As losses mount, Crossgates seeks to cut tax assessment in half

Lord & Taylor department store

The Enterprise — Michael Koff

The parent company of the Lord & Taylor department store, an anchor tenant of Crossgates Mall, this week announced closing sales are to be conducted at all 38 stores. ​

GUILDERLAND — With the United States economy shrinking by an unprecedented 9.5 percent between April and June — the fastest the quarterly rate has dropped since records have been kept — the effects continue to be felt locally.

Seeking redress from its retail woes, Crossgates Mall is suing the town of Guilderland in an attempt to knock $139 million off its $282 million tax assessment — a near 50-percent drop in the assessed value.

On Sunday, Le Tote Inc., the parent company of the Lord & Taylor department store, an anchor tenant of Crossgates Mall, in a court filing stated that it had “formulated a plan of reorganization under chapter 11 of the Bankruptcy Code.” The company’s chapter 11 plan states “store closing sales are to be conducted at all 38 Lord & Taylor stores.”

J.C. Penney, another Crossgates anchor tenant, also recently filed for chapter 11 protection and closed down some of its stores, although its Guilderland shop was not one of them. 

Pyramid Management Group, the owner of Crossgates, has been seeking to diversify from just retail. Michael Shanley of Pyramid told The Enterprise in November 2019 that Crossgates had, for many years, been focused solely on retail, but that the retail market is changing and the company is looking for other alternatives.

Last month, the Guilderland Planning Board board accepted Pyramid’s Final Environmental Impact Statement for its Rapp Road and Western Avenue projects, including: a 19-acre plot of land at Rapp and Gipp roads where 222 apartments or townhouses are proposed, and 16 acres of land located at the intersection of Crossgates Mall Road and Western Avenue for which Pyramid proposes to build a 160,000-square-foot Costco. 

The company is currently three months delinquent on five Crossgates-related loans totaling approximately $262 million.

Two of the loans included in a $971 million commercial mortgage-backed securities conduit transaction total approximately $94 million of debt for Pyramid, according to a Securities and Exchange Commission filing.

Those two loans have a bankruptcy status and carry roughly $2.4 million worth of outstanding principal and interest payments. 

The filing states the loan was transferred to the special servicer in April due to an “imminent monetary default. Borrower requested COVID relief in the form of a six-month forbearance including deferral of debt service payments, extension of the Loans Maturity Date to match the deferral period.”

In the commercial mortgage-backed securities (CMBS) industry, a special servicer assumes responsibility of a loan from its original administrator, known as a master servicer, when the borrower has “defaulted mortgage loans or loans that are designated as ‘specially serviced’ as a result of credit events,” according to the Practising Law Institute.

A United States Securities and Exchange Commission filing regarding a Crossgates-contained $689 million commercial mortgage-backed securities (CMBS) conduit transaction states that the remaining $105 million mortgage loan Pyramid holds on Crossgates had $2.7 million in outstanding principal and interest payments, and that the loan had been transferred to the special servicer. The July 29 SEC filing noted “refer to Servicer Reports for comments as they are too lengthy to include for this cycle.”

Explaining the loans, Pyramid Management said in statement: 

“Like virtually all shopping mall owners across the United States, the ownership of Crossgates has reached out to its lenders asking for adjustments to its debt terms. We anticipate now, as the nation recovers from its current economic challenges, that adjustments to the debt terms for Crossgates will be concluded successfully.

“There have been no bankruptcy filings at either the property or corporate level. Nor are any planned.”

The Kroll Bond Rating Agency in May reported that Pyramid, with $1.3 billion in CMBS loans, had been “exploring potential restructuring options or debt relief from lenders.”

Guilderland’s first town-wide revaluation since 2005 has led to over 60 challenges in Albany County Supreme Court; those challenges listed The Enterprise’s website. 

 

Money woes

Albany County’s sales-tax revenue for the second quarter of 2020 had dropped 25 percent from the same time period in 2019, from $73.1 million last year to $54.9 million this year.

Crossgates alone generates $34 million in sales-tax revenue, which is divided between the state and Albany County. The county traditionally has shared a portion with its municipalities, based on population. Guilderland receives $6.87 million; Albany County collects $10.3 million; and New York State keeps $17.17 million.

Guilderland Supervisor Peter Barber previously told The Enterprise that the town in the second quarter of this year could take a $1 million hit from the pandemic. But Barber said that shouldn’t be an issue right now because the town has other revenue streams, and Guilderland is taking added precautions like letting positions go unfilled if there’s a retirement or if an employee leaves for another job, unless the position is absolutely necessary.

He also said capital projects have been put on hold in addition to the town probably cutting back on paving and sidewalk projects. Barber added that Guilderland has healthy reserves, which he described earlier as being “in the millions of dollars,” should the sales-tax shortfall last longer than expected. 

Crossgates’ lawsuit, filed by three separate affiliated companies of Crossgates in Albany County Supreme Court, claims the mall should receive a reduction from last year’s $282 million 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, and 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 suit goes 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.”

Heather Weinhold, Guilderland’s new assessor, told The Enterprise that, if a complainant wins a tax certiorari case, the length of time the new assessed value applies to the property depends on the court order — but she said the new value is usually frozen for three years. 

After the three years, if there were changes or improvements to the property, then the town could undertake another revaluation process, Weinhold said.

Asked if a property owner were to win his tax certiorari case and receive a substantial cut in its assessed value would the taxes that property owner pays drop accordingly, Weinhold said, “If there was a drop in the assessed value, then the tax rates would have to be configured, and then the difference of what [the owner] paid, to what they should have paid, would be refunded to them.”

In 2019, the tax rate for the Guilderland Central School District was $16.763 per $1,000 of assessed value; for the Guilderland Public Library, it was approximately 89 cents per $1,000 of assessed value; the town of Guilderland general tax rate was 26 cents per $1,000 of assessed value and a highway fund is taxed at a rate of about $1.10 per $1,000 of assessed value — there were also a number of special districts that only residents who receive that benefit pay for, like fire, ambulance, and water districts. 

In the tax year 2019, the seven tax parcels listed in Crossgates’ lawsuit against Guilderland collectively paid entities within the town about $7 million in property taxes:

— About $1.9 million to the town itself;

— About $4.7 million to the Guilderland Central School District;

— About $250,000 to the Guilderland Public Library; and

— Close to $100,000 worth of late payment penalties were made. 

The Guilderland Central School District had a $102 million budget in 2019-20.

The Guilderland Public Library’s 2019-20 budget was about $4 million.

The town of Guilderland’s budget for 2019-20 was about $35 million.

 

 

More Guilderland News

  • The use variance request was made by John Polk and and his wife, Rebecca Stump, to allow for up to six chickens on their nearly 20-acre Bozenkill Road property. 

  • The biggest factor in the revenue jump is the state’s commitment to make Foundation Aid to schools whole. “It looks like that three-year phase-in, at least from the governor’s perspective, is going to happen, so that’s tremendous news for our school district and school districts throughout the state,” Guilderland’s assistant superintendent for business, Neil Sanders, said on Tuesday.

  •  In those first 10 years, it seemed no one dared go above 30 miles per hour, “which we enjoyed, especially living on Main Street,” said Altamont resident Mya Sullivan, but over the past year, she has begun to see drivers flying down Route 146. 

The Altamont Enterprise is focused on hyper-local, high-quality journalism. We produce free election guides, curate readers' opinion pieces, and engage with important local issues. Subscriptions open full access to our work and make it possible.