Board mulls $37 million question (7/23/09)

Hearing held on shopping center’s tax appeal

July 23, 2009

By Greg Elias

Observer staff

Town Assessor Bill Hinman used gentle sarcasm in explaining why he opposed reducing the tax value of Maple Tree Place to $37 million less than the shopping center’s owner paid for it four years ago.


    File photo
The owners of Maple Tree Place, the shopping center pictured above, have appealed the property’s $80.9 million appraised value.

“The fact of the matter from my perspective is they paid a lot of money for it,” he said. “There had to be a reason, there had to be some really, really smart people putting out all this money to buy this property.”

His comment drew chuckles during a hearing Monday night before the Williston Board of Civil Authority. The board listened to arguments in a tax appeal filed by the shopping center’s owner.

Illinois-based Inland Western disputes the town’s $80.9 million appraised value of Maple Tree Place. Williston listers last month denied Inland’s request to drop the appraisal to $65 million, prompting the appeal.

If successful, the appeal could have a significant impact on tax revenue. Maple Tree Place is valued at more than double the next highest-valued property in Williston. Inland Western would pay $1.3 million in local taxes this year based on the current value.

Attorney Richard Wulsin represented Inland at the hearing. He said the $102.3 million price the company paid for the shopping center was “somewhat irrelevant” in establishing the present value.

“The sale in June 2005 bears very little resemblance to the fair market value of the property in April 2009,” he said, noting commercial loans have dried up and so have the number of potential buyers.

Wulsin presented a chart listing the value of other large shopping centers. The chart showed that Maple Tree Place’s appraised value is more than double that of University Mall in South Burlington and Burlington Town Center. Property taxes per square foot of retail space are considerably higher at Maple Tree Place than the other four retail centers included in the chart.

Wulsin also said Maple Tree Place has a significant number of vacancies, reducing income and hence value. One of its largest stores, Linens ‘n Things, went bankrupt last year, and there is other vacant space.

Hinman rebutted those arguments. He asserted there really is no shopping center in Vermont comparable to Maple Tree Place. As for vacancies, he said the rate is around 10 percent, not an extraordinarily high number.

Board members appeared skeptical about both sides’ arguments. They wondered how the wildly differing values were determined.

Hinman said individual buildings were individually assessed, as was the land. He said top-quality construction and desirable location drove up the appraisal.

But Hinman agreed with Wulsin that the sale price didn’t accurately represent the current market value.

“There was no way in my mind this property could be worth $102.3 million,” he said, adding that sales of other commercial properties around the state simply don’t support such a high number.

Much of the discussion revolved around the two broad ways commercial property is valued: prices of comparable properties and income potential.

Wulsin argued for an income-based method of determining value. He said companies that buy and sell property look to income potential when deciding how much to pay.

Hinman acknowledged that using the income approach would yield an appraisal close to what Inland claims the property is worth. But he said when he tried using that method he could not come up with a figure that represented the true value of the property. He said Maple Tree Place is unlike other shopping centers in Vermont because of its prime location, unique configuration and high-quality construction.

Near the end of the hearing, board member Tony Lamb expressed frustration about the conflicting evidence. “How is the board supposed to make a decision?” he asked.

But under state law the board must make a decision within the next 30 days. Chairman Herb Goodrich appointed a three-member committee to inspect the property. The committee will compile a report that the board will review before ruling on the appeal next month.