The other shoe has dropped at the financially troubled Hudson Valley Mall on Ulster Avenue. Its $49.4-million mortgage has been foreclosed upon, and Kingston attorney Catherine Charuk has been appointed receiver to sort out the situation in the interests of the creditors. Mall management is no longer making the big decisions.
According to the foreclosure action, the mall owners ceased making payments on the mortgage last September. That default entitled the mortgage-holder to the appointment of a receiver without notice, an action confirmed by Supreme County justice Richard Mott. The receiver or an agent handles the rents, maintains the premises, and directs other operational and management functions. New York City broker Andrew Scandalios has been appointed real-estate broker “to market the mortgaged premises for sale subject to court approval.”
On May 2, mall owner PCK Development formally consented to the order appointing the receiver.
The 62.6-acre Hudson Valley Mall contains 765,269 square feet of rentable space and currently generates income of about $650,000 a month. That sum includes rent being paid by tenants, including JC Penney and Macy’s, who had shuttered their stores before their leases ran out.
The mall is presently assessed at $66 million, but is suing for a reduction to $40 million. The likely success of that effort would put pressure on the remaining taxpayers of the Town of Ulster, Kingston’s school district and county government, which must come up with the tax money that the mall would otherwise be paying.
The taxable base of the town is 1.1 billion dollars, which suggests that the impact of the reduction in the mall’s taxes to the other taxpayers in the town would be in the neighborhood of 2.3 percent of the total tax base. Town government is presently dealing with the effects of reduced revenues from TechCity, formerly the town’s other biggest contributor to the tax base.
It looks very much as though someone, the creditors, the debtors or both, will have to write off a substantial portion of their investment.
With 28 persons seated on the more than 200 chairs available at the food court a few minutes past noon Friday, July 7, the Hudson Valley Mall looked sparsely populated. Five small food-service places remained. In addition to the five remaining anchors — Sears, Regal Cinema, Best Buy, Dick’s Sporting Goods and Target — about 40 smaller stores, some local, some regional and some national — are still doing business. Visitor traffic in the corridors seemed light, as might be expected at that time of day and week. The anchors all had some customers.
The attendant at the mall’s information booth was helpful. She directed me to the Woodstock Music Shop, a newer establishment down the hallway. That was the kind of service-oriented business the mall management was trying to attract, she said.
The music store displayed a poster for the Woodstock Rock Academy, which the store clerk told me it supported but didn’t have a financial connection with. The store not only sold musical equipment, he said, but did rentals, hosted workshops and classes, and provided other services to the music community. Open less than a year, it was doing all right, he said.
A couple of the empty stores hosted displays of cars from Begnal Motors and Sawyer Motors. The custom-made auto-show vehicles from Sawyer were particularly striking.
A hallway sign said: “Support Ulster County. Shop local. Shop the Hudson Valley Mall, your mall since 1989.”
On the way out, I counted 22 people in the food court. I estimate that there were about 350 cars in the various parking lots surrounding the mall. I didn’t do an exact count.
Since the Hudson Valley Mall can’t seem to meet its financial obligations and doesn’t seem on the brink of a turnaround, the receiver’s job will involve major changes. The problems won’t solve themselves. Charuk, whose office is on Pearl Street in Kingston, had no comment on her task at the mall, other than that she hopes to handle the job expeditiously.
In terms of employment and compensation, the retail sector in Ulster County has been stable in the past decade. According to federal census data, the industry had 9676 employees in the first quarter of 2004 and 8986 in the same period of 2014. Total payroll in the low-paying sector, unadjusted for inflation, has increased in the decade from $203.5 million to $232.6 million.
Ulster town supervisor James Quigley is convinced that some level of retail business activity will continue at the mall. In the long term, will it be sufficient to maintain the viability of the mall model in a market the size of Kingston? Can a complementary use be found that will strengthen the mall? Or will other sites without the expense structure (maintenance, security) gradually draw away the critical mass of activity the mall requires for viability?
Bankruptcy law and the marketplace will decide.
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