VOL. 118 | NO. 4 | Wednesday, January 7, 2004
By Andy Meek
Wolfchase Seeks to Compete Through Tax Breaks
The Daily News
When it comes to regional shopping centers, whats in a
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,
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.