Kushner Mall Deal Was Rushed Through, New Jersey Residents Tell Judge

  • Eatontown residents sued over plan to refurbish aging mall
  • ‘Are they required to go to Giants Stadium and rent it?’

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Four residents of a town near the New Jersey shore urged a judge to block a $300 million plan by a company owned by the family of White House senior adviser Jared Kushner to revitalize an aging mall, saying approval of the project was rushed to suit the developers without adequate public input.

The residents of Eatontown, a borough of more than 12,000 people about a 50-minute drive from Newark, sued the municipality last year over the Kushner Cos.’ plan to redevelop the Monmouth Mall and add a residential development with 700 apartments.

The residents argue that the ordinance allowing the project to go forward is a form of “spot zoning” prohibited by state law. It was tailored to the developer’s plans and pushed through at a hearing held in a small room to limit public input, the residents say.

In a trial that began Monday in Freehold, Edward Liston Jr., an attorney for the plaintiffs, said the borough was “deliberately trying to circumvent and thwart the essence” of the state’s public meeting law by holding a September 2016 meeting on the ordinance in council chambers. A larger room had been used for an earlier meeting on the issue.

Patchy Audio

Residents who couldn’t fit in the council chambers were sent to a nearby firehouse to watch a video feed -- a room without air conditioning that was interrupted by patchy audio and at least one fire call, Liston said.

“They could have done it the right way,” Liston told Justice Lisa P. Thornton, who presided over the trial without a jury, in his closing argument on Tuesday. "They did it the wrong way."

Andrew Bayer, an attorney for Eatontown, told the judge the borough had no obligation to provide a larger space but set up a video feed anyway to accommodate anyone who wanted to witness the proceedings. All of the meetings where the mall redevelopment plan was discussed were held in council chambers except an April meeting, he said.

James Yolles, a spokesman for Kushner Cos., declined to comment on the lawsuit.

Attorneys for the borough have argued that malls are experiencing a “steady rate of decline” and that shopping centers that don’t “change with the times” are in danger of closing. The redevelopment of the mall, the borough’s largest taxpayer, is consistent with modern planning principles that encourage malls to add restaurants, housing and entertainment, Eatontown officials contend.

"Traditional suburban malls are dying," Bayer told Thornton during his closing arguments on Tuesday. "E-commerce is making large brick-and-mortar stores obsolete."

The shopping center provides 10 percent of Eatontown’s tax base, he said, and a recent reduction in the value of the real estate will cost the borough about $165,000 in levies.

"The borough wants to ensure the mall survives," Bayer said.

‘Uphill Battle’

At the start of the trial, Thornton indicated the plaintiffs had an “uphill battle” to prove the borough violated state public meeting laws. On Tuesday, she expressed further skepticism about the residents’ complaints about the size of the meeting room at the September meeting.

“Are they required to go to Giants Stadium and rent it?” Thornton asked. “There’s nothing before me to indicate they didn’t try to accommodate a larger crowd.”

The Kushner Cos. and Vornado Realty Trust bought the shopping center, which was built in 1960, for $164.7 million in 2002, and Kushner acquired Vornado’s stake in 2015 in a $230 million deal. The company in court papers argued that the revitalized shopping center would be the first of its kind in New Jersey and would “ensure the Monmouth Mall’s vitality for current and future Eatontown residents and visitors.”

"Spot zoning is when you do something solely to benefit a single property owner," said Roshan Shah, an attorney representing the mall owners. "That is not this case."

Bayer told the judge that the borough discussed the project at more than a dozen public meetings and "went completely beyond" what was required by law in terms of notifying the public. It even adjusted the plan to accommodate citizens’ concerns, increasing a buffer between neighboring properties and eliminating a plan for a hotel on the site.

‘Ghost Town’

"The mayor and the council here did what responsible public servants do sometimes," Bayer said. "They listened to their citizens."

The judge declined to rule immediately after the trial ended Tuesday, but she signaled she might agree with the borough’s argument that the mall is in decline. She said she grew up in nearby Long Branch and that it didn’t look like it did 20 years ago either.

"It’s a ghost town," the judge said.

The case is Guerra v. Borough of Eatontown, MON-L-3767-16, Superior Court of New Jersey, Monmouth County (Freehold).

— With assistance by David M Levitt

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