The New York-based investors who bought the Bangor Mall last year say the property was actually worth almost two-thirds less than what the city said it was last year, and that their tax bill was too high as a result.
It’s the third year in a row that owners have challenged the city’s appraisal of the struggling mall, seeking a lower valuation that would result in a lower tax bill. They have been challenging those appraisals even as the city has already been making large reductions in the mall’s assessed value to reflect its loss of tenants and revenue in recent years.
After the city denied the mall’s initial request for a rebate in April, its owners are now appealing that decision to the city’s Board of Assessment Review, which will consider the matter on Thursday.
While the mall’s appeals for a lower assessed value aren’t new, it’s the first time that a trio of investors from Great Neck, New York — Mason Asset Management, Namdar Realty Group and CH Capital Group — have challenged the mall’s assessment since they bought it for $12.6 million in the spring of 2019.
They paid that amount after the mall first went up for auction, but no bidders met the $14.95 million reserve price. That purchase price was much lower than the mall’s assessed value at the time, $47.4 million. It was also lower than the $34.5 million assessment the mall would soon receive for the 2020 fiscal year, which the owners are now contesting. The 2020 fiscal year ran from July 1, 2019, to June 30 of this year.
An attorney for the mall’s owners has argued that the $34.5 million assessment is too great based on the price they paid for it, national retail trends and the loss of large and small tenants from the mall. He proposed it be reduced to $12.6 million, which he called its “fair market value.”
“The Bangor Mall was the subject of a recent, arm’s-length transfer for $12,600,000 and in recent years has lost anchor tenants and other key tenants and suffered from declining occupancy, tenant sales, and revenue,” mall attorney Ryan Gibbs of Ohio wrote in the rebate request. “The Subject Property suffers from severe economic obsolescence that has not been taken into account in the Assessment.”
If the new valuation were granted, it would cut the mall’s tax bill for the 2020 fiscal year by $505,388 — from $795,197 to $289,809 — according to Bangor Assessor Phil Drew.
Drew denied the application on April 12, and the mall’s owners have now filed an appeal with the city’s Board of Assessment Review. That panel has already denied two previous requests for a lower valuation from the mall’s last owner, Simon Property Group of Indianapolis. Those assessments are now being appealed to a state review board.
In his letter denying the most recent request, Drew explained the city’s approach for determining a property’s valuation based on the income it can generate. He noted that when the city produced its 2020 assessment in the spring of 2019, three of the mall’s four anchor store locations were occupied — by JC Penney, Dick’s and Hannaford — while the one formerly occupied by Sears was still empty. About 60 percent of the rest of the mall had tenants.
Drew called the mall’s drop in assessed value that year from $47.4 million to $34.5 million “reasonable.” That was the second consecutive year the mall saw a large drop in valuation and the first time in two decades that the mall would owe Bangor less than $1 million in annual property taxes.