The Town of Ulster and the Kingston City School District have signed an agreement with the new owners of Hudson Valley Mall to reduce the assessed value of the mall by about 90 percent for taxing purposes. The Hull Property Group of Augusta, Ga. paid $8.1 million for the bankrupt property in January. It was valued for assessment purposes at $66 million in March.
The five-year agreement requires the school district, county and town to refund a total of $1.4 million in overcharges for this year at a rate of approximately $929,000 for the school district (63 percent of the total) to be paid in equal installments over the period of the agreement), $210,000 for the town, and $135,000 for the county. About $126,000, or nine percent of the total, is to be refunded by taxing districts providing sewer, water, lighting and other services. The county was not a party to the agreement, but was subject to it.
Ulster town Supervisor James Quigley III said the agreement, which amends a previous state court order, clears the way for the Hull Property Group to upgrade the 35-year-old mall in order to retain current occupants and attract new ones. The Hull Group said it intended to invest upwards of $10 million in property improvements in what it called “a dying property,” but not without an agreement on assessments. The agreement stipulates that its assessment will not be raised, regardless of improvements, during the five-year period.
The impact of a $60 million reduction in assessed value on local tax bills will cost the town an estimated $340,000 in revenue a year, Quigley said. The impact on the Kingston school district would be about four times higher — but of course its tax base is larger, exceeding $2 billion, according to county records. School officials were not available for comment.
Quigley says some $40 million in new development planned in the town will mitigate the assessment losses at the mall to some degree.
State Supreme Court Judge Richard Mott, who signed off on the settlement in what was originally a tax certiorari proceeding, did not address the impact of the mall agreement on basing property value solely on sales price. Properties are sometimes also valued on their income or on comparative sales. In his six-page ruling, Mott made specific mention of “declining values of small-market enclosed mall property in general.” That language supported the Hull case for dramatically lower assessments.
As a practical matter, Quigley said, courts tend to give great weight to comparative value and current prices.
Without an agreement on taxes, the Hull Group had said it would not proceed with improvements.
“Without this agreement, we would have remained in a kind of limbo wherein things could have only gotten worse,” Quigley said Friday. “Our overall goal is to preserve and enhance commercial property values and sales-tax receipts, not only at the Hudson Valley Mall, but in the Ulster Avenue commercial corridor. I believe the Hull Group negotiated in good faith, and we welcome them to our community.”
Hull, in a separate statement, echoed those sentiments.