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VOL. 124 | NO. 244 | Monday, December 14, 2009

Shelby County’s Malls Fight Tax Appraisals

By Andy Meek

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TOO HIGH: The owner of the Wolfchase Galleria, shown, and Oak Court malls has appealed the properties’ new appraisals from the Shelby County Assessor’s Office. -- PHOTO COURTESY OF JOSH WHITEHEAD

In a sign of the rattled state of commercial property owners amid the lingering downturn, the owners of most of Shelby County’s major shopping malls are contesting their 2009 property appraisals.

The new values, which will determine the properties’ tax bills, were sent out earlier this year as part of the 2009 countywide reappraisal of property. The area’s five most prominent shopping centers – Wolfchase Galleria, The Avenue Carriage Crossing, Oak Court, Raleigh Springs Mall and Southland Mall – all saw their appraisals rise this year.

Most of them now are pushing back against the increased figures, the combination of which added more than $38 million in new taxable value to the local tax rolls. In some cases, they are pushing hard.

Big difference

The Avenue Carriage Crossing, a sprawling collection of high-end shops that sits on more than 60 acres at Tenn. 385 and Houston Levee Road in Collierville, got a 3 percent bump in its appraisal this year. The new value was almost $80 million, up from $77.98 million in 2008.

The mall’s owners have submitted information to local officials arguing its value should be closer to between $50 million and $55 million. If that is deemed to be a true reflection of the property’s worth, it would mean the mall – one of the newest regional shopping destinations in Shelby County, open since 2005 – lost about a third of its value over the past year.

Staffers in the Shelby County Assessor’s Office are in the process of reviewing documents submitted by Carriage Crossing and the other mall property owners defending their belief the new appraisals are too high. And several dynamics are at play in the back-and-forth over the ultimate tax bills the mall owners will pay.

The general expectation locally and nationally is problems tied to commercial real estate will continue to loom large for the near future. The health of many banks – especially smaller ones unable to withstand nasty shocks on their balance sheets and that have significant exposure to commercial loans – is being watched closely because of it.

That problem is compounded by the fact the local shopping centers in question write some of the largest checks to the taxman compared to every other taxpayer large and small in Shelby County. Wolfchase Galleria, for example, sits on 45 acres at the corner of U.S. 64 and Germantown Parkway and is the largest single source of property tax revenue in Shelby County.

Wolfchase’s combined city-county tax bill for 2009: $4.46 million.

Representatives of the mall, owned by Indianapolis-based Simon Property Group, have not told local officials what they think the property value should be dropped to. But the assessor’s office says all of the property owners will get a fair chance to make their case.

“All we need is the facts,” said Assessor Cheyenne Johnson. “If they’ll give us the facts behind their numbers, we’ll work with them. We just need the facts.”

More of the same?

If the original higher values were to stand for each of the malls, it would mean on paper the property tax revenue they generate would collectively grow by $1 million. That’s only a theoretical figure, since other factors such as tinkering with the tax rate affect how much local governments ultimately collect in property taxes.

But even in theory, it shows what’s at stake if a protracted dispute whittles down the malls’ tax bills.

With the exception of Carriage Crossing, each of the malls in question generates property tax revenue for Memphis and Shelby County because they lie within the city limits of Memphis. Memphis property owners pay city and county taxes.

Since Carriage Crossing is in Collierville, its property taxes go to Shelby County and the town of Collierville.

Wolfchase has been in this position before – and more or less lost. After the reappraisal that preceded 2009’s, back in 2005, the retail behemoth fought to get its then-$132 million appraisal cut to about $73 million.

The mall’s tax representatives eventually dropped an appeal they’d filed to the state Assessment Appeals Commission after taking their case before an administrative judge. Then-Shelby County Assessor Rita Clark described the result as a victory, saying a flood of appeals – and, by extension, a possible erosion of the area’s tax base – likely would have followed a victory by Wolfchase.

Others to consider

Meanwhile, the same company that owns the Wolfchase mall also owns Oak Court in East Memphis and is appealing that mall’s value, too. Oak Court’s 2009 appraisal rose almost 10 percent, going from $45.48 million to $49.8 million.

Whitehaven’s Southland Mall saw its appraisal nearly double, going from $8.25 million in 2008 to more than $15 million this year. Greg Moody, director of reappraisals for the assessor’s office, said an appeal by Southland likely would result in the mall’s 2009 value coming closer to $12 million to $13 million.

Among the other prominent shopping mall destinations in the area, Raleigh Springs Mall in North Shelby County near Bartlett also saw its appraisal rise this year, from $1.87 million in 2008 to $2.2 million.

That mall is in a unique position, compared to the malls appealing their 2009 values. Moody said Raleigh Springs’ current appraisal is basically a “salvage value” and that it’s not really treated as an income-producing mall for tax valuation purposes anymore.

MORTGAGES 54 374 1,120
BUILDING PERMITS 177 767 2,425