The pending takeover of the bankrupt Hudson Valley Mall in the Town of Ulster by a Georgia development group is shaping up as another of those good-news-bad-news scenarios.
The good news is that Augusta, Ga.-based Hull Property Group has bought the 760,000-square-foot mall (gross leasable area) for $8.1 million. At $200 a square foot, which is probably cheap, it would cost upwards of $150 million to replace the mall, not counting parking and access roads.
The bad news is it’s assessed for $66 million, meaning Hull got it for the fire-sale price of something like eight cents per dollar on the assessed value. Drilling further on that side of the ledger, there is no way Hull or any other business is going to carry a $66 million assessment on something they bought for $8.1 million. Ask TechCity owner Alan Ginsberg, who bought the IBM complex across the road for $3 million back in ’98 and has been fighting his assessments ever since.
That the Hudson Valley Mall was a failure in progress was apparent to any shopper. The empty stores (including two anchors), pockmarked parking lots, ghost-town weekdays, and used cars for sale in the corridors told the tale. It’s hardly a stretch to project that without a new investor the whole mall could have gone dark in a year or two. And then what? Maybe a really big food pantry? The world’s largest Dollar Store?
And what about those assessments? It is a curiosity of state law that the resident locality — in this case, the Town of Ulster — determines property values. The school district has the largest stake, upwards of 60 percent of the tax total, the county about 16 percent. Neither has a direct say, though both will suffer the consequences of a reduced tax base.
How it might go
For Ulster Town Supervisor Jim Quigley, the question is now low can he go. He’s been there, done that, lost his shirt with other big property owners, like Ginsberg. The courts, where all this is likely to wind up, have not been kind to municipalities. The Hull people know that: these guys do their homework. With about two dozen “failed” malls in their portfolio, they tell us they’ve never closed one.
Operators of a tight ship, they’ll need to get a grip on two factors, their real costs going forward — and that will include taxes and a projected $10 million in renovations — and their potential market. The former, absent major surprises like roofs caving in, is not hard to predict. Jim Hull, Hull Group’s principal and spokesperson, noted in an interview last week, for instance, that the mall had lost some $25 million in sales to malls in Dutchess and Albany counties in the past year. For the county, that translates into a million dollars in sales tax revenues.
Quigley, for his part, doesn’t expect the worst-case contingency. A retired CPA and a seasoned negotiator, Quigley can read a balance sheet. “They’ll need to defend their investment,” he said when it was suggested to him that the Hull folks might just pick up their stakes if they don’t get what they want. Lost on all but the most obtuse locals is Hull’s keen interest in “making it in New York,” as he put it, i.e. access to Wall Street investment. Queue up the Frank Sinatra classic for more on that.
Right now, all eyes are on the assessments, even as other moving parts come into play. Both sides are eager to settle this issue, at least for the short term. Nobody expects the final assessment to come in at either extreme, though I predict it will swing more toward Georgia than Ulster. In that regard, Hull seemed more amendable than say, Ginsberg. “Purchase price doesn’t have anything to do with value,” he told us at one point. If Hull succeeds in reviving this failed mall, and they have a good track record, the rising tide will produce higher assessments going forward.
Meanwhile, expectations are more about right-sizing, to borrow an IBM term, than expansion. Absent an anchor or two to fill the 200,000 square feet left by Macy’s and Penney’s departure, bulldozers could be in the wings. Nonetheless, “We’re going after the big nationals,” Hull said.
At another end of the mall, Sears is working off a one-year lease; its departure would not be shocking. A leaner, cleaner mall (in terms of unobstructed lines-of-corridor sight), with perhaps a major food store and expanded theaters, could emerge.
There is in the minds of some, remembering past pitches, that this could be too good to be true, that perhaps these affable Georgians are, as my mother liked to say, too sweet to be wholesome. For now, optimism prevails.
Kenny do it?
Unanimously reelected Ulster legislature chairman for another year, Ken Ronk is counting on the $12.2 million Family Court renovation to promote the kind of working relationship between the legislature and the executive heretofore unheard of.
Ronk routinely speaks to better relations with County Executive Mike Hein, though with little tangible evidence. True, things get done; we’ll be hearing lots about it in various “state of the county” reports over the next few months. But things more often start and end with the executive, with little if any input from the legislature.
To Hein, good relations with the legislature mean he gets almost everything he wants, with significant majorities. Ronk has chosen to be agreeable. Better a seat in the foyer than in the parking lot.
Ronk, who will seek his fifth term in November, knows well the rocky relationships the executive had with previous chairmen, including Fred Wadnola, Terry Bernardo and John Parete. Buck the man, and the phone calls go unreturned, the emails are ignored, and formal communication dries up. Under those circumstances, it can be a very, very long way from the exec’s office on the sixth floor to the legislature at the other end.
Ronk’s unanimous reelection after last year’s 14-9 vote indicates a finger on the pulses of his colleagues, an ear to the ground, an eye on the ball. (I’m competing in a cliché contest.) Nudged by legislators, Ronk will name a special committee of the legislature for the express purpose of overseeing planning and management of the Family Court project.
That Hein does not welcome input from those outside his very small inner circle is not lost on anyone. As such, oversight may be more in the eye of the legislature than their wary neighbor down the hall.
Ronk’s special Family Court committee will include, he says, members of the standing Public Works and Ways and Means committees, among others. Ronk said he expects the committee won’t have much to do during the winter, as the executive branch has already completed most of the preliminary planning work. “After that, they might meet two or three times a month, who knows?” he said. The administration plans to start construction in late summer.
Last week, in one of those hurry-up scenarios that almost always comes a cropper, the legislature was asked to approve the $12.2 million bond issue without delay. Citing lack of information and coordination, black holes that figured prominently in the jail debacle a decade ago, six legislators voted against the bond issue. It takes seven votes to stop a bond.
Administration spokesmen warned that with an “aggressive” construction timeline, even a delay of a few weeks could be problematical. The tight deadline, they told legislators, was necessitated by an August 2018 expiration of the county’s current courthouse lease on Lucas Avenue in Kingston.
Nobody asked about extending the lease, if necessary, and nobody volunteered that information. This much I think I know: leopards don’t change their spots. An executive who has so jealously guarded his self-defined prerogatives will not eagerly share power.
Here and there
Monday’s Martin Luther King holiday had special significance for Kingstonians. It was the 15th anniversary of the death of former mayor T.R. Gallo, 41. He had been scheduled to address an MLK luncheon that day, an event he never missed during previous years in office.
The late former mayor gets much of the credit for rallying public support for the restoration of the city hall (1998-2000), but it was economic development head Steve Finkle whose day-to-day supervision of the complicated project that made it happen. Finkle died almost two years ago after a lengthy illness. There will be a reception for a display of his photography at — where else? — City Hall from 5 to 7 p.m. on Friday, Jan. 27.
Legislature Republicans welcomed Esopus councilman and former (short-term) supervisor Kyle Barnett as legislative counsel last week. They like his grassroots government experience and expertise in municipal law. Barnett, recall, was briefly a candidate for the Republican nomination for Surrogate Court last year. He replaces the well-respected Erika Guerin, who resigned.