Mall sues to lower tax bill
The Houston-based company that acquired the Hot Springs Mall in an August 2015 foreclosure auction has appealed the retail space’s real property appraisal to Garland County Circuit Court.
The appeal Rockstep Capital Opportunity Fund I LLC filed last month seeks to undo the $10,013,685 appraisal determined by a November Garland County Court order, which established a $96,700 real property tax obligation for the 40acre parcel in the 2017 tax year. The shopping center acquisition and development company has argued for a $6 million valuation, or almost 4 percent more than the
$5,775,000 Rockstep paid at the foreclosure auction. Rockstep told the Garland County Equalization Board that the previous owners couldn’t service the $12 million debt secured by the property.
Dillard’s is owned by Dillard’s Inc and wasn’t included in Rockstep’s acquisition.
The $6 million valuation Rockstep
has requested would create about a $58,000 annual real estate tax obligation, freeing up capital Rockstep has said could pay for improvements at the mall. The company is asking the circuit court to reverse the county court’s valuation and determine a “true market value” for the property.
“The appraised value as determined by the county court of Garland County is arbitrary, manifestly excessive, oppressive and does not value the property of the plaintiff at its true market value,” the complaint said.
The county court lowered the appraised value from the $11,013,685 established by the equalization board in September.
Rockstep petitioned the equalization board after challenging the $13,370,450 valuation the county’s contract appraisal service, Arkansas CAMA Technology, set last year at the conclusion of the county’s five-year reappraisal cycle. The board based its $11 million determination on the mall’s $1.4 million in 2016 net-operating income, explaining that it represented 13 percent of the property’s value.
Rockstep told the board a 13-percent return is not lucrative enough to attract investors or buyers, especially in light of market share brick-and-mortar retailers have lost to online competitors.
The mall had a $19.2 million appraised value prior to Rockstep’s acquisition. The equalization board lowered it to $12.7 million in 2015. Rockstep appealed the adjusted appraisal to county court and ultimately circuit court, where a mediated settlement established a $9.1 million appraised value.
Arkansas CAMA told the board the $13 million appraisal for the 2017 tax year reflected increased property values along Central Avenue, with the segment spanning the King Expressway and Higdon Ferry Road increasing more than 17 percent since the previous reappraisal cycle ended in 2012.