After three years of negotiations, a settlement was approved Thursday by the Schuylkill County Board of Commissioners lowering the fair market value of the Schuylkill Mall by $6 million from 2009 to the 2012 tax year.
"It's just a reflection of the overall economy right now," attorney Robert Frycklund, who handled the case for the county, said Wednesday. "There are still a lot of vacancies in that mall."
The mall's owner, Empire Schuylkill LP, which is part of Empire Realty Investments, Philadelphia, filed the tax reassessment claim in 2009 against the Schuylkill County Board of Assessment Appeals, New Castle Township and the Saint Clair Area School District. According to the settlement, the fair market value of the mall will decrease from $18 million to $16.5 million for the 2010 tax year, $13.5 million for 2011 and $12 million for 2012.
The agreement also states that the mall will not seek any adjustments to the fair market value for at least two years.
Using 2009 tax revenues as a baseline, Frycklund said the loss for the county will be $28,950 for 2010, $38,049 for 2011 and $34,155 for 2012.
As usually seen in reassessment cases, Frycklund said the township has the least at stake while the school district will have about three times as much of a loss in tax revenue.
Due to a millage increase from 5 to 7.5 in New Castle Township in 2010, the township will see an increase of $4,376 in tax revenue. The township will lose $1,320 for 2011 and have an increase of $1,118 for 2012 due to the state increasing its common level ratio.
A common level ratio is a comparison of a previous year's actual sale prices to the assessed value of properties set by the counties and is used by the state to more accurately reflect current property values.
Frycklund noted that these numbers are artificial.
"In reality, it is a reduction," Frycklund said.
Frycklund said the school district is going to lose $59,212 for 2010, $78,022 for 2011 and $68,564 for 2012.
Ground was broken last Saturday on an $8.8 million expansion project for the Saint Clair Elementary/Middle School that will add six classrooms, two special education rooms, a music room, a large instruction room, a second elevator, improvements to the existing elementary/middle school, rubber flooring in the main hallways and a rooftop playground.
Kendy Klahr Hinkel, the school's superintendent, said the loss in tax revenue will not affect the project.
"We have been fairly conservative with our budget," Hinkel said. "Although it would seem to have a negative effect, it is actually a positive. We have been budgeting for five years not knowing what revenues we were going to receive. Although it is less money, we understand what money is coming in and we are fine with our budgeting plan."
Frycklund does not anticipate the owners of the mall will sell the property in the near future.
During negotiations, Frycklund said he sat down and talked with the owner of Empire Schuylkill, Michael Pearlstein, for about six hours.
"I believe he is really committed to building it up, not only getting a few flagship stores, but filling out the whole mall," Frycklund said. "He really does seem to be in it for the long haul and that's really a win/win for everyone."
Empire Schuylkill bought the shopping center in March 2007 for $17.6 million from PR Schuylkill Limited Partnership, a part of Pennsylvania Real Estate Investment Trust, Philadelphia, which owned the mall since November 2003.
According to tax documents and a deed made available to The Republican-Herald at the time of the transaction, the fair market value of the mall in 2007 was $39,663,892.40.