Namdar sues Calumet City Over River Oaks Mall Eminent Domain

A town that attempted to takeover a struggling suburban Chicago shopping mall via eminent domain was hit with a lawsuit this week from the mall’s owner, Namdar Realty Group.

Namdar alleges Calumet City, a town on the border of Illinois and Indiana, improperly used eminent domain as a scare tactic to get tenants at the River Oaks Mall to leave and depress the value of the shopping mall.

New York-based Namdar, led by founder and CEO Igal Namdar, has owned the 1.4 million-square-foot shopping mall since 2017.

A notice that the city was pursuing the use of eminent domain to take over the mall was sent out to retail tenants in late September. It came after negotiations over the city’s purchase of the mall from Namdar fell apart because the two parties couldn’t agree on the fair market value of the property.

Last summer, Namdar reportedly stepped away from a deal to sell for a price in the range of $4 million to $7 million, which would be $2.85 to $5 per square foot. Calumet City Mayor Thaddeus Jones said Namdar was asking $10 million, or $7.14 per square foot, at the time.

In response to the city’s negotiations, Namdar presented his own valuation of the property, claiming it is worth $40 million, or $28.50 per square foot. However, the city strongly disagreed with the owner’s valuation of the center, prompting officials to consider alternative actions.

The city made a final offer of $13.2 million, or a little under $9.50 per square foot.

Officials then moved ahead with the eminent domain process, which illegally interfered with Namdar’s contracts with tenants, and slandered the property’s title, Namdar’s lawsuit alleges. Calumet City officials also failed to properly notify the mall tenants of the city’s requirement under state law to support tenants in relocating, the lawsuit claims.

The lawsuit did not specify which, if any, tenants did not re-sign leases as a result of the proposed takeover, but it states that the company suffered at least $50,000 in damages.

Even with a notice sent out to tenants, the takeover was not set in stone. As mentioned in the letter, the eminent domain action still needed approval from the Illinois General Assembly, as required by state law.

The city has long eyed the struggling property and unveiled a $110 million plan for the site in July, which would integrate retail, dining and residential spaces. A key feature of the proposal was a three-level go-kart track from Supercharged, a company based in New Jersey.

At least two developers are interested in the plan, Jones said at an October City Council meeting, although he did not specify which developers those were.

One alderman voted against the proposal to take over the mall via eminent domain because a developer for the project had not been identified.

Calumet City isn’t the only municipality in Chicagoland looking to repurpose a shopping mall.

The Village of West Dundee has been buying portions of the Spring Hill Mall over time, though firm plans have not been unveiled.

The Village of Bloomingdale spent $17 million to buy the Stratford Square Mall with plans to transform the property into a mixed-use development known as The Grove.

Similar to the Calumet City mall turmoil, not all mall takeovers have gone smoothly. Plans to redevelop the Charlestowne Mall, a defunct suburban shopping mall in St. Charles stalled for a second time in September as the village announced a second buyer had backed out of plans to purchase the property.