Kushners face heated trial over suburban Jersey mall project

Days after a seaside reception for his father-in-law's presidential campaign, Jared Kushner set out to pitch a deal to a small-town mayor: Kushner Cos. would transform an aging shopping mall into a live-work destination, bringing culture and commerce to a scraggy stretch of the Jersey Shore.

The mayor, a retired police officer, viewed it as a brilliant offer his town couldn't refuse. But hundreds of Eatontown residents turned out in opposition, packing borough council meetings last year to protest the Monmouth Mall expansion as a giveaway to Kushner.

Kushner soon won approval to build 700 apartments atop his mall parking lot as part of a $300 million expansion deal — an agreement that now is the subject of a heated lawsuit set for trial Monday.

Before joining the White House as a senior adviser to President Donald Trump, Kushner was CEO of his family company and was widely credited with its expansion into Manhattan. But he was just as busy building political loyalties and securing municipal changes to benefit the business in his home state of New Jersey.

Plaintiffs in the mall suit are claiming town officials privately negotiated with the Kushners for half a year without telling the community, then rushed a vote on new zoning rules that benefited only Kushner's company after the deal already had been rejected.

"People are mad. They're mad at the mayor, and they're mad at the backroom deals," said plaintiff and longtime resident Sara Breslow.

The town's attorneys say officials allowed ample time for debate before voting. And the attorneys for the Kushner Cos. say the mall was in "steady decay" and that those opposing the expansion want to block the company from building affordable housing for needy residents.

Other real estate deals Kushner has brokered in New Jersey are under attack, too, with residents also claiming local politicians are too accommodating to the powerful real estate family.

In Jersey City, the Kushners had hoped for a 30-year local tax break for two residential towers, but residents took to the streets in February and the family recently withdrew its application. Farther down the shore, in Perth Amboy, the status also is shaky. The Kushners have been pressing the city to approve a downsized version of a 22-building waterfront community the family promised years ago, but that is uncertain given resentment over stalled construction and a lawsuit from condo investors who feel misled.

In Eatontown, the Kushners are giving every sign that their Monmouth Mall development is secure. Residents say land surveyors started digging into neighbors' front lawns despite the impending trial.

In August 2015, Kushner's parents threw a garden party honoring Trump at the family's block-long oceanside estate in Long Branch, where officials soon will vote on a proposal to give the Kushner Cos. and a real estate partner up to $25 million in taxpayer-backed financing for a resort development. Days later, he and his family went to nearby Eatontown to push their plan to build 1,200 new apartments and a hotel at the mall.

Kushner had a tough sell. Not only did consultants say the new apartments would add as many as 1,460 people to the town of 13,000, but the housing would be all rentals, not owner-occupied units. Town officials had long worried about striking the right balance between renters and homeowners.

Most daunting, Kushner needed to change municipal zoning rules because no dwellings were allowed at the mall.

"Jared Kushner took the lead, he introduced himself and spoke about his company," Republican Mayor Dennis Connelly said in a description of the initial pitch, according to borough council meeting minutes. "He laid out what is going on at Malls in general and why he believes now is the time to make a huge change to the investment."

Over the next few months, lawyers for the town and Kushner Cos. met privately several times, and the company supplied studies that indicated their proposal would boost the economy and have minimal traffic impact.

"This type of mall reimagining has helped boost the tax base of towns across the country, and will do the same for Eatontown," Kushner Cos. spokesman James Yolles told The Associated Press when asked for comment.

Keeping negotiations private backfired, feeding residents' suspicions that Connelly wanted to push Kushner's project through by limiting debate. After news of the plan finally broke in the local press in February 2016, records show that one council member emailed Connelly to suggest people be allowed to comment in an upcoming meeting, saying residents felt "the project is being rushed."

Connelly shot back, "I will not be bullied into thinking that we need to have several debates."

More than 100 residents packed a public meeting that April, with many arguing that Kushner's scaled-back plan to build 800 apartments would cause gridlock and drain social services in the sleepy borough. A Kushner representative declared the family had phoned to kill the deal and, as residents clapped, walked out of the meeting. Connelly pivoted and recommended that the council vote no.

