SOUTH PORTLAND – The Maine Mall has dropped appeals of its municipal tax assessments for fiscal years 2009, 2010 and 2012, according to city officials.

Chicago-based General Growth Properties, reportedly the second-largest owner of mall property in the United States, contested property assessments on nine of 12 lots it owns on and around the Maine Mall site, seeking tax refunds of nearly $2.25 million, combined, for the three tax years in dispute.

However, following the defeat of one appeal at the state level, GGP has apparently decided to throw in the towel.

“We have not got anything in writing, but we did get a call saying they were not going to be going ahead with any further appeals,” said the city assessor, Elizabeth Sawyer.

South Portland’s Board of Assessment Review denied the 2009 appeal in July 2011. GGP then appealed to the state Board of Property Tax Review, which heard the case on March 21. In an April 26 decision signed by board Chairman Charles Lane, the state agreed to the city’s motion to dismiss, calling the work of GGP’s Portland-based attorney, Jon Goldberg, on behalf of his client “unpersuasive and inadequate.”

Prior to the state hearing, Goldberg appeared before the local board of assessment review on Nov. 15, 2012, and March 6, 2013, for hearings on GGP’s 2010 and 2012 tax appeals. At both sessions, Goldberg offered no defense or documentation, all but forcing the board to deny the appeal. At the latter hearing, Goldberg admitted the lack of defense was purposeful, designed to avoid a series of lengthy hearings and expedite the local denial that would trigger an appeal to the state.

“The taxpayer has decided not to submit any further evidence,” he said. “We’ll rest our case on materials that have been supplied previously. There’s no trickery about it. Essentially, we are going to take the appeal to the state board of tax review.”

At both hearings, the board of assessment review denied the appeals, saying it had “no choice,” given Goldberg’s refusal to present any evidence supporting GGP’s claim that Sawyer had muffed at assigning a property value to the mall.

However, Goldberg’s tactic seems to have backfired at the state level, where GGP had hoped to make its case. In his dismissal, Lane wrote that Sawyer had a right under state law to request updated documents regarding how the city reached it own assessment of the Maine Mall properties and their values.

In 2009, Sawyer assessed the mall at $242,684,000. GGP, on the other hand, claimed its true market value was $181,700,000. At the property tax rate for that year $14.70 per $1,000 of valuation a decision in favor of GGP would have yielded a tax refund of $896,464.

In the April 26 dismissal, Lane questioned Goldberg’s various letters to Sawyer, in which he claimed to have already provided all she could want. State law, he wrote, “does not authorize the taxpayer to determine, on its own, when the assessor has sufficient information to determine the value of the property.”

Goldberg argued that leases with mall tenants are confidential material and that the work its own appraiser is “attorney work product and therefore confidential.” However, Lane disagreed and ruled in favor of South Portland’s motion to dismiss the appeal.

Essentially, GGP never got its appeal heard because it failed to give South Portland’s assessor information to support its valuation claims, making it seem very unlikely that the subsequent 2010 and 2012 appeals, which followed a similar nonresponsive route to the state board, would fare any better.

GGP had 21 days to appeal the dismissal to the Maine Supreme Judicial Court, a move Sawyer said she was expecting right up until she got the call saying the fight was over.

Goldberg did not return messages left requesting comment, nor did GGP’s vice president of corporate communications, David Keating.

According Sawyer, South Portland valued the nine contested lots using a method of assessment for commercial, revenue-producing property, which is based largely on gross revenue realized in each store.

Sawyer says she did mark down the mall’s assessed value by $211 million on its 2010 assessment, due to prevailing market conditions, for a new value of $210,803,500. However, GGP again claimed a value of $181,700,000 a difference of $29,103,500 that would have meant a tax refund of $456,925.

For 2012, with the market on the rebound, Sawyer set an assessment of $235,787,700. However, the mall stuck it its $181,700,000 value, for a $54,087,700 difference that, it claimed, should have brought a refund of $892,447.

At the heart of all three appeals was what GGP’s appraiser, David C. Lenhoff of Rockville, Md., called an “intangible business enterprise component.” In other words, Lenhoff claimed some stores in the mall pay a higher rent, based on higher sales than they might otherwise enjoy, due to the GGP’s management expertise in creating the mix of retailers within the mall complex.

According to Sawyer, GGP recently dropped Lenhoff, getting a new opinion from Don Bouchard, senior vice president of Boston-based Lincoln Property Co.

“That basically supported what we were saying all along about the intangible component, which they were not able to make stick in appeals anywhere in the country that we’re aware of,” said Sawyer.

“I think the city did the right thing by defending its valuation,” said Sawyer. “I think we did react appropriately when the market did decline. They must have finally come to that conclusion, too.”

‘Good news’

For his part, City Manager Jim Gailey has predicted a new era of good feeling between the city and owners of Maine’s largest retail site.

“We see this as very positive, good news that will go a long way toward tearing down the barrier that has grown up between the city and GGP over the years,” he said. “This will allow a more collaborative approach for the mall district because getting into any kind of public-private partnership, that was never going to happened with those appeals out there.

“The mall is primed for some enhancements. They are looking at many different things, such as their building fac?ade and parking lots,” said Gailey, suggesting the city may now be willing to lend the resources of its planning and development department to assist in future projects. Among ways the city might help, said Gailey, is to create “a global pedestrian plan” to improve and enhance the “massive amounts of asphalt we have out there.”

In a June 25 email, the mall’s senior general manager, Craig Gorris, declined comment, refusing even to confirm the tax appeals had been dropped, writing only, “I’m glad Jim feels that we’ve been good partners and I look forward to maintaining a very productive working relationship with the city’s many departments.”

When pressed for a GGP official authorized to speak on the matter, Gorris gave Keating’s name, but added, “It’s not something we are going to comment on.”

In his email, Gorris also clarified a comment he made at a June 19 meeting of South Portland’s economic development committee meeting. Asked how things were looking for the vacant lots across Maine Mall Road, where a movie theater and an IHOP once stood, Gorris said, “We are closer than we’ve been in five or 10 years to doing something there.”

However, in his June 25 email, Gorris said, “That was more of a general comment about the current retail and development environment. There’s nothing specific going on across the street other than we’ve been taking a lot of calls from interested parties.”

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