The owners of two of the biggest malls in the Northtowns are seeking reductions of more than 75% in their tax assessments as the coronavirus outbreak shut stores down at a time when retailers already are struggling.
Douglas Jemal’s Douglas Development Corp., owner of the Boulevard Mall in Amherst, and the partnership of Mountain Development Group and Uniland Development Co., co-owners of the Eastern Hills Mall in Clarence, are asking their towns to slash the taxable value of both properties by more than 75% each. Between the two, they are seeking $48 million in reductions.
If successful, that would save them a combined $1.3 million a year in Erie County, town and school district taxes.
But it’s justified, because mall traffic isn’t likely to return to normal anytime soon – if at all, said attorney Peter Allen Weinmann, a veteran of property assessment challenges.
“The economy and the pandemic have knocked the life out of both of these properties,” said Weinmann, who is handling both requests for the mall owners.
“Even though people may start going back to work and some stores may be opening up, it’s fair to say that the vast majority of the population is going to be very reluctant to engage in shopping at brick-and-mortar stores because of the extraordinary health concerns,” Weinmann added. “It’s really risky to go out and engage in shopping when you can easily protect yourself with social distancing and go shopping on the Internet.”
The Boulevard Mall, at the intersection of Niagara Falls Boulevard and Maple Road, is listed with a fair market value of $32.97 million, and an assessed value for taxes of $30 million. The property is divided into four parcels, led by the main mall that is valued at $18.95 million, followed by the JC Penney’s and Jenss parcel, the Sears store, and the Food Court, Michael’s and Buy Buy Baby section.
But Weinmann argued that Jemal’s June 2019 purchase of the mall for $24.05 million – “in competitive public bidding at an open public auction” – trumps the previous figure, and should bring the valuation down by $8 million. In the application, he called that “low-hanging fruit.”
“Right off the bat, before we get into substantive valuation, the black letter law is that the best indicator of market value is a recent arm’s-length purchase price, and that’s what exists here,” Weinmann said. “So at a very minimum, the value should be $24 million.”
“We’re now impacted by the pandemic, and that has had an upsetting impact on the property,” Weinmann added. With the 763,000-square-foot mall now closed except for stores with exterior entrances, its net operating income “has evaporated from $1.5 million to negative territory.”
That leads to a further and much larger reduction in current value to $7.63 million, the attorney said, using a basic industry valuation of $10 per square foot that is based on recent comparable sales of malls and other shopping center assessments.
That would represent a 77% cut for a two-month closure.
But if conditions do change, the Town of Amherst is planning a revaluation next year or in 2022, Weinmann said, “so they’ll have an opportunity when the economy stabilizes to take a fresh look.”
Meanwhile, with Eastern Hills, Weinmann has been working with the owners for the past two years to challenge the tax assessment, given the significant vacancies and the plans by MDC and Uniland to redevelop the property into a mixed-use, town center concept. The pandemic only made it worse.
Weinmann said Eastern Hills was already “a dead shopping mall,” but “now it’s a cold cadaver.” So he’s seeking an 88% cut in the total valuation, from $25.73 million to just $3 million.
The two applications were submitted to the respective town Boards of Assessment Review, which will issue their administrative decisions on July 1, Weinmann said. He said the owners would then have until the end of July to file formal challenges in state Supreme Court if they are not satisfied.
“Typically, commercial cases and complex properties go to be resolved in the court system,” Weinmann said.
Posted by The Buffalo News