The owners of the struggling Eastern Hills Mall in Clarence will save more than $2.4 million in property taxes over 10 years, after reaching an agreement with the town, Erie County and the Clarence School District to lower the property taxes on the struggling mall while they work to redevelop it into a mixed-use town center.
Just a day before their assessment challenge case was scheduled to go to trial, the developers signed a settlement with the three taxing entities that significantly cuts the assessment on the property over the past three years, and then freezes it over six more years. The new assessment level will represent a drop of more than 60% from what the town has the property valued at currently.
But that may still be small comfort to Uniland Development Co. and Mountain Development Corp., as Eastern Hills continues to lose about $1 million a year because consumers aren’t shopping at malls and much of the space remains empty.
Indeed, that was the crux of tax attorney Peter Allen Weinmann’s argument to Judge Deborah A. Chimes of state Supreme Court, and what he had planned to say to the jury if the trial had started.
“Most shopping malls on the planet are dead malls, because of the Internet, compounded by the pandemic. This is why we had such a strong case,” Weinmann said. ” ‘Ladies and gentleman of the jury, when was the last time you went shopping at the Eastern Hills Mall? I rest my case.’ ”
Like many malls across the country, Eastern Hills has been faltering for years, under the weight of radically changed shopper habits. So Uniland and Mountain teamed up to convert the shopping center into the $250 million mixed-use Eastern Hills Town Center, with more than 1,500 apartments, senior housing, 1 million square feet of office space, a brewery, restaurants with patios and one hotel.
The apartments, townhomes, offices, hotel and walking trails would encircle boutique-style retail shops, restaurants and public space, and streets will be carved through the property for direct access. Plans also include medical space, shopping, and civic and recreational areas, including a public park and barn-style event spaces.
The developers have already modified their plans to cut the projected retail space in half and eliminate a second hotel, while boosting the number of apartments by half. They also plan to reuse as many existing structures as possible instead of demolishing and rebuilding them. But the proposal has not yet won final approval, and the mall remains open as is for now.
The settlement ends a case that began several years ago, and which involved four to five years of negotiations, motions and then legal discovery in preparation for the trial. Chimes finally ordered separate appraisals by both sides, and “at the end of the day, we were still millions of dollars apart,” Weinmann said.
The 100-acre mall at 4545 Transit Road actually includes the primary mall plus four additional parcels – the Macy’s and former Sears stores, and two small vacant pieces used for stormwater management.
The developers’ appraisal valued the entire property at $7.1 million in 2018-2019, dropping down to $5.4 million by 2022. In contrast, the town appraised it at $17.2 million, then increased it to $18.2 million and $19.4 million, before dropping to $16.9 million.
But that’s still significantly lower than the town’s formal assessment. The property was assessed at $15 million in the 2018-2019 tax year, but that rose over the next three years to $26.3 million by the current tax year.
“Their own appraiser could not even sustain the town’s valuation,” Weinmann said.
Under the new agreement, the assessment retroactively drops to $13.5 million for the first three years, and then down to $12.5 million for this year. Then it falls further to $10.35 million for the next six years, through 2027-2028.
Uniland and Mountain waived their tax refunds for 2019-2020 and 2020-2021. But Weinmann said they will save $2.435 million over the life of the agreement – including $350,000 per year for the six years in which the assessment is frozen.