Mall seeking lower property taxes
PRESQUE ISLE, Maine — The Aroostook Centre Mall, currently Presque Isle’s second-largest taxpayer, is asking the city for a property tax reduction.
Last fall, the struggling mall was taken over by a commercial trust representing the previous owner’s mortgage holder after a Halloween 2017 auction that saw no interested bidders. Wells Fargo, the bank and trustee of the mall’s mortgage, acquired the property for $4 million and hired the property management company Torchlight Loan Services to try to improve its finances.
Now, as some have been expecting, the mall’s owners are trying to the lower their local tax bill, which came to $350,208 last year.
“We did receive some paperwork from the mall,” Presque Isle city manager Martin Puckett said at the Feb. 7 city council meeting. “We know that there’s an intention that they’re going to file an abatement.”
Puckett told councilors that the mall is the initial stages of pursuing the reduced tax bill, and that the request will ultimately go before a tax abatement review board that bases its decision on a variety of factors.
“There are multiple methods to take a look at the mall, looking at comparisons, looking at what they’re doing for retail sales,” Puckett said.
The Aroostook Centre Mall is assessed for property taxes at a total of $13.6 million, with $2.5 million representing its 37 acres of land and the rest the 525,000 square feet of building space.
The mall paid $350,208 in property taxes in 2017 and is the city’s second-largest taxpayer after Emera Maine, according to city assessor Lewis Cousins. For comparison, Walmart, the city’s third largest taxpayer and busiest retail store, paid $300,340 last year on an assessment of $11.7 million.
According to the abatement application filed with the city, Torchlight officials are asking the city to reduce the mall’s assessment to $7 million.
In an email, Cousins said that the mall’s last adjustment was made in 2013, when Sears and Staples were still open and when the mall was reduced to its current assessment by the city.
Cousins said he’s currently working on a “new assessment that better reflects current conditions.” He also explained that the mall and the nearby lot hosting Lowe’s are under the same ownership, with the two assessments totalling $15 million. The Lowe’s building, however, is owned by Lowe’s and assessed separately.
If approved, the mall’s request would be the third commercial property tax abatement in Presque Isle since 2014, after abatements were approved for the Key Bank Building and the Presque Isle Inn and Convention Center, Cousins said.
Orest Mandzy, managing editor of the industry publication Commercial Real Estate Direct, predicted in an interview last fall that the mall’s owners would likely try to reduce their tax liability due to years of declining sales and an exodus of retail stores over the last decade.
According to Mandzy and data he’s analyzed, the mall saw profits of $820,000 in 2016, down from pre-recession profits of $1.2 million in 2007.
Mandzy said last fall that the mall had recently been appraised by a private source at $6.95 million. That’s less than the $10.3 million the previous owners, Sitt Asset Management, owed on the mortgage and nearly half the city of Presque Isle’s $13.6 million assessment.
While the mall was successful in landing a new Harbor Freight store that opened last summer, the last several years have seen multiple departures of big box stores and former anchor tenants, including KMart, Sears and Staples.
One issue of uncertainty going forward is the mall’s last anchor store, JCPenney. The company’s lease at the Aroostook Centre Mall ends in October 2018, according to a report by CMBS Market Watch. The company’s lease for a store at the Maine Mall in South Portland also ends this summer.
JCPenney did not respond to a request for comment. Aroostook Centre Mall manager Patty Crooks could not be reached by press time.
Last year, JCPenney closed 139 stores, including a store in Rockland, leaving stores in Auburn, Bangor, Presque Isle, South Portland and Waterville.