GUILDERLAND – If at first you don’t succeed, make a bolder request.
In July last year, citing the impact of the pandemic and the decades-long decline in the brick and mortar retail business, Crossgates Mall asked an Albany County court judge to withdraw $ 139 million. dollars from its tax assessment of $ 282 million – a nearly 50% reduction in assessed value.
In a motion filed on July 9, Crossgates, again citing similar reasoning, asked Justice Margaret T. Walsh to reduce her current assessed value of $ 282.5 million by $ 162.5 million.
Macy’s, not Pyramid, owns the 12 acres of shopping center which Macy’s is sitting on. And Macy’s is looking to see its valuation drop even more drastically, from $ 15.7 million to $ 3 million.
The new Crossgates file indicates that prior to the publication of Guilderland’s provisional assessment roll for 2021, Crossgates provided information to Heather Weinhold, the city assessor, which showed that its “value had declined by a year to year due to, [among other things], the continued pressure on its ‘bricks and mortar’ business from e-commerce, declining sales and record bankruptcies and store closings, especially for department stores and fashion retailers that were once the main focus of [Crossgates’] business.”
The petition further states that Weinhold was made aware that the value of the property was also “negatively affected by the devastating impact of the COVID-19 pandemic …”.
In June 2020, as COVID-19 closed shopping malls in New York City, local politicians and business owners rallied at Crossgates, calling on Governor Andrew Cuomo to reopen the state’s covered malls. During the press conference, MP John McDonald said Crossgates has 225 tenants.
Crossgates says its valuation of $ 282.5 million “is flawed and illegal due to overvaluation” and that the mall is or will be “injured due to the overvalued, uneven, inappropriate and illegal valuation.”
Crossgates’ parent company, Pyramid Management Group, has just scored a big win which, given its track record, should lead to more tax certiorari cases against the city. On July 8, an appeals court unanimously overturned a lower court decision that had halted construction on the company’s Rapp Road and Western Avenue projects – a 222-unit apartment development and project of Costco Wholesale store.
Macy’s July 15 petition, unlike Crossgates’ petition, did not include specific reasoning as to why she should receive the reduced appraisal, but did indicate that those details had been offered to the city appraiser – some under the form of affidavits – when the retailer has filed a grievance. .
Physical retailers across the country have been bleeding customers for years, but COVID-19 has acted as an e-commerce accelerator.
The pandemic has helped accelerate the fight in the department store industry, which has seen iconic retail names like Lord & Taylor, once a Crossgates tenant, and JCPenney, still a tenant, end up in the trash can of the history of bankruptcies.
Census data exposure that with two exceptions, annual department store sales have declined every year since 2000, when sales, $ 231.6 billion, were the highest in any year since the Census Bureau began tracking the data , in 1992.
With the exception of January through May 2020, the first five months of 2021 saw the lowest department store sales figures, $ 54.6 billion, since 1992.
Macy’s sales in 2020 were $ 17.3 billion, down significantly from sales of $ 24.5 billion in 2019. Macy’s annual median sales for the three years before 2019 were $ 24.9 billion, while the annual median sales between years 2013 and 2015 were $ 27.9 billion.
The retailer, which plans to close 125 of his 727 stores over the next three years, avoided bankruptcy in 2020 in part because it often owns the real estate on which its stores are built and was able to put the land as collateral as part of a larger securitization of $ 4.5 billion in financing to help finance its operations.
Macy’s filed similar Section 7 motions against Guilderland in 2019 and 2020 as well; both cases are still pending. However, a letter recently filed in Macy’s 2020 certiorari fiscal file indicates that a resolution may soon be within reach.
The letter, dated July 9, 2021, is from city attorney William Ryan to the judge in the case, Walsh.
Ryan writes, “My opponent and I are in serious settlement negotiations and are hoping for a resolution. “
With things going well, Ryan asked Walsh for a 30-day extension to continue negotiations before he had to report back to him on the status, if any, of a resolution.
Walsh approved the extension on July 12.
It’s still like deja vu
As the US economy contracts in unprecedented ways 9.5% Between april and june from last year – the fastest quarterly rate has gone down since records were kept – Crossgates sought redress for its retail woes by filing a lawsuit against the town of Guilderland in July 2020 with the aim of cutting its tax assessment by nearly half of $ 282 million.
Crossgates in his 2020 court record said he is expected to receive an almost 50% drop in his assessed value for all of the reasons re-spelled out in his 2021 petition.
Within a year of filing the petition, Crossgates initially ignored and then opposed a disclosure request made by the city for property appraisals it used to raise some $ 290 million. loan dollars.
In late April, city attorney Ryan wrote a letter to Crossgates attorney “in a good faith effort to resolve” the dispute the two sides had over the mall’s objections to handing over the appraisals as well. than promissory notes related to mortgage refinancing.
Guilderland is researching documentation on the mall’s $ 470 million valuation. Last summer, after an appraisal, the value of Crossgates was lowered to $ 281 million.
In a June 16 response, Crossgates said the 2012, 2013 and 2014 ratings were irrelevant because they were prepared long before the assessment which they are now seeking to cut in half.
The mall said the appraisals were paid for and prepared for Crossgates’ lenders – and not for Pyramid himself, the owner of the mall, who, according to court documents, never “approved or adopted” them.
Crossgates also argued that “although mortgages, unlike loan appraisals, may qualify in some Section 7 proceedings, here promissory notes are neither relevant nor discoverable, for at least three reasons ”.
New York State courts have recognized that due to the term of a mortgage and the specific nature of an appraisal against date, the promissory note is a reliable indicator of value. merchant, says the mall.
An appraisal is an opinion on the value of a property on a specific date. It’s based on facts, but it’s an opinion.
Crossgates argues that the second reason promissory notes are irrelevant and irrelevant is that when a long period of time has elapsed between when the mortgage was made and when the appraisal was disputed, the loans or notes no longer “reflect or establish the value of any property on the relevant valuation date.”
And third, in tax certiorari cases, according to Crossgates, it is “well established” that a property should be valued “regardless” of any existing financing.
The city responded a few days later.
Crossgates, Guilderland argued in his June 22 response, has “unrestricted access to all information relating to their property and its value,” but the city, “on the other hand, does not have this information and of this access “.
It is “only fair”, argues the city, that it “receive the relevant documents by way of investigation to enable it to adequately prepare a defense in these proceedings”, given that Crossgates seeks to narrow its assessment closely. of $ 140 million.
As the city has previously argued, the June 22 filing indicates, the promissory notes “reflect the current and outstanding obligations for the subject property and its owners.”
The ratings are to be disclosed so the city can determine whether “they are affecting the current income stream and whether the current income stream is at market value,” the file said.
Crossgates arguing that the property is worth much less in part due to the general, multi-year decline in brick-and-mortar retailing, the appraisals should be disclosed, the city argues in its filing, due to “the fact that these documents are relate directly to and specifically analyze that particular property.