County to recalculate mall’s taxes after rulingPublished 11:05am Tuesday, March 25, 2014
With a Minnesota Tax Court ruling in favor of WestRidge Mall over Otter Tail County in the matter of the mall’s appraisal, the county will have to recalculate the taxes paid in three recent years and issue the mall owners a refund, according to County Assessor Doug Walvatne.
“We’ll have to refund them the difference from what they paid and from what the new valuation is,” Walvatne said.
According to court documents, the court’s decision March 20 reduced the property values of the mall — on about 29 acres of commercial land — from $3.72 million in 2010 to $1.65 million, from $3.92 million to $1.62 million in 2011 and from $4.05 million to $1.70 million in 2012.
The enclosed mall space, located at 2001 West Lincoln Avenue, makes up 210,824 square feet of gross leasable area.
The court ruled that for each of the three years, the Otter Tail County Assessor overstated the property’s estimated market value.
“Well, obviously we’re disappointed,” Walvatne said. “We thought we had a pretty strong case.”
The county will figure out a tax abatement based on the reduced property values from those three years in the court ruling and issue a tax refund for overpayment, according to Walvatne. The dollar amount for the refund and a time table for issuing it are undetermined, he said.
For the mall owners, “it’s exactly what we were hoping for,” said their attorney Chad Felstul.
“Because it’s our position that the valuation that the judge put on the property is more reflective of the economics of not only WestRidge but enclosed malls at this time,” he said.
At issue between the mall owners and county officials was the highest and best use for the land. The county’s expert, Joseph Mako, agreed that construction of another enclosed mall is “unlikely,” and also said that the highest use of the land “is to demolish the improvements and redevelop the underlying land,” according to court documents.
The county thought the highest and best use of the property would be if the mall were vacant or torn down.
“The value, we felt, was in the land,” Walvatne said.
But the best use of the property from the owners’ perspective was to have an enclosed shopping center.
There were long-term leases in place, as well as restrictions that Home Depot has on how the mall can be used, Felstul said. Because of that, it wouldn’t make sense to tear down the mall and then have to figure out what to do with those leases, he said.
The court ruled that the highest and best use of the property must reflect the limitations imposed by the leases and, therefore, the highest and best use of the property is as improved, according to court documents.
The original part of the mall was built in 1978. An addition came in 1980 when about one-third of the center was built.
The mall owners are up to date on paying taxes for the property. Taxes in 2010 were $131,138 (with two special assessments included: $9,010, $8,420), 2011 taxes were $134,516 (including $9,503 special assessment), 2012 taxes were $146,064 (including $9,503 special assessment) and 2013 taxes were $151,550.
It’s the hope of the mall owners that, with the savings in taxes, they will be able to make some improvements to the facility and also attract more tenants to the mall, according to Felstul. They’ve worked with the leasing agent Goldmark Schlossman to attract new tenants.
“In future years, it’s our hope that the valuation will be consistent with what the tax court ruled,” Felstul said.Tags: WestRidge