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Shops of Nanuet Also Settles; Clarkstown Bonds For $8.7 Million; Future Tax Revenues Reduced
REAL ESTATE
The Palisades Center walked away with half of what it was asking for in a protracted tax challenge that ended with a settlement. The Shops At Nanuet also cut a deal with Clarkstown and the Nanuet School District. The settlements cap many years of tax challenges filed in Rockland County Supreme Court by both the Palisades Center and the Shops At Nanuet.
The Town of Clarkstown has agreed to refund the owners of the Palisades Center $27.5 million in property taxes paid to the town, the Clarkstown school district and Rockland County over a four year period. The town also agreed to a yet-to-be disclosed multi-million-dollar tax settlement with the Shops of Nanuet owner The Retail Property Trust.
At a Clarkstown Town Board special meeting yesterday, resolutions passed: Authorizing Settlement of Tax Certioraris Regarding Eklecco Newco LLC (1000 Palisades Center Drive, West Nyack, NY); Authorizing Settlement of Tax Certioraris Regarding The Retail Property Trust (Tax Map No. 63.8-3-6); and, Authorizing the Financing of Settled Claims Resulting from Tax Certiorari Proceedings
The Clarkstown schools will bear the largest brunt of the settlements.
Here are the terms:
* Clarkstown Central School District district will pay about $18 million, or more than 65 percent of the settlement, to Eklecco, the Palisades Center mall’s owner; the town will pay $7.8 million and Rockland County around $1.7 million.
* Nanuet school officials have yet to provide a cost estimate for the multi-year settlement with the Shops at Nanuet. A town official said it would cost the school district around $2 million. The Clarkstown resolution estimated a cost of about $828,000 for the town.
A cost for the county was not immediately available, but the County received the smallest share of the tax revenue.
For many years, Clarkstown and the School District have been balancing their budgets collecting taxes on inflated and unrealistic assessments, despite annual efforts by the owners of both the Palisades Center and the Shops At Nanuet to secure re-assessments to reflect the realities of the pandemic, changes in tenant quality, and the impacts of online shopping on brick-and-mortar malls. Not only will the Town and School District have to take on massive bond debt to pay back those taxes, but they will also have to pay interest going forward on millions of dollars of debt for many years at a time when interest rates are at a multi-year high. And, with an agreement to re-assess the properties going forward, tax collections in the future will be close to half of what both the Town and School District had become accustomed to receiving.
The impact on the school districts, the students, faculty and staff will be significant by any measure.
The Nanuet school board voted for the deal Monday night. The Clarkstown school board was set to vote on the settlement with the Palisades Center on Tuesday night.
Settlements set Palisades Center value for 3 years going forward in accordance with New York State law.
The Palisades Center and the town have been in court for several years over the mall’s tax challenges covering multiple years, with the parties very far apart of the value of the struggling mall.
The Palisades Center had set the market value at around $155 million while the town’s most recent value for the mall was $578 million. Under the settlement, the tax assessment is now based on a value of $300 million.
That will hold for at least three years, according to the settlement.
Lawyers for the town and the school districts recommended the settlements, according to the town resolutions.
Both were approved Tuesday morning by the town board with a 4-0 vote at a special meeting. The board then voted to bond up to $8.7 million to cover tax settlement costs, avoiding the need to make immediate budget cuts to pay for the settlement, while putting residents on the hook to pay back the bond debt with interest.
The Palisades Center is a major property taxpayer for the county, town and local school district. It’s also long challenged its tax assessments.
Even before the mall’s grand opening in 1998, the owners had filed a tax assessment challenge.
Meanwhile, mortgage lenders, including Wilmington Trust, have gone to court to demand foreclosure action against EklecCo and the other Pyramid Cos. affiliates that own the Palisades Center.
The court filing, in state Supreme Court in Manhattan, asks for the mall to be sold off, right down to the fixtures, with the lenders getting the proceeds to pay off its overdue mortgage, interest and court costs.
Tuesday’s property tax settlement could impact the foreclosure case. The tax settlement has the effect of setting the value of the mall higher than what the owners had asserted in court papers as it attempts to delay foreclosure and negotiate a settlement by refinancing the existing debt.
The mall is overdue on repaying a $418.5 million mortgage it took out in 2016.
The parties are working on a settlement, court records show, while Wilmington Trust has sought a temporary receiver.
The borrowers, EklecCo NewCo LLC, Queens Comic’s NewCo LLC, Riesling Associates, and Three J’s Family Trust, are due to present a settlement plan by July 16.
