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VOL. 118 | NO. 4 | Wednesday, January 7, 2004

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By Andy Meek

Wolfchase Seeks to Compete Through Tax Breaks


The Daily News

When it comes to regional shopping centers, whats in a name?

Thats a question the Shelby County Assessor of Property Rita Clarks office is trying to answer. The office is being pressed by tax representatives for Wolfchase Galleria to sharply reduce the malls $133 million appraised value in the upcoming countywide reappraisal.

Brand-name value. The reason they give, according to Clark, lies in the value of the malls name. Using the concept of business enterprise value an appraisal industry term that represents a value enhancement based on such things as trade names and franchises Wolfchase reps argue that half of the malls value lies in its brand name. Simon Property Group Inc., the largest publicly traded real estate company in North America, owns the 1.1 million-square-foot mall on Germantown Parkway, as well as Raleigh Springs Mall and Oak Court Mall in Memphis.

As a result, Clark said Wolfchase officials are looking to get the malls appraised value reduced to about $70 million. That figure does not include the brand-name value associated with Wolfchases four anchor stores, Dillard's, JC Penney, Sears and Goldsmith's-Macys. Clark said anchor stores arent figured into mall appraisals.

Effect on revenues. Wolfchase representatives and county officials will discuss the issue at a 9 a.m. meeting Tuesday at the Assessors Office, and its resolution could have a significant effect on the Metro Memphis economy. Wolfchase Galleria, which sees an estimated 200,000 weekly visitors, is the largest single source of property taxes in Shelby County, according to mall manager Keith Stewart. The mall lies within the city of Memphis, so it generates city as well as county property taxes.

Clark said if the mall is successful in reducing its appraisal, other malls would likely attempt to follow suit. A reduction in Wolfchases appraised value also would reduce the malls assessed value, which is the percentage of appraised value on which property taxes are paid.

Theyre trying to say that because Wolfchase is a Simon company, it has an inherent value that can be extracted, because if it wasnt a Simon company it wouldnt be nearly as valuable, and we disagree, Clark said. What were trying to do is look at what the income stream for that property is. We dont want to get into this idea of what the value of the name is.

But if theyre successful, then we will have to value a lot of different properties by their methodology.

Heavy reliance. The issue comes at a time of increased attention to property tax revenues in both the city and county. Marlin Mosby, a financial adviser to the city and county, said property taxes make up about half of Memphiss revenue and an even larger percentage of county revenue.

Memphis Mayor Willie Herenton recently proposed several suggestions to the Memphis City Council to avoid a city property tax increase, and Shelby County government officials just wrapped up an efficiency study to look for sources of revenue other than the property tax.

Effort to compete. From Wolfchases perspective, Stewart said, the effort is nothing more than a push to remain competitive as regional shopping centers come online later this year in Collierville and DeSoto County centers he fears will attract tenants away from Wolfchase.

And its not the only option Wolfchase is pursuing at the moment. Mall officials have already lobbied for support from the Memphis City Council to pursue property tax relief from the Memphis and Shelby County Industrial Development Board, which grants property tax relief in the form of payment-in-lieu-of-taxes (PILOTs). However, the move would first have to be approved by the Tennessee General Assembly.

Stewart said mall officials are still garnering local support for their efforts.

What were concerned with and working toward is a workable, competitive tax rate so we in retail can compete for national tenants to bring them here to Memphis, as opposed to going to Collierville and DeSoto County, which is where the interest now lies, he said. Were all members of the community, and we are competitive and we want to stay competitive. And thats what were trying to get people to recognize now, before its too late.

We want to be able to track people to Memphis and have them come here, but if its cheaper for them to do business 12 miles down the road, where do you think theyre going to go?

Appraisal history. Though Clark said Wolfchase officials will likely push for a $70 million appraised value, the mall has been valued well above that since it opened in 1998. Greg Moody, director of appraisals and reappraisals for the Assessors Office, said the mall originally was appraised at $114 million in 1998. Since the last countywide reappraisal in 2001, the malls value has held at about $130 million, he added.

For now, one thing both groups agree on is that the issue could have far-reaching effects on the county. Stewart said Wolfchase officials will continue to push for property tax relief, something he said has benefited both the industrial and commercial communities.

And whatever value the malls name is determined to have, it wont sway Clarks office from opposing Wolfchases push for an appraisal reduction.

Well fight this as far up as it needs to go, because its so important, she said.


PROPERTY SALES 56 289 2,908
MORTGAGES 55 226 2,009
BUILDING PERMITS 108 1,002 6,703
BANKRUPTCIES 42 248 1,225