GUILDERLAND — The town and Crossgates Mall have laid to rest a three-year-old tax lawsuit that will save the mall millions of dollars in property taxes. 

Acting county Supreme Court Justice David Weinstein in a Feb. 27 decision clarified his earlier ruling, which both sides appealed, that set Crossgates’ 2020 assessed value at $258 million and its 2021 assessment at $177 million.

Weinstein’s March 6 ruling, which both sides agreed to, also set the mall’s assessed value for 2022, 2023, and 2024 at $177 million. Weinstein also ordered that the three-year $177 million valuation apply to tax lawsuits filed by Crossgates in 2022 and 2023, suits which seek to lower the mall’s assessments for the respective years to $109 million and $102 million. The March 6 ruling applied to the mall’s 2021 certiorari case. 

“I’m pleased that the Court rejected efforts to lower the final assessed value,” Supervisor Peter Barber told The Enterprise by email on March 7. “With the end of this litigation, no party got what it wanted and has to live with a compromised outcome. I appreciate the hard work of the Assessor and retained counsel to defend the assessment.”

Crossgates’ parent company, Pyramid Management Group, did not respond to a re quest for comment. 

Crossgates has been facing financial difficulties since the start of the pandemic. In July 2020, amid the early months of COVID and a state-imposed shutdown, Crossgates’ appraised value was lowered from $470 million to $281 million. This March, that number was lowered once again, this time to $167 million.

Not long after the start of COVID, the mall stopped paying its mortgage, which led to a default on $242 million in loans, which led to the subsequent auctioning of the debt. The loans were scooped up by Morgan Stanley and a Connecticut-based investment bank for $174 million, leading to an approximately $98 million loss for bondholders.

Guilderland’s tax rolls were first dealt a blow in December when Weinstein sided with Crossgates in its valuation of the property. Weinstein determined the mall’s own appraisal for 2020 and 2021 was the “most consistent” analysis of the property’s value, and ordered that the town’s “assessment rolls are to be corrected accordingly, and any overpayments of taxes are to be refunded with interest.”

Weinstein in December ordered that Crossgates’ 2020 and 2021 assessments be lowered to $258 million and $177 million, respectively. The town had valued the property at $282.5 million for both years. Its current value on Guilderland’s 2023 assessment roll is approximately $275.5 million. 

But in January, Pyramid filed notice with the Appellate Division of the Third Judicial Department in Albany that it would be appealing the win. A few days after Pyramid alerted the appeals court of its decision to challenge Weinstein’s ruling, the town of Guilderland did the same. 

The dispute that followed Weinstein’s December decision centered on Pyramid’s request to local taxing jurisdictions demanding that, in addition to the court-ordered back-taxes it was due, the town, county, school district, and library also apply the equalization rate when determining the company’s refund for the 2022 and 2023 tax years. 

In court filings, the town said the mall’s valuation should be fixed at $177 million for 2022, 2023, and 2024, while Crossgates argued its valuation should be adjusted based on the equalization rate.

To make the case that the state statute locking in its court-ordered property valuation for 2022, 2023, and 2024 should not be used to lock in its valuation, Crossgates sought to argue semantics.

The statute, the mall argued, was ambiguous because it did not clearly indicate how the equalization rate factored into the determination of its “assessed valuation,” or if “assessed valuation,” the phrase used in the state statute governing changes in assessment following litigation and in the language of Weinstein’s original decision and order, was equivalent to the “assessed value,” that is, what the “town enters on its [assessment] roll.”

Weinstein said there was no ambiguity in the statutory language, and that “assessed valuation so determined” had clearly referred to the valuation set by the court.

Crossgates also tried to argue that its constitutional rights were violated because, when the court set a $177 million valuation for 2022, 2023, and 2024, if the equalization rate were not applied, its assessments would exceed full-market value, which was a violation of New York State’s Constitution. But that argument was rejected because, in the case Crossgates had cited as precedent, the court found no proof that the locked-in valuation would exceed full value.

Tax dollars

While it was the town of Guilderland that was sued by Crossgates, it will be Guilderland schools that bear the brunt of the refund burden. 

For 2022, the town’s equalization rate was 91 percent, which would have resulted in an assessed value of $161 million. That year, the mall paid about $6.3 million in taxes on its approximately $234 million assessment, approximately $4.3 million of which was school taxes.

For 2023, Guilderland had an equalization rate of 85 percent, which would have given Crossgates an assessment of $155.5 million. In 2023, when the equalization rate was 85 percent and the mall had an assessed value of $275 million, Crossgates paid taxing authorities in Guilderland about $6.1 million, approximately $4.4 million of which was school taxes.

For the two years prior to 2022, when the equalization rate was 100 percent, Crossgates paid about $7 million and $6.7 million in property taxes, approximately $4.8 million and $4.6 million of which was school taxes.

Going forward, Crossgates isn’t depriving local taxing jurisdictions of revenue; the difference in value between its former and current assessments  will get spread across the rest of the area’s taxpayers.

The school district has drained its reserve for tax certiorari cases, having spent $5.7 million on court-ordered refunds already.  

The reserve depletion has led the district to the decision that it will borrow the money needed to pay back any future tax refunds. The bond will be paid back over the course of a decade. 

“We have to address them,” Superintendent Marie Wiles said during Tuesday’s Guilderland Board of Education meeting, “but we don’t want to do it at the expense of not being able to fulfill our mission.” 

Wiles said, “And, if we were to pay Crossgates five-plus million out of this budget, this presentation would be … a list of things we have to cut,” in addition to increasing class sizes.