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Maine Mall owner seeks delay, change of venue for tax dispute with South Portland

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Maine Mall owner seeks delay, change of venue for tax dispute with South Portland

SOUTH PORTLAND — The state Board of Property Tax Review has scheduled three days of hearings starting Oct. 20 to settle a dispute over a 2006 tax bill between the city and General Growth Properties, owners of the Maine Mall.

But GGP, which filed for Chapter 11 bankruptcy protection in April, is hoping to delay that hearing and have the case transferred to U.S. Bankruptcy Court in New York. 

Attorneys representing GGP and the city scheduled a conference call with the state board for Thursday afternoon to determine whether a delay is warranted. If granted, it would be the second time a hearing before the state board has been delayed. An April hearing was postponed because of an illness of a state board member. 

At issue is the city's 2006 assessment of the mall and its outlying properties. Those holdings were valued at about $260 million by the city, but an independent assessment by GGP argues they are only worth $190 million. GGP is seeking the return of nearly $920,000 in taxes paid, plus interest. 

Jonathan Goldberg, GGP's local attorney, said that corporate lawyers in Washington, D.C., are requesting that the South Portland tax appeal, along with others nationwide, be heard in U.S. Bankruptcy Court and that he could not definitively say what is motivating the desired change in venue.

But Robert Keach, a Portland bankruptcy attorney and president of the American Bankruptcy Institute, said the move could be both a practical and tactical maneuver.

As a practical matter, Keach said, GGP could likely reduce attorney fees by having all of their active appeals tried in a central court. 

As a tactical matter, however, Keach said GGP may believe it will receive a more objective hearing in front of a bankruptcy judge, who is motivated to help the financially faltering company reorganize and pay its debts.

"It could be a calculated gamble to look at this more objectively," Keach said. 

GGP could also be trying to strengthen its position to force the city to capitulate on the disputed tax bill. Keach said he once used a similar legal maneuver in a case involving a perceived over-valuation between a power company and the town of Jay, which ultimately agreed to settle. 

Regardless of who decides the case, Keach said the judgment must be made in accordance with Maine law. But municipal and state boards may be less inclined to lower a disputed tax bill than a bankruptcy court that is charged with facilitating a company reorganization.

"What changes obviously is who is deciding the case," he said. "There are some people who would tell you that might change the tilt in terms of the outcome, but in theory, it should be the same standards."

City Assessor Elizabeth Sawyer believes Maine law is on the city's side. The fact that GGP purchased the mall and its surrounding properties for $270 million in 2003 supports the 2006 revaluation, and resulted in a 14 percent increase in the mall's tax bill, she said.  

What's certain is that any further delay or change of venue will ultimately add to the city's mounting legal bills. 

Finance Director Greg L'Heureux said the city has spent more than $30,500 defending its 2006 assessment of GGP's mall-area holdings. Nearly $18,000 has been spent on outside legal representation and nearly $14,000 has been spent on valuation experts. 

Of the more than 200 malls owned by GGP in 44 states, 158 were included in the company's filing for bankruptcy protection, including the Maine Mall. 

Randy Billings can be reached at 781-3661 ext. 100 or rbillings@theforecaster.net 

This story has been updated to correct the cost of the city's legal fees.