Mall Assessment Fight Goes To Bankruptcy Court
Owners of the Chautauqua Mall are taking their fight to pay less local taxes to the U.S. Bankruptcy Court.
Washington Prime Group last week asked the court in Houston, Texas, to determine the appropriate market value for land it owns in the town of Busti.
This is the third attempt Washington Prime Group has made to reduce its taxable assessment on the Chautauqua Mall after filing a pair of tax certiorari cases in state Supreme Court in Mayville in 2020 and 2021. Earlier this week, the 2020 filing was updated to include the request made to the Bankruptcy Court. Washington Prime’s lawyers are arguing
“At the last conference, we discussed that petitioner may remove this matter to Bankruptcy Court,” wrote Kevin MacLeod, a Baldwinsville, N.Y., lawyer hired to represent Washington Prime Group. “I write to inform the court that an Adversary Complaint has now been filed in United Stated Bankruptcy Court seeking relief under 11 U.S.C. 505. Specifically, Petitioner has asked the Bankruptcy Court to make a determination as to the property tax liability for the property at issue in the above referenced proceedings. I have attached a copy of the recent filing for your reference. In light of the recent filing, Petitioner respectfully requests that all deadlines and proceedings before this court be stayed pending a determination of the Bankruptcy Court.”
In its 2020 and 2021 filings, Washington Prime Group had asked to have its taxable assessment decreased from $9,260,000 to $5,200,000 while arguing that the mall has been unfairly assessed. Washington Prime’s lawyers are arguing before the Bankruptcy Court that the 2020 and 2021 cases are moving too slowly and need to be resolved in order for the bankruptcy case to proceed.
No formal discovery has been authorized on the 2020 assessment reduction request, but the parties have voluntarily exchanged some documentation, according to the March 15 court filing. Washington Prime made a settlement request, on Oct. 8, 2020, but Washington Prime claims the town did not respond or participate in the negotiations. The State Supreme Court verbally ordered the sides to submit their own preliminary appraisals for review by April 15, 2022.
The 2021 filing has had no action other than the town’s consent to representation for electronic filing purposes.
“Neither case has proceeded to the stage where a scheduling order has been issued setting deadlines for the exchange of trial ready appraisals pursuant to 22NYCRR 202.59(g) or setting a trial date,” the March 15 Bankruptcy Court filing states. “Among other things, adjudication by this court of both cases together in one proceeding will greatly serve the interests of efficiency and uniformity.”
Washington Prime Group has spent nearly a year working through its bankruptcy proceeding after the COVID-19 pandemic exacerbated its financial struggles. Washington Prime Group was formed in 2014 following a spinoff from the Simon Property Group. It operates roughly 100 malls across the country, including the Chautauqua Mall. The Chautauqua Mall has struggled through the loss of three anchor tenants in the past several years, including Sears, Bon-Ton and Office Max. The mall has pivoted toward Planet Fitness and restaurants like Sakura Buffet to add tenants as retail stores struggled even before the COVID-19 pandemic while adding a new outparcel development in Taco Bell. Ollie’s Bargain Outlet is the newest store to open in the mall.
“WPG asks this court to determine the estimated market value of the Chautauqua Mall in light of, among other factors, widespread mall sector struggles and the deterioration of the subject property’s actual operational performance to adjudicate the amount of tax, as a function of value that ought to be fairly assessed against WPG,” Washington Prime’s lawyers wrote on March 15.