LANESBOROUGH — For the second year in a row, the owner of the Berkshire Mall has avoided losing control of the county's largest retail shopping complex by paying the outstanding taxes that he owes right up against the deadline.
Town Manager Paul Sieloff confirmed Tuesday that the mall's owner, Berkshire Mall Realty Holdings LLC, paid nearly $1 million in back taxes that it owed to both the town and the Baker Hill Road District on Monday. The mall's general manager, Jaime Ruiz personally presented the checks to town officials, Sieloff said.
A subsidiary of Kohan Retail Investment Group of Great Neck, N.Y., Berkshire Mall Realty Holdings had owed the town $422,000 and the road district $520,000 in back tax revenue for fiscal 2018, which ends June 30. Both debts have been paid in full.. On June 4, the town and the road district, which has legal jurisdiction over the mall's property, took action that would have allowed them to begin the legal process of taking the mall from Kohan by tax title if they did not receive what they were owed by June 18.
If Kohan had failed to pay what he owed by Monday, the Baker Hill Road District could have legally taken over the management of the almost 30-year-old 720,000 square foot shopping complex. But under state law, Kohan would have had six months after the expiration of that 14-day payment date to settle its debts and retain management of the shopping complex. If Kohan was still in default after that six month time period elapsed, the Baker Hill Road District could file a petition in state land court to take ownership of the property.
A similar situation occurred last July when Kohan failed to pay over $400,000 in back tax revenue that it owed to both the town and the district for the fourth quarter of fiscal 2017. But the firm retained control of the shopping complex when it paid its debt four days after that 14-day notice date had expired.
"He owed basically almost the entire year this year," said Sieloff, referring to the amount that Kohan owed both the town and the road district for fiscal 2018.
Mark Siegers, the attorney for the Baker Hill Road District, did not return a telephone call seeking comment.
"They were waiting to see what happened with this tax payment situation," before taking any further action, said Sieloff, referring to the road district's plans.
In a telephone interview, Mike Kohan, the principal of the Kohan Retail Investment Group, which has owned the mall since September 2016, said he had to borrow the money to pay the town and the road district this time.
"There's no anchor left and it's struggling day-by-day," said Kohan, whose real name is Mehran Kohanseih. All four of the complex's anchor tenants have left the mall since October 2015. Target's space is independently owned.
"I tried to get it out of the income and something out of my pocket, but it was impossible," he said.
Although a new store, the Berkshire Emporium is scheduled to open in the space formerly occupied by JC Penney on June 23, the mall is currently less than half full, and some stores are no longer open seven days a week. One store, the Baseball in the Berkshires Museum, occupies its space in the mall rent-free, according to a person familiar with that arrangement.
The loss of tenants has been compounded by the mall's assessed value, which is $19.5 million, according to town records, six times more than the $3.5 million that Kohan Retail Investment Group paid for the entire complex less than two years ago. The loss of revenue has made it difficult for the mall's owner to meet his financial obligations to both the town and the road district.
This winter, two unexplained power outages in the mall caused the retail shopping complex to close for short periods of time. A dispute over the nonpayment of snowplowing services during the winter of 2017 caused a District Court judge in January to allow Petricca Construction of Pittsfield to attach the rents of five mall tenants in order to recoup the $72,009 it was owed by the mall's ownership group. That situation has since been resolved, said Kohan on Tuesday.
Kohan has said previously that he wants to retain ownership of the mall. But when asked Tuesday how long he could continue to pay his taxes right up against the deadlines, Kohan said only "two or three years."
"I can't think of any longer term than two or three years because one way or another I'll find somebody to buy part of it," he said. "I've been discussing with some people to buy the anchors (the spaces formerly occupied by the mall's four anchor tenants)."
The town and the road district have been exploring options to redevelop the mall, including state legislation that allows the road district the legal right to own property. The road district has also commissioned a $70,000 study to research how other struggling shopping malls have been revived, while a company from Westborough has looked at the mall property as a potential location for growing recreational marijuana.
"If they want to come and buy the mall they are welcome to buy the mall, but I'm not going to sell the mall so my investors lose money," Kohan said. "There's more than $5 million that has been put into the deal. I don't want to make money, but I don't want to lose money...There's no way I'm going to let my investors down like that."
Business Editor Tony Dobrowolski can be reached at firstname.lastname@example.org or at 413-496-6224.
The mall is currently less than half full, and some stores are
"I tried to get it out of the income and something out of my pocket
back tax revenue that Kohan currently owed.