Judy Rutan, a caterer whose backyard flanks the mall, had been worried that the value of her home would fall with apartment blocks going up next door, so was relieved to think that the expansion was over.

"Our whole future base is invested in our home, and we are not financially well-off," said Rutan, a Republican. "It's not just my home. I raised my kids here, and this mall project is going to make us lose the whole feel of the town."

Residents thought the development was dead but, behind the scenes, Connelly said he asked Kushner Cos. to tweak it. Soon, the company put a slimmed-down proposal before officials including up to 700 apartments, and no hotel. That was 500 fewer units than its original bid and 100 fewer than its most recent proposal.

In the meantime, Connelly was appointed to a $74,000 side job at the state Commission of Motor Vehicles, the kind of position typically filled by the party of the governor, in this case Republican Chris Christie. Connelly had been seeking such a job for more than two years.

In the tense atmosphere of the town, the July timing made some residents suspect the appointment was an effort by Christie — then Trump's campaign adviser — to win Connelly's support for the Kushners' project.

Connelly and Christie's office said such conjectures were completely false. Kushner Cos. spokesman Yolles said the company had nothing to do with the mayor's new job.

By August, the mayor was championing a new proposal allowing up to 700 apartments, and scheduled a council vote.

Monmouth Mall's fate was decided on a sweltering September evening. Although the mall had never been zoned for housing, the planning board had ruled three weeks before that a new ordinance allowing apartments there nonetheless fit Eatontown's master plan. Kushner Cos. agreed to provide at least 88 affordable housing units.

Now the borough council needed to vote.

The original April meeting was held in a large school auditorium with a standing room-only crowd. This time, a smaller council room was chosen. More than 100 people showed up to voice their opinions, with the overflow sent to watch the meeting remotely in a firehouse.

"I'm begging everybody up here to vote yes," Connelly pleaded with his colleagues inside council chambers, according to transcripts. "This wasn't done by Kushner."

"According to you, not according to us!" one resident shouted. "You're not king!"

"I'm not king, but I was elected mayor," Connelly responded. "Anyway, I'll call the vote now."

The measure passed 5-1.

Two months later, two council members who approved the expansion lost their seats to candidates who campaigned against the mall.

One of the victors, Al Baginsky, said Connelly was wrong to keep the Kushner talks private and called the Kushner walk-out at the April meeting "theatrics" to make the 700-apartment offer seem like a concession.

With the town divided, four residents — three Democrats and one Republican — filed suit against Eatontown weeks before the presidential election seeking to void the council vote, claiming that borough officials' decision to meet in a smaller room was "practically designed" to limit debate. The suit accused officials of violating the public meetings act, along with breaking with procedure and land-use law by giving special zoning favors to a single developer, an illegal act called "spot zoning."

"If it were called the 'Monmouth Mall Zone' or the 'Kushner-Can-Do-Whatever-He-Wants-in-His-Private-Zone Zone,' there would be no difficulty in recognizing the spot-zoning for what it is," the plaintiffs' trial brief reads.

Kushner Cos. signed onto the suit in December, taking the town's side.

In May, the company announced a new partnership with New York-based Rouse Properties to add landscaping and a culinary marketplace to the mall, which they said would transform it into a job-creating "state-of-the-art mixed-use destination."

"Most of the mixed-use opponents attacked the residential element, with some spreading fake news," Kushner Cos.' attorneys said in its own trial brief.

"Malls across the country are dying," town attorneys said in their brief, adding that the plaintiffs were trying to "inject the national political sentiment of 2017" into the suit by making it about Kushner.

Federal financial disclosure forms show Kushner still owned the mall in March, but a White House spokesman said Friday that he cut ties to the project in May. The spokesman said the related disclosure filings were not yet public, and provided no documentation.

Connelly said his support for the project had nothing to do with politics.

"I don't care if it was the Kushners or the Clintons," he said. "If they are coming in to put $300 million into our town to revitalize a property that is the biggest taxpayer, why would we say no to that?"


Condon reported from New York. Researcher Jennifer Farrar in New York contributed to this report.