A group of municipal bondholders has filed suit against the owners of the American Dream megamall and officials in East Rutherford, New Jersey, alleging that the parties coordinated efforts to sharply reduce the property’s assessed value, damaging investors who hold bonds backed by the project.
The lawsuit, filed Feb. 6, 2026, in Bergen County Chancery Court, was brought by U.S. Bank Trust Co. on behalf of bondholders led by Nuveen, which holds nearly 90% of the outstanding debt. The complaint targets East Rutherford and mall ownership entities affiliated with Triple Five Group.
At issue are roughly $800 million in municipal bonds secured by Payments in Lieu of Taxes, or PILOTs. Unlike traditional property taxes, PILOT payments are contractually structured and tied directly to the property’s assessed value. When the mall’s valuation falls, the revenue available to repay bondholders declines as well.
Court filings show the mall’s assessed value has dropped dramatically over the past two years. After being valued between about $3.1 billion and $3.3 billion through 2024, the assessment fell to $2.5 billion in March 2025 and then to $1.65 billion following a July court ruling.
Bondholders claim the reductions were not the result of an independent review. The complaint alleges borough officials replaced a longtime appraiser with a less experienced firm and that the revised valuation failed to include major attractions such as the mall’s Ferris wheel. Investors argue the reduced valuation was effectively predetermined.
The lower assessment has significantly reduced PILOT payments, leaving revenue covering less than half the annual interest owed—about a $24 million shortfall.
Mall owners deny the allegations, calling the lawsuit “a deceptive attempt to pressure public institutions through litigation.” East Rutherford officials also rejected claims of collusion, noting that the final valuation decision was issued by a judge rather than municipal officials.
