July 2, 2013

Owner of The Maine Mall drops property tax appeal

Assessed value was at issue in a case that could have cost South Portland as much as $4 million.

By Matt Byrne mbyrne@pressherald.com
Staff Writer

SOUTH PORTLAND — The owner of The Maine Mall has ended an appeal of three years of property tax bills that, if successful, could have cost South Portland as much as $4 million, a city official said.

click image to enlarge

Shoppers crisscross the center atrium of The Maine Mall in South Portland. The mall has abandoned an appeal of its tax assessment.

2010 Press Herald File Photo / John Patriquin

City Assessor Elizabeth Sawyer said she was notified within the last month that General Growth Properties, the Chicago-based retail property conglomerate that bought The Maine Mall in 2003 for $270 million, will abandon its protracted and costly legal battle over the tax payments.

The company had argued that the mall was worth far less than the values set by the assessor in 2006, 2009, 2010 and 2012. The assessed value is used to determine how much taxes a property owner must pay.

Anyone may appeal a property tax assessment, starting at the local level with the city or town assessor, then with a local board of assessment review. The state Board of Property Tax Review handles further challenges for non-residential property valued at more than $1 million. After that, property owners can go to Superior Court, or eventually the Maine Supreme Judicial Court.

The disagreement over the mall began in 2006, when General Growth Properties argued that the property was worth $190 million, $71 million less than the city's assessment. The Board of Property Tax Review rejected that appeal.

In 2009, the company said the mall was worth $180 million, $61 million less than the city's assessment, and the differences were similar for 2010 and 2012, Sawyer said.

David Keating, a spokesman for General Growth Properties, wrote in an email that the company would not comment on its tax appeal efforts but it looks forward to bringing high-quality retail to the city in the future.

Sawyer said General Growth Properties was rebuffed at each turn of the appeals process, but the case was costly for the city. Since 2006, South Portland has paid $143,729 for court-related costs, expert witnesses and attorney's fees, said City Manager James Gailey.

Sawyer said General Growth Properties, which went through bankruptcy in 2009 and emerged in 2010, employed an appraiser who argued that the purchase price of the mall, at $270 million, included so-called business enterprise value that exceeded bricks-and-mortar assets.

The city had to hire its own costly expert witnesses to rebut the claim, she said.

"It's the American way," Sawyer said. "You don't want to pay more taxes than you have to. At the same time, it's my responsibility to make sure people pay on an equal basis."

Now that the mall's prospects have improved, resistance to the tax assessments has appeared to ease, she said.

"The economy is turning around," Sawyer said. "There's a lot going on at the mall. Their occupancy (rates) have improved."

When the Bon-Ton department store opens in September in the former Filene's Basement location -- which has been vacant since 2006 -- the mall's million-plus square feet of retail space will be near capacity.

"The city wants to move forward in a positive manner and work with GGP," Sawyer said, "and that was not going to be possible with the continued litigation."

Matt Byrne can be contacted at 791-6303 or at:

mbyrne@pressherald.com

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