Crossgates refuses to disclose documents in tax lawsuit

— Enterprise file photo

Nearly a year ago, Crossgates Mall filed a lawsuit against the town of Guilderland, seeking to have its tax assessment slashed from $282.5 million to $143.3 million.

GUILDERLAND — Crossgates Mall responded to Guilderland’s request for financial information the town insisted was necessary to help build its defense in a tax lawsuit filed by the mall, by, first, ignoring it for months, then eventually settling on the argument that the town’s requests for, among other things, tenant rent rolls and an appraisal performed on the property were “overly broad,” “privileged,” and also “publicly available.”

Crossgates Mall filed an Article 7 petition against the town in July of last year seeking a $139.2 million reduction on its $282.5 million tax assessment.

The petition, filed in Albany County Supreme Court by three Crossgates-affiliated limited-liability corporations, argued the mall should receive a near 50-percent drop in its assessed value because, “Prior to the issuance of the Town’s tentative assessment roll for 2020, [Crossgates] provided and offered information to the Town’s Assessor concerning the Property and its value,” its June 2020 court filing stated.  

The mall also “advised the Assessor that the Property’s value had declined year-over-year due to continuing pressure on its ‘bricks-and-mortar’ business from e-commerce, sales declines, and record bankruptcies, and store closures, particularly for department stores and fashion retailers that were once the primary focus of [Crossgates’] business.”

The filing went on to claim 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 in half. The pandemic, however early it may have begun, Guilderland argued, still occurred “outside the scope” of the town’s 2020 assessment.

Crossgates’ pandemic argument also failed on the facts, the town argued in its October 2020 court filing, because, according to New York State property law, “the grounds for reviewing an assessment shall be that the assessment to be reviewed is excessive, unequal or unlawful, or that real property is misclassified.”

A few weeks later, Guilderland demanded Crossgates turn over dozens of financial documents to prove the property was “not income-producing.”

In late April, the town’s lawyer, William Ryan, penned a letter to Crossgates’ attorney “in a good faith effort to resolve” the dispute the two sides were having over the mall’s objections to handing over appraisals and promissory notes related to three loans the mall refinanced in 2012, 2013, and 2014. 

Based on the town’s understanding, the filing states, Crossgates was taking the position that the promissory notes and appraisals are “irrelevant given the valuation date of July 2019.”

The town “respectfully” disagreed.

Ryan argued the promissory notes were a reflection of the mall’s current obligations, and “need to be reviewed to determine whether they affect the current income stream and whether the current income stream is at market value.”

Crossgates also argued in its original court filing that the property was “worth significantly less” than its $282 million tax assessment, Ryan wrote, in part because of a “decline in consumer demand for malls and a poor investor outlook for malls.”

That allegation, made by Crossgates itself, makes the mall’s prior five to seven years of business an issue, and “renders the promissory notes and the prior appraisal reports particularly relevant,” Ryan argued.

In a June 1 affidavit, Ryan added that the promissory notes and appraisals were likely “to evidence the owner’s actual investment expectations for and confidence in” Crossgates.  

Ryan also argues that, with Crossgates seeking a near 50-percent cut in its assessment, Guilderland “should be afforded significant latitude in conducting discovery and preparing its defense.”

Ryan then wrote to Albany County Supreme Court Justice Margaret T. Walsh on May 14, notifying her that Crossgates refused to withdraw its objections to disclosing the documents sought by the town.

Crossgates has previously and repeatedly dragged out tax certiorari proceedings against the town.

The mall has sued Guilderland a number of times over the past 30 years in an attempt to lower its assessment, claiming at one time property was worth $119 million — while the town had assessed it at $198 million.

The mall commenced individual tax proceedings challenging its assessments for the tax years 1993-1994, 1994-1995, 1995-1996, 1996-1997, and 1997-1998 — finally in 2002, the town moved to have the proceedings dismissed because Pyramid hadn’t filed any paperwork in the matter for four years.

In 2003, a judge ruled in favor of the town and ordered Pyramid to pay Guilderland’s court costs, $1 million. But the issue dragged on for another two years, a 12-year ordeal in all, when Pyramid finally acquiesced to Guilderland’s $198-million assessment in February 2005, ultimately leaving $24 million on the table.

“Based upon this response the town will be making a motion seeking to compel disclosure of the requested documents,” Ryan wrote to Judge Walsh in May.

He filed the motion to compel on June 1.

The motion stated that, at an upcoming June 23 conference at the Albany County Courthouse, the town would be seeking an order compelling Crossgates to disclose the appraisals and promissory notes, or, if the mall didn’t hand over the documents within 20 days, the town would request the case be tossed. 

Ryan wrote in his June 1 affidavit that, under state law, the judge “has the authority to direct and authorize the requested disclosure.”

And if Crossgates were to fail to “respond to or comply with any request, notice, interrogatory, demand, question, or order,” Ryan argues, citing the state’s rules regarding disclosure, the town may “compel compliance or a response,” like the dismissal of the case.

Crossgates’ March 19 response was never e-filed by the mall and was included only as part of the town’s June 1 filing, which was accepted by the court the following day. Crossgates argued that the town’s December 2020 demand for discovery and an inspection request was “overbroad, cumulative or duplicative, vague and ambiguous, expansive, oppressive, unduly burdensome, and exceed[ed] the scope of discovery.”

At the end of 2020, the town demanded from Crossgates copies of tenant lease agreements; rent rolls and retail sales reports of individual tenants for 2017, 2018, and 2019; lists of tax reimbursements that had gone to tenants; and copies of the loan-related appraisals that were performed on the property.

Crossgates in its March 19 response argued the town was seeking “information that is not material and necessary in the prosecution or defense of this action…”

The mall also claimed Guilderland was seeking access to information that, at once, was both privileged but already in its “possession, custody, or control, have been filed in this or any other court of record, or are otherwise publicly available.” 

An attempt to look for and produce “such documents would be duplicative and unduly burdensome,” Crossgates argued, adding that the documents the town was seeking were “more easily obtained through other means.”


March pact 

Crossgates and Guilderland on March 4 agreed to a confidentiality agreement, which was e-filed the same day, and would limit “the review, copying, dissemination, and filing of confidential and/or proprietary documents, and information to be produced by either party and their respective counsel.”

The two sides agreed to the stipulation in order “to facilitate the production, exchange and discovery of documents and information that the Parties and, as appropriate, non-parties ….”

The judge overseeing the case signed off on the protective order on March 18; it was e-filed the same day.

Ryan told The Enterprise at the time that it wasn’t “unusual” for the town to enter into a confidentiality agreement. 

Crossgates’ financials would still be disclosed, Ryan said, “It’s just a question of not having [them] publicly disseminated.” Ryan went on to explain that “all the filings will [continue to] be public, and if there’s sensitive financial information, that will be blacked out.”

Crossgates’ response to Guilderland, dated March 19, which objected to the town’s December 2020 demand for discovery and inspection, wasn’t e-filed until June 1, and accepted by the court a day later, when it was included as part of the town’s submission. 

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