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Marion County to ask Indiana Tax Court to take mall cases

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Marion County is granting Simon Property Group Inc. a $2.4 million refund, after a tax review board cut the value of two ailing malls roughly in half.

Simon prevailed before the Indiana Board of Tax Review in each of two cases, which covered Lafayette Square Mall and Washington Square Mall for multiple years.

“We were surprised it went completely their way,” Marion County Assessor Joseph O’Connor said. In each case, the review board chose Simon’s values over the county’s, rather than arriving at an in-between value, which is also an option.

O’Connor plans to appeal both decisions to the Indiana Tax Court, but said Simon will get its refund in the meantime because he doesn’t want to risk racking up interest charges while cases are pending.

The two malls’ declines are well-documented, but the county and Simon were nowhere close to agreement in their appraisals.

Marion County had valued Lafayette Square at $35 million in 2006, for example, while Simon argued it was worth $15 million.

Likewise, the county’s appraiser valued Washington Square at $22 million for 2006, while Simon’s appraiser pegged it at $12 million.

The lowest value that Indianapolis-based Simon presented for Washington Square was $9.5 million for 2010.

Located in older Marion County suburbs, the malls have about four decades behind them. Lafayette Square opened in 1968 at Lafayette Road and West 38th Street, and Washington Square opened in 1974 on East Washington Street.

Simon didn’t build either mall, but acquired them in 1996 through its $1.6 billion purchase of Ohio-based DeBartolo Realty.

Household spending power in both areas has declined, especially around Lafayette Square. Simon took its name off the mall in 2005 and sold it in 2007 to New York-based Ashkenazy Acquisition Corp. for $18 million.

Simon still owns Washington Square. Though Simon’s appraiser made a strong case that it will continue to decline, spokesman Les Morris said the company hasn’t turned its back on the property.

“We’re very actively leasing it and managing it,” he said. “It’s a solid area.”

The three-member tax review board handed down its decision on Washington Square, which covered 2006 through 2010, in September. The ruling on Lafayette Square, for 2006 and 2007, came out Oct. 3.

Simon’s arguments don’t appear to have swayed the county’s current assessments – $22.9 million for Lafayette Square and $24.9 million on Washington Square.

As long as an assessor calculates new values each year, the taxpayer has to start the appeals process from scratch, said Larry Stroble, a partner at Barnes & Thornburg who was not involved in the Simon appeals.

The depressed state of commercial real estate could give the mall owners a strong incentive to pursue more appeals.

“All major owners of commercial real estate are monitoring their expense levels as closely as they can,” said James Sullivan, managing director and senior analyst covering real estate companies for Cowen Group in New York. “It’s certainly been, over the last couple of years, a pretty active part of many of these companies’ strategies.”

The $2.4 million, which doesn’t include interest, is a relatively small figure for Simon, which is the world’s largest real estate company and has revenue topping $4.5 billion. While Marion County is strapped for cash, it will have no problem writing the check, said Richard Hunter, director of settlements for the Marion County auditor.

Marion County has refunded $20 million to $40 million in property taxes a year since the state-mandated reassessment of 2007, Hunter said. The county has made multimillion-dollar refunds to other prominent companies, including Eli Lilly and Co.

Sometimes it pays to let a property go back to the bank, Sullivan said. If a property is worth less than the mortgage, writing off that liability increases a company’s book value, he said.

“Just about all owners of retail real estate will have this circumstance occur,” he said.

O’Connor will be making his appeal on a shoestring budget. One reason it’s even feasible, he said, is that one of his analysts, John Slatten, is also an attorney and CPA who can dedicate his time to the cases.

Marion County has defended appeals before the tax court, but O’Connor said he can’t remember the last time the county carried the burden of proof as petitioner.

“I feel lucky to have such great people,” O’Connor said. “I’ll put a so-called government worker up against private industry people any day.”•

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  1. Where may I find an attorney working Pro Bono? Many issues with divorce, my Disability, distribution of IRA's, property, money's and pressured into agreement by my attorney. Leaving me far less than 5% of all after 15 years of marriage. No money to appeal, disabled living on disability income. Attorney's decision brought forward to judge, no evidence ever to finalize divorce. Just 2 weeks ago. Please help.

  2. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

  3. Hi there I really need help with getting my old divorce case back into court - I am still paying support on a 24 year old who has not been in school since age 16 - now living independent. My visitation with my 14 year old has never been modified; however, when convenient for her I can have him... I am paying past balance from over due support, yet earn several thousand dollars less. I would contact my original attorney but he basically molest me multiple times in Indy when I would visit.. Todd Woodmansee - I had just came out and had know idea what to do... I have heard he no longer practices. Please help1

  4. Yes diversity is so very important. With justice Rucker off ... the court is too white. Still too male. No Hispanic justice. No LGBT justice. And there are other checkboxes missing as well. This will not do. I say hold the seat until a physically handicapped Black Lesbian of Hispanic heritage and eastern religious creed with bipolar issues can be located. Perhaps an international search, with a preference for third world candidates, is indicated. A non English speaker would surely increase our diversity quotient!!!

  5. First, I want to thank Justice Rucker for his many years of public service, not just at the appellate court level for over 25 years, but also when he served the people of Lake County as a Deputy Prosecutor, City Attorney for Gary, IN, and in private practice in a smaller, highly diverse community with a history of serious economic challenges, ethnic tensions, and recently publicized but apparently long-standing environmental health risks to some of its poorest residents. Congratulations for having the dedication & courage to practice law in areas many in our state might have considered too dangerous or too poor at different points in time. It was also courageous to step into a prominent and highly visible position of public service & respect in the early 1990's, remaining in a position that left you open to state-wide public scrutiny (without any glitches) for over 25 years. Yes, Hoosiers of all backgrounds can take pride in your many years of public service. But people of color who watched your ascent to the highest levels of state government no doubt felt even more as you transcended some real & perhaps some perceived social, economic, academic and professional barriers. You were living proof that, with hard work, dedication & a spirit of public service, a person who shared their same skin tone or came from the same county they grew up in could achieve great success. At the same time, perhaps unknowingly, you helped fellow members of the judiciary, court staff, litigants and the public better understand that differences that are only skin-deep neither define nor limit a person's character, abilities or prospects in life. You also helped others appreciate that people of different races & backgrounds can live and work together peacefully & productively for the greater good of all. Those are truths that didn't have to be written down in court opinions. Anyone paying attention could see that truth lived out every day you devoted to public service. I believe you have been a "trailblazer" in Indiana's legal community and its judiciary. I also embrace your belief that society's needs can be better served when people in positions of governmental power reflect the many complexions of the population that they serve. Whether through greater understanding across the existing racial spectrum or through the removal of some real and some perceived color-based, hope-crushing barriers to life opportunities & success, movement toward a more reflective representation of the population being governed will lead to greater and uninterrupted respect for laws designed to protect all peoples' rights to life, liberty & the pursuit of happiness. Thanks again for a job well-done & for the inevitable positive impact your service has had - and will continue to have - on countless Hoosiers of all backgrounds & colors.

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