The developer of Center City Mall has filed a lawsuit against the Downtown Paterson Special Improvement District (SID) alleging the business district violated its by-laws by excluding the developer from voting on the district’s annual budget.
At the heart of the dispute is whether the Center City Mall, which sits on land owned by the Paterson Parking Authority through a 99-year ground lease, should be a voting member of the district. Center City Partners argues it is a member of the district. However, a legal opinion issued by a business district attorney in July states Center City does not meet the criteria to be a member.
“Center City Partners is a tax-paying property owner within the designated district and is a member of the Downtown Paterson Special Improvement District. In fact, as a Board Member, I have dedicated countless hours and resources to ensure that the organization makes a positive impact on the community for member businesses, property owners, customers and residents,” said Ekaterina Valiotis, director of property management for Center City Partners, in a statement on Wednesday afternoon. “Unfortunately, the SID has fallen short of standards of integrity and we were forced to initiate legal action in an effort to protect the interests of all property owners within the district.”
Orlando Cruz, manager for the district, called the lawsuit “baseless” on Wednesday. He said the district acted on the opinion of its legal counsel.
The opinion states district assessments are only levied against property owners and that properties owned by Paterson Parking Authority or those that are tax-exempt are excluded from membership in accordance with the by-laws.
“While the Mall property is included in the SID, Center City should not be a member of the DPSID,” reads the legal opinion. The mall will have “no voting rights nor assessment obligations going forward.”
“Center City, for many years was never a part of the assessment process because we had an in-house shared services agreement that they would provide x amount of marketing and space to house equipment,” said Cruz.
The mall’s lawsuit states it has historically been a member of the district. That changed this year, ahead of the Aug. 2, 2019 budget meeting. The lawsuit states the district allegedly broke its by-laws by holding the “annual” meeting in August rather than September. Cruz said the August session was a special meeting and not the annual meeting.
Cruz said $40 million worth of assessments voted yes on the budget and $20 million voted no. He said each dollar of assessment is a vote. $18 million of the no votes came from other downtown Paterson properties owned by Alma Realty, parent of Center City Mall, including the old Fabian Theater, 302 Main Street, and 160 Market Street.
Cruz said those properties were sent ballots to vote on the budget.
The lawsuit filed on Tuesday came to light at the City Council meeting later that day. Council members had to approve the district’s budget introduction. Councilman Michael Jackson, who has an apparent conflict of interest for his business ties to an Alma Realty affiliate, tried to convince his colleagues to vote against the measure. Council members ignored his attempt and approved the resolution.
The fresh dispute between Center City Mall and the business district is a new front in the battle between Alma Realty and mayor Andre Sayegh. Sayegh refused to back the developer’s plan to build a hotel and 12,000-seat arena for $100 million. The mayor’s support was needed for $40 million in state tax credits.
Cruz, who is viewed as a close ally of the mayor, finds himself in the crossfire as both sides escalate their fight.
The lawsuit is asking the court to invalidate the district’s actions taken at the Aug. 2 meeting and confirm Center City as a voting member of the district.