Maine Mall owners could appeal city’s stance on taxes - July 29, 2011
By David Harry
Staff Writer
Maine Mall owners haven’t decided whether they will appeal city property tax valuations to the Maine Board of Property Tax Review, their attorney said Tuesday.
Jonathan Goldberg of Portland-based Mittel, Assen, said the 5-0 decision Friday by the South Portland Board of Assessment Review against General Growth Properties “is a disappointment to the taxpayer. A lot of effort and expense went into our case.”
The board upheld the April 1, 2009, valuation of $242 million by South Portland Assessor Elizabeth Sawyer.
Board members were asked to consider a GGP appraisal of nearly $182 million, or $60 million less, for nine properties that cover about 48 acres.
The alternative appraisal of $182 million was prepared for GGP by Rockville, Md., based-PGH Consulting LLC.
“The appraisal as presented does not make a case for the value we should be considering,” board Chairman Paul Cloutier said.
At stake was about $880,000 in city tax revenue, based on the fiscal year 2010 city property tax rate of $14.70 per $1,000 of assessed value.
Goldberg said nine mall properties were overvalued by the city based on calculations that did not account for the economic climate and its effects on mall businesses.
Goldberg said city officials used outdated information to project sales potential at the mall and did not account for “intangible” costs to mall owners. Those costs included rental agreements that produced reduced revenue because mall anchor stores cut operating hours or closed.
“This is a classic battle of the experts,” Goldberg said about the appeal hearings that began in April. “It boils down to a credibility issue.”
South Portland Corporate Counsel William Dale defended Sawyer’s work in a 25-minute rebuttal. He noted GGP officials assessed the Maine Mall value at $270 million during the company’s 2009 bankruptcy proceedings.
The company emerged from Chapter 11 bankruptcy last November. The 12 properties owned by GGP were purchased for $265 million in 2003, according to city tax records.
The appraisal report presented by Goldberg used a “business enterprise valuation” method to separate business costs from real estate values. The method has not been accepted by other courts and appeals boards in the country in determining property valuations, Dale said.
“GGP is using a company that has a reputation for coming in second in court cases,” Dale said.
GGP officials initially appealed valuations on 12 properties valued by the city at $252 million for fiscal year 2010. Goldberg said appeals on the land leased to Maine Mall Motors, the Jared jewelry store on Philbrook Avenue and the former site of Maine Mall Cinemas “were not being actively pursued.”
Should GGP officials pursue an appeal to the state, it would mark the second time the company has contested city valuations on mall properties.
The state review board, which considers appeals on commercial properties worth at least $1 million, in 2009 upheld the 2006 city assessment of $268 million on mall and surrounding properties.
Staff Writer
Maine Mall owners haven’t decided whether they will appeal city property tax valuations to the Maine Board of Property Tax Review, their attorney said Tuesday.
Jonathan Goldberg of Portland-based Mittel, Assen, said the 5-0 decision Friday by the South Portland Board of Assessment Review against General Growth Properties “is a disappointment to the taxpayer. A lot of effort and expense went into our case.”
The board upheld the April 1, 2009, valuation of $242 million by South Portland Assessor Elizabeth Sawyer.
Board members were asked to consider a GGP appraisal of nearly $182 million, or $60 million less, for nine properties that cover about 48 acres.
The alternative appraisal of $182 million was prepared for GGP by Rockville, Md., based-PGH Consulting LLC.
“The appraisal as presented does not make a case for the value we should be considering,” board Chairman Paul Cloutier said.
At stake was about $880,000 in city tax revenue, based on the fiscal year 2010 city property tax rate of $14.70 per $1,000 of assessed value.
Goldberg said nine mall properties were overvalued by the city based on calculations that did not account for the economic climate and its effects on mall businesses.
Goldberg said city officials used outdated information to project sales potential at the mall and did not account for “intangible” costs to mall owners. Those costs included rental agreements that produced reduced revenue because mall anchor stores cut operating hours or closed.
“This is a classic battle of the experts,” Goldberg said about the appeal hearings that began in April. “It boils down to a credibility issue.”
South Portland Corporate Counsel William Dale defended Sawyer’s work in a 25-minute rebuttal. He noted GGP officials assessed the Maine Mall value at $270 million during the company’s 2009 bankruptcy proceedings.
The company emerged from Chapter 11 bankruptcy last November. The 12 properties owned by GGP were purchased for $265 million in 2003, according to city tax records.
The appraisal report presented by Goldberg used a “business enterprise valuation” method to separate business costs from real estate values. The method has not been accepted by other courts and appeals boards in the country in determining property valuations, Dale said.
“GGP is using a company that has a reputation for coming in second in court cases,” Dale said.
GGP officials initially appealed valuations on 12 properties valued by the city at $252 million for fiscal year 2010. Goldberg said appeals on the land leased to Maine Mall Motors, the Jared jewelry store on Philbrook Avenue and the former site of Maine Mall Cinemas “were not being actively pursued.”
Should GGP officials pursue an appeal to the state, it would mark the second time the company has contested city valuations on mall properties.
The state review board, which considers appeals on commercial properties worth at least $1 million, in 2009 upheld the 2006 city assessment of $268 million on mall and surrounding properties.
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