Hackensack left them out of settlement agreement, owners of Sears building say in lawsuit

Megan Burrow, NorthJersey.com
Updated ·3 min read

HACKENSACK — The owners of the landmark Sears building on Main Street are suing the city, alleging that a settlement clearing the way for development at the site was agreed to without their consent.

The city reached a settlement with Transform Holdco, LLC, in January. The company, which acquired Sears Holdings' assets in 2019, a year after the retailer went bankrupt, filed its lawsuit against the city in 2022 after the City Council approved an amended redevelopment plan for the site.

That plan called for a mixed-use residential and commercial development at the property and required that the building's façade and iconic tower be preserved. Transform challenged that requirement in its suit, arguing that Hackensack had "downzoned" the site and limited what the company would be able to do with the property.

Under the settlement agreement, Transform agreed to pay the city an $80,000 "community benefit contribution."

The Sears building on Main Street at the corner of Anderson Street in Hackensack, N.J. on Thursday Feb. 3, 2022.
The Sears building on Main Street at the corner of Anderson Street in Hackensack, N.J. on Thursday Feb. 3, 2022.

A conceptual plan allowed for the construction of a modern apartment building around the main three-story building and tower. A 30-year financial agreement known as a PILOT, or payment in lieu of taxes, would be part of any development at the site.

But the limited liability corporations that own the building claim in their lawsuit against Hackensack and the city Planning Board that the deal with Transform, which they call the “ground lessee,” was settled without their involvement, despite their being named parties in that complaint.

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Nearly a decade after city officials laid out a plan to redevelop the downtown, “without any meaningful investigation or study, the city and unknown defendants hurriedly and surreptitiously adopted” a redevelopment plan for the Sears site in December 2021, the suit says.

The redevelopment plan was later amended and required the preservation of the building’s façade and tower.

The Sears building on Main Street at the corner of Anderson Street in Hackensack, N.J. on Thursday Feb. 3, 2022.
The Sears building on Main Street at the corner of Anderson Street in Hackensack, N.J. on Thursday Feb. 3, 2022.

The entities — Arcolo Hackensack LLC, Sugensteve Hackensack LLC, Sugencole Hackensack LLC and Sugengran Hackensack LLC — say in the suit that they discovered the settlement only after reviewing the Jan. 10, 2023, agenda for the City Council meeting, where the resolution to approve the deal was listed.

The Planning Board in June recommended the property as an area in need of redevelopment without condemnation. In August, the City Council passed a resolution agreeing with the findings of the Planning Board’s investigation.

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But Arcolo claims in the suit that Francis Reiner, the city planner, based the designation on news accounts that the property had been vacant for more than two years without interviewing the owners of the property. Reiner’s report noted that the building is “in generally fair condition,” the suit says.

The Sears building is owned by Arcolo and its related entities, but Transform holds a long-term lease on the building and owns the surrounding property.

The Sears building on Main Street at the corner of Anderson Street in Hackensack, N.J. on Thursday Feb. 3, 2022.
The Sears building on Main Street at the corner of Anderson Street in Hackensack, N.J. on Thursday Feb. 3, 2022.

The complaint says the designation should be voided because the property does not meet the state's requirements and the city did not provide notice to the property owners. Attorneys for Arcolo did not respond to requests for comment.

As development booms across the city's downtown, officials have said they want to preserve the 91-year-old art deco building, a longtime landmark for residents and a remnant of the city’s past when Main Street was the bustling commercial center of the county.

When Sears Roebuck and Co. opened in Hackensack in 1932, it was the largest department store in Bergen County and one of the tallest buildings in the region. The store closed in 2020.

Nick Bond, a spokesman for the city, said attorneys have reviewed the suit and that “it appears to have serious legal and factual flaws, which the city will address in its legal filings.”

“We have great confidence in the integrity of the city’s redevelopment process and our strong track record of revitalizing Hackensack,” he said.

This article originally appeared on NorthJersey.com: Hackensack NJ OK'd Sears settlement without consent, says suit