General Growth Properties – South Portland’s largest taxpayer – is late with its quarterly property tax payment for the Maine Mall.

The Chicago-based mall owner, which filed for bankruptcy in April, missed the May 7 deadline on its $931,756 tax bill. The city assesses an interest fee for late tax bills. For the Maine Mall, the charge is $280 per day.

City leaders said this week they are optimistic the company will meet its obligation.

“The Chapter 11 filing indicates that GGP and its subsidiaries intend to remain current on their property tax obligations,” City Manager Jim Gailey wrote in an e-mail to the newspaper.

Tax Assessor Elizabeth Sawyer said Monday that she has been assured by the mall owner that the most recent property tax bill will be covered soon.

“It’s a red tape thing because the bankruptcy is so new,” Sawyer said. “Usually General Growth is early (with tax payments), but they probably had to get this cleared through the bankruptcy judge.”

Sawyer said she maintains regular contact with the tax department at General Growth Properties because the company is the city’s biggest taxpayer. General Growth pays $3.7 million annually in local property taxes.

By comparison, National Semiconductor – with the second-highest property tax bill – pays $3.2 million in local property taxes.

The Maine Mall has continued operating since the April 16 bankruptcy filing. Nationwide, General Growth owns about 200 shopping malls, including Boston’s Faneuil Hall, the South Street Seaport in New York City and Providence Place in Rhode Island.

Facing $27 billion in debt from short-term loans and mortgages, General Growth’s Chapter 11 petition represents the largest bankruptcy filing in U.S. history.

Chapter 11 petitions were filed in New York for the company’s three South Portland entities: GGP Maine Mall LLC, GGP Maine Mall Land LLC, and GGP Maine Mall Holdings LLC.

Gailey said all the General Growth petitions have been consolidated with the General Growth Properties’ main case “for procedural purposes.”

He noted that a “standard automatic stay is in place and prohibits any collection activities against the debtors’ assets, regardless of when the claim arose.”

The stay limits a creditor’s ability to demand payment on overdue loans, as the company reorganizes under the supervision of the courts.

Gailey said that Jensen Baird Gardner & Henry, the city’s law firm, has a bankruptcy law specialist, who is prepared to file the “necessary proofs of claim at the appropriate time.”

He noted that federal courts let states determine the priorities of claims. In Maine, real property taxes have what is known as “a super priority position,” Gailey wrote in an e-mail.

“This means that the city will eventually be paid not only any outstanding tax principal, but also the applicable interest,” which is 11 percent.

Shopping mall analysts predict that General Growth’s reorganization efforts will focus on selling off properties.

General Growth bought the Maine Mall in 2003 for $270 million. A security agreement recorded at the Cumberland County Registry of Deeds in 2005 indicates that “GGP-Maine Mall LLC” had a mortgage in the amount of $230 million from CitiGroup Global Markets.

The document also contained a statement that borrowing by GGP-Maine Mall against the South Portland properties could not exceed $460 million.

The financial problems of cash-strapped General Growth Properties are another headache for city officials, who are dealing with declines in excise taxes and state funds.

Gailey noted that the city’s “cash flow is stable at this point.” But he said that if General Growth failed to pay its tax bill through July, the city would have trouble balancing its budget. He noted that the city would need “to explore alternative ways to fill the gap.”

Shoppers at the Maine Mall and other retail centers owned by General Growth have not seen any disruption in services. The mall owner has pledged to continue operating its shopping centers, though Sunday hours have been cut back at the Maine Mall. The company also suspended a major expansion of the South Portland shopping center.

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