Simon wants mall property taxes lowered
Jul. 1—The nation's largest owner of shopping malls has been shopping for discounts — on its property taxes.
Simon Property Group has cashed in on its efforts this year, securing a $2.3 million credit on its property taxes in Salem and winning a court judgment for north of $1.7 million against Nashua.
The company's campaign for lower valuations predates the coronavirus pandemic, which dented sales at brick-and-mortar stores. Simon has sued all four of the New Hampshire communities where it operates shopping malls.
"They got less than what they asked for, and they certainly got more than we wanted," said Steven Bolton, corporation counsel for Nashua.
Simon isn't the only company challenging their property taxes.
Owners of everything from condos to strip malls have filed requests to reduce their tax bills — and appealed to either Superior Court or the New Hampshire Board of Tax & Land Appeals if they are unsuccessful.
"We like to say it's not very cost effective for the companies (to file court appeals), but dozens of them do every year," Bolton said.
Judges, he said, typically "credit both sides to some degree and come out somewhere in between."
A non-Simon owner operating the Steeplegate Mall secured lower assessments for 2019 and 2020 in a settlement with the city of Concord, but is still challenging its 2022 assessment, according to Jonathan Rice, Concord's director of real estate assessments.
Lowe's, Kohl's and McDonald's in Nashua were among those who have filed suit to press for cuts in their tax bills, according to a review of the state court's website.
In its case with Nashua, Simon's lawyers persuaded a judge to lower the assessed valuations of the Pheasant Lane Mall for the 2019 and 2020 tax years, lowering its tax bills by more than $1.7 million plus interest.
Simon filed an appeal of its 2021 assessment in Superior Court and also has asked the city for a cut in its tax bill for 2022, Bolton said.
Nashua has seen wide fluctuations in the number of abatement requests filed over the past three decades, with higher numbers when assessments are updated. Nashua recorded 259 for the 2022 tax year, when values from a revaluation took effect, after 97 the previous year. There were 1,533 in 2005 when figures were updated, according to Gregg Turgiss, a commercial assessor for Nashua.
Simon often owns the non-anchor-store areas of its enclosed malls, with anchor stores frequently, but not always, owned by others.
In Salem, town officials and a business entity of Simon Property Group reached a settlement in March that gives the mall owner a $2.3 million tax credit to settle tax years 2020 through 2023, according to the five-page pact.
Simon silent on requests
Massachusetts attorney Anthony Ambriano has represented Simon in all four communities with Simon centers: Nashua, Manchester, Salem and Nashua.
"The company doesn't comment on pending litigation," Ambriano said by phone last week.
Simon didn't respond to a request for comment.
In its first-quarter earnings release, Simon said occupancy in its U.S malls and premium outlets stood at 94.4% as of March 31, compared with 93.3% a year earlier. Base minimum rent per square foot grew by 3.1% and reported retailer sales per square foot rose 3.3% from a year earlier.
The International Council of Shopping Centers said it doesn't collect or track abatement requests by mall owners.
Stephanie Cegielski, the trade group's vice president of research and public relations, said people are still shopping in person.
"We haven't seen a drop in brick-and-mortar sales with the exception of the summer of 2020 when the pandemic had non-essential businesses closed," she said in an email. "The level of growth for online sales is currently at the same level as it was prior to the pandemic, which is around 8% year-over-year."
People want their malls to succeed.
Three in five people in a May survey said they wanted to see a mall revival, led by the Gen Z and Gen X generations.
About a quarter of those surveyed said they hadn't gone to a mall in the past year, while 15% say they go multiple times a month, according to the survey by IPX 1031, a financial company.
Here is how some communities handled disputed Simon assessments:
Salem
The town and the mall submitted competing appraisals in Superior Court for four Simon parcels that make up much of the Mall at Rockingham Park.
"The town always wants to get it right, and so we thought we had it right, and they thought we had it wrong," said Joe Lessard, interim chief assessor.
"After extensive negotiations, it was settled and that the proper amount was the amount that finally was settled on," Lessard said.
About $936,000 of the settlement was applied to the 2023 tax bill, with the remainder to be used in future years.
A revaluation in Salem updated all property assessments in 2021.
Before the settlement, the mall's assessed valuation, like many other commercial properties', rose by a "much smaller percentage" than residential properties, Lessard said.
Merrimack
Simon's abatement fight over its Merrimack property went to the state Supreme Court.
According to court records, the town had assessed the Merrimack Premium Outlets at $86.5 million in 2016. Later that year, the town discovered that the property had been used in or about 2013 as collateral for a loan and had been valued for that purpose at $220 million, so the town reassessed it at $154.1 million for the 2017 tax year.
Simon lost its initial court fight but prevailed in 2021 before the Supreme Court, which reversed the decision and sent the case sent back to the lower court.
Simon has been filing abatement requests every year since 2017, according to Tracy Doherty, Merrimack's administrative assessor.
"We're trying to settle the first one," she said.
In a filing in the Merrimack case, Simon attorney Ambriano cited another case, Pheasant Lane Realty Trust versus the city of Nashua from 1998. That trust is another Simon business entity.
Manchester
Manchester assessors rejected abatement requests by Simon for tax years 2020 through 2022 for the portion of the Mall of New Hampshire owned by a Simon business entity.
"The burden of proof is on the taxpayer, and they provided no proof, no evidence to support their claim," said Robert Gagne, who chairs the city's board of assessors.
Mall representatives maintained that "retail bricks-and-mortar are in decline," Gagne said. "We've known that for a couple decades now."
Simon, he said, didn't provide an alternative assessment or market value for 2020. For 2021 and 2022, they wanted the assessment cut by tens of millions of dollars.
Gagne computed that the mall wanted a tax break of $1.3 million for 2022 alone.
Simon has appealed Manchester's rejection of its 2021 abatement request to Superior Court. Gagne said the valuation the mall wanted would have saved it more than $855,000.
The 2021 citywide revaluation of property already has benefited the mall.
Its 2020 tax bill totaled more than $3.6 million, but that dropped to $2.7 million in 2021 and $2.8 million in 2022, according to Gagne.
That was because other property types, such as single-family homes, appreciated at a higher rate, which shifted the tax burden, he said.
Assessments overall increased by 40%, including 46% for single-family homes, 22% for mixed uses and 14% for commercial, which includes malls, office buildings, gas stations and hotels.
Gagne said Simon representatives cited the pandemic as a reason to lower its assessment.
"Somebody buying a property like that is buying the expectation of future revenue," he said. "You don't buy that for one year. You buy that for a 10- to 20-year investment."
State tax board
The New Hampshire Board of Tax and Land Appeals has 700 to 800 open cases at any one time, running from single-family homes to commercial properties, according to clerk Anne Stelmach.
"It could take an average homeowner eight to 12 months just to get through this process here," she said. "Commercial could go a lot longer."
She said, "We've had cases that have dragged out for four years."
Even getting property values to use as tools to win a case is a challenge.
"Now trying to get a commercial appraisal, you're going to wait a year, because everyone is backed up," Stelmach said.
Simon business entities in Manchester, Salem and Nashua have filed several abatement appeals that they later withdrew. A Nashua case dated to 1992. She doesn't know why the cases were withdrawn.
The board doesn't keep a tally on what percentage of municipalities or property owners win.
"We get asked for it by the Legislature all the time," she said.
