The owner of Crossgates Mall is suing the town of Guilderland to cut the property tax assessment nearly in half as the company contends with a difficult retail environment that only grew worse when the Covid-19 pandemic hit earlier this year.
The shopping mall, which is owned by LLCs controlled by Syracuse-based Pyramid Management Group, should be assessed at
$143.2 million, not $282.4 million, according to a court filing under the state’s Article 7 real property tax law.
As Pyramid Management seeks to lower its assessment and, by extension, the roughly $7.5 million it pays in annual property taxes at the mall, the company also worked out a deal in June with a lender to suspend debt payments for four to six months.
The money will have to be paid in 12 monthly installments starting in January, according to financial filings related to a commercial mortgage-backed security on the property. The total balance due on the loan is $104 million.
Pyramid sought the debt relief after it was among scores of businesses in New York that was forced to close their doors in mid-March to help prevent the spread of the coronavirus. Mall interiors were allowed to reopen in mid-July.
In a sign of how badly retailers are struggling, one of the mall’s anchor tenants, Lord & Taylor, is closing as its parent company filed for bankruptcy.
Pyramid’s attempts to cut costs include the property tax assessment lawsuit against the town of Guilderland.
Commercial property owners in New York who unsuccessfully challenge their tax assessments in the spring can sue municipalities with the goal of convincing a judge their assessments should be less than the amount set by the local assessor.
Pyramid Management Group is one of more than 60 property owners that filed Article 7 petitions in Albany County in July challenging their tax assessment, according to the county clerk’s office.
Others include:
Macy’s Retail Holdings for the store it owns at Crossgates (assessment: $15.65 million, claim: $3 million)
Two office buildings at Stuyvesant Plaza (combined assessment: $8.4 million, claim: $6.57 million) 20 Mall at Guilderland (assessment: $15.9 million, claim: $9 million)
Pyramid’s argument for why the Crossgates assessment should be drastically reduced includes problems that were impacting the shopping center before the pandemic hit.
The lawsuit cites “continuing pressure on its ‘bricks and mortar’ business from e commerce, sales declines and record bankruptcies and store closures, particularly for department stores and fashion retailers that were once the primary focus” of the business.
Pyramid also argues the assessment should be reduced because of the financial impact from the pandemic even though the mall wasn’t forced to close until March 19, which was after the March 1 deadline for the town assessor to set the tentative assessment.
“The condition of the property was adversely affected by the Covid-19 pandemic catastrophe and the widespread presence of the virus in New York state,” according to the lawsuit.
Pyramid’s financial filings related to the commercial mortgage-backed security indicate the net operating income was $6.7 million in the first three months of this year.
Annual net operating income was relatively flat from 2016 to 2019, averaging about $30 million, despite the challenging retail environment that Pyramid cited in its tax assessment lawsuit.
Pyramid officials declined to comment for this story.
[related_posts_by_tax posts_per_page="4" format="thumbnails" image_size="full" limit_year="1"]