughly $1.1 billion in debt that represents a combination of municipal bonds and municipal debt. That includes the $800 million in bonds.