Originally Posted Online: Dec. 12, 2012, 6:13 pm
Last Updated: Dec. 13, 2012, 11:50 am
Appraiser: SouthPark Mall economic model 'not working'
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By Dawn Neuses, firstname.lastname@example.org
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Photo: Todd Mizener|
SouthPark Mall has become an economic model that no longer works, according to an appraiser who addressed the Rock Island County Board of Review on Wednesday, Dec. 12. The mall's owner, Macerich, Inc., wants the malls value re- assessed, from $15.5 million to $9.9 million, citing lower occupancy rates and lower sales per square foot than the national average for JCPenney, Dillard's, Younkers and Sears.
MOLINE -- An appraiser hired by SouthPark Mall's owners told the Rock Island County Board of Review on Wednesday that the mall is an "economic model that is not working."
Macerich Co., the owner of the mall, wants its 2012 assessed value now set at $15.5 million to be lowered to $9.9 million. The assessment is one-third of market value and is the figure on which property taxes are computed.
If the assessment is lowered by the requested $5.6 million, it would decrease Macerich's property taxes from $1.4 million to approximately $900,000.
A decision on the appeal likely will be made in March.
Kevin Byrnes, a property appraiser hired by Macerich, working with the Chicago firm Byrnes, Houlihan & Walsh, LLC, testified he used two separate appraisal methods -- retail sales and income capitalization -- to come up with a $30 million full market value for the mall.
That's about half the value set by assessors five years ago.
He said SouthPark's total occupancy, counting both permanent and temporary tenants, has declined to 81 percent.
Permanent tenants pay about five times the rent as temporary tenants, who have leases of one year or less, Mr. Byrnes said. Theamount of temporary tenant space in SouthPark is increasing while the amount of permanent space decreasing.
"It really hits the bottom line," said Mr. Byrnes. He said the mall, as it operates today, is an "economic model that is not working." The property has millions in deferred maintenance, he said, adding malls such as SouthPark are being "repositioned," sometimes renovated into open-air lifestyle centers.
Inside the mall, the "permanent" occupancy rate is 60 percent, Mr. Byrnes said. Counting out-lot tenants, the occupancy rate is 67 percent, he said.
Six permanent retail tenants already have invoked co-tenancy agreements which allows them to pay less in rent if mall occupancy falls belows 65 percent, he said.
Mr. Byrnes said four SouthPark anchors -- JCPenney, Dillard's, Younkers and Sears -- have lower sales per square foot than the national average for each store. He said he did not have sales per square foot information for VonMaur, as it is a privately-held company.
Chief Rock Island County assessor Larry Wilson told the review board the SouthPark appraisal is under review by an appraiser hired by the county. Additional income information will be provided by Macerich, he said.
The information, and his recommendation on the appeal, will be forwarded to the board.
Moline has been working with Macerich to reinvent the mall. Recently the city council postponed a vote on the creation of a tax increment financing district for SouthPark to await a decision on the mall's assessment appeal.
In a TIF, any increase in property tax assessments from development within the district goes into a special fund for use in attracting additional development, improving infrastructure within the district or repaying some development costs.
It is not unusual for SouthPark Mall owners to fight assessments. According to previous interviews with township and county officials, former mall owner Simon Development Group fought the property assessment virtually every year from 1997 to 2011.
Simon and Macerich were co-owners of the mall before Macerich took full ownership in January. At that time, a 2009 assessment appeal was pending before the Illinois Property Tax Appeal Board.
The appeal was dropped when Macerich became full owner of the property, Mr. Wilson has said.