GUILDERLAND — Guilderland’s tax rolls were dealt a blow recently as an  Albany County court judge sided with Crossgates Mall in its valuation of the property. 

Acting county Supreme Court Justice David Weinstein in December determined Crossgates’ own appraisal for tax years 2020-21 and 2021-22 was the “most consistent” analysis of the property’s value, rather than the town’s, and ruled in the mall’s favor, ordering that the town’s “assessment rolls are to be corrected accordingly, and any overpayments of taxes are to be refunded with interest.”

 Guilderland Supervisor Peter Barber, in response to a request for comment, told The Enterprise by email, “Because the decision could be appealed by any party, I cannot comment on pending litigation.”

Crossgates’ parent company, Pyramid Management Group, in a statement to The Enterprise said, “We welcome the Court’s decision, which recognizes that Crossgates and its tenants have been significantly over-taxed — both before the COVID-19 pandemic and during its aftermath. The decision will help to sustain and advance Crossgates, to the ultimate long-term benefit of the center, its tenants and the community.”

The petition was originally filed in July 2021. 

Pyramid still has outstanding certiorari cases against the town, filed in 2022 and 2023. 

In his Dec. 13 ruling, Weinstein ordered that Crossgates’ 2019 assessment (tax year 2020-21) be lowered to $258 million and its 2020 assessed value (tax year 2021-22) be dropped to $177 million, a consequence of the pandemic.

The mall’s current value on Guilderland’s 2023 assessment roll is approximately $275.5 million.

The town’s assessment for Crossgates for those two tax years was about $282 million. For tax year 2020-21, the decline from $282 million to $258 million is an 8.5-percent drop. For tax year 2021-22, the decline from about $282 million to $177 million translates to a 37-percent loss. 

In its appraisal submitted to the court, Guilderland estimated Crossgates’ tax bill for 2020 to be about $6.98 million, meaning a loss of about 2.58 million tax dollars. However, the appraisal states, “because the assessments are under appeal, the eventual actual real estate taxes are unknown.”

An appraisal is not an assessment. 

An appraisal is performed to determine the market value of a property at a certain date, under a certain set of conditions. It is an opinion. Loan lenders often use appraisals to determine the value of a property.

An assessment is performed by a municipality to determine how much a property owner should pay in taxes for his or her land. Local taxing authorities take into account various factors like prior years’ data, market analyses, and in-person inspections to arrive at an assessment.

Arguments at trial

The appraisals as well as expert testimony came under scrutiny during the trial portion of the recently decided case, as each side tried to get the other’s tossed, neither of which were successful.

For tax year 2020-21, the mall’s appraiser put its valuation at $227 million, while the town of Guilderland countered with $390 million. For the following tax year, 2021-22, Pyramid said Crossgates’ valuation should be $156 million. The town disagreed and said it should have been $257 million.

The market rate calculations made by the town’s appraiser were flawed, Crossgates asserted, because he did not consider leasing activity between 2018 and 2021, which showed rents were declining. 

Additionally, Crossgates argued that the court should strike the town’s report because of a lack of explanation in the appraiser’s methodology for determining market rents as well as capitalization rates.

Market rents are the amount of rent that a property could fetch on the open market, taking into consideration current supply and demand conditions. It represents the rate that a landlord could realistically expect to receive, and that a tenant could reasonably expect to pay, in a competitive market setting. 

In real estate, capitalization rates are used to estimate an investor’s potential return on a property. It’s a ratio that helps investors understand the relationship between the income a property generates and its current market value.

The mall also contended the town’s rent analysis was flawed because it assumed Crossgates was a higher class of mall — meaning it had higher sales per square foot — than it actually is. 

Guilderland attempted to strike the testimony of Crossgates’ expert witness because the mall had provided the town with a different rent roll than the one used by Crossgates’ expert; the town was given rolls for the fiscal year, while the mall used calendar-year rent rolls.

Pandemic

Consideration of COVID-19 on valuations was another issue addressed by Weinstein.

Crossgates had initially claimed that “fair market value of the Property ... had also been negatively affected by the devastating impact of the COVID-19 pandemic catastrophe on the condition of the Property.”

The town responded by arguing that the first appearance of coronavirus and the nature of pandemics in general were not reasons for cutting Crossgates assessment.

But court filings, according to Weinstein’s decision, showed that both appraisers addressed the impact of COVID-19 extensively, and any argument that the pandemic was irrelevant to the assessments was deemed “frivolous.”

Summarizing the trial record, Weinstein wrote that Crossgates had been experiencing declining operating trends for several years, with major store sales dropping but mall shop sales per square foot increasing recently due to pent-up demand after the pandemic. 

The first year of the pandemic saw the collective sales of Crossgates retailers drop by 56 percent compared to the year prior. Crossgates’ tenants in 2020 reported total sales of $266.5 million, down from  $416.8 million in 2019. 

The pandemic exacerbated existing challenges such as declining rents and rising vacancies in malls, the trial record stated. Shop sales at Crossgates had been increasing from 2017 until the pandemic-induced closure, and rose again following COVID.