Judge tosses Valley Stream school districts' lawsuit against Green Acres Mall

A New York state judge has dismissed a lawsuit brought by four Valley Stream school districts challenging multimillion-dollar tax break extensions for Green Acres Mall and an adjacent shopping center, handing a legal win to the developer and the Town of Hempstead’s Industrial Development Agency.

In a ruling issued April 2, State Supreme Court Justice Christopher McGrath upheld the IDA’s decision last year to extend so-called PILOT agreements—payments in lieu of taxes—despite claims by the districts that the retail complex failed to meet the job creation targets tied to the original deals. The judge also ruled the school districts lacked legal standing to sue, since they are not taxpayers.

The decision marks a major setback for the Valley Stream Central High School District and Districts 13, 24, and 30, which argued the extensions violated public trust and undermined their budgets. Macerich Co., a California-based real estate investment trust, owns the properties through subsidiaries and has reaped more than $142 million in tax savings since 2015.

“Absent court intervention to reverse the actions taken by the IDA, the Valley Stream community will continue to subsidize the tax breaks granted to the mall without accountability for the economic development the tax breaks were intended to create,” said Christopher Shishko, attorney for the school districts, in a statement prior to the ruling.

Where are the jobs?

At the heart of the lawsuit was a dispute over job numbers. According to court documents, Green Acres Mall reported 2,537 full-time-equivalent jobs in 2023—falling 237 short of the 2,774 jobs required under a 2015 PILOT agreement. The adjoining shopping center missed its mark by 90 jobs, reporting 480. The school districts sought to trigger a “recapture clause” in the agreements that would either force Macerich to repay tax savings or adjust PILOT payments to reflect the shortfall.

But the IDA countered that the agreements included a “force majeure” clause, giving the agency leeway to modify job requirements in the face of extraordinary circumstances. Citing the COVID-19 pandemic and the closures of anchor stores like Kohl’s in 2019 and Sears in 2021, which cost 131 jobs, the agency said the job losses stemmed from events outside the company’s control.

“Certainly, the COVID-19 pandemic, which was the main reason for adjusting the FTE [full-time equivalent] job requirements, can be classified as such an event,” said the IDA in the court filing.

In a letter to the IDA earlier this year, Macerich also blamed rising interest rates and inflation-driven construction costs for its inability to meet employment benchmarks. The IDA agreed, concluding that extending the tax deals and easing job requirements were preferable to risking further economic instability at the struggling retail complex.

“We’re very pleased that the court agreed with our arguments,” said Fred Parola, CEO of the Hempstead IDA, calling the dismissal a “total victory” and validation of the agency’s approach to economic development.

Macerich has proposed a $100 million redevelopment of the mall it says will generate 464 new full-time jobs.

Green Acres PILOTs: a history of heat

This isn’t the first time Green Acres’ tax deals have sparked legal and political backlash. In 2017, the IDA moved to revoke the PILOTs after Macerich failed to hit job targets, but a Nassau County judge sided with the company. That ruling forced Valley Stream school districts to reassess budget forecasts, raising concerns about lost revenue and shifting tax burdens onto homeowners.

The current extensions have reignited those fears. School officials warn that the PILOTs, now running through 2031, will further strain district budgets and exacerbate funding gaps for schools serving Valley Stream, Elmont, and Franklin Square.

Macerich originally secured the PILOTs for a $79 million mall renovation in 2014 and an $83.7 million shopping center construction project in 2015. The new extensions will save the company an estimated $174 million over five years, according to court filings.

Despite the courtroom loss, school leaders may yet seek legislative or political remedies to challenge what they see as unaccountable corporate tax relief at public expense. For now, the PILOTs—and the controversy—remain in place.

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