Lanesborough officials worry loss of mall tax revenue could lead to cuts
LANESBOROUGH — Town officials fear the dwindling — or outright loss — of six-figure property tax revenue from the Berkshire Mall could mean municipal budget cuts starting in three months.
The Select Board on Monday night raised the specter of spending reductions for fiscal 2020, starting July 1, because of the mall ownership's ongoing struggles to make timely tax payments.
"I'd like to put out to the department heads they may have to be aware where they have to be cutting," said Selectman Henry "Hank" Sayers.
Selectman Robert Ericson said a contingency budget might be necessary "in case things go south" for getting tax money from the owner, Berkshire Mall Realty Holding LLC.
Target, which is located in the mall but owns its own space, pays its taxes separately and is up to date on its tax bills.
Town Manager Kelli Robbins said it's right to be concerned about lost revenue, but the board shouldn't panic.
"Until we have the budget put together and see what it looks like, you're worrying prematurely," she told the board. "I think you're going to be pleasantly surprised."
The majority of the Lanesborough's current overall budget of $11.3 million is funded by $8.9 million in residential and commercial property tax revenue.
Michael Kohan, principal owner of the shopping complex, has had trouble paying his quarterly payments, at times writing a check on the due date. The mall's total bill for fiscal 2019 is nearly $368,000. That's down from $615,000 in fiscal 2016, which ended June 30, 2016; three months later, Kohan bought the mall in September 2016 for $3.5 million.
The $247,000 drop in the tax bill over those years is a result of the mall's lower assessed value due to three anchor stores closing and the overall store occupancy rate falling to less than 50 percent in three years.
Kohan currently is behind $298,146 on back taxes, accrued interest and court costs it owes to the Baker Hill Road District, the government entity charged with maintaining and policing the connector road servicing the mall and monitoring its activity. In December, the district sued for the delinquent taxes.
Two weeks ago, Berkshire Superior Court Judge John A. Agostini ordered Berkshire Mall Realty Holding to pay in full. Kohan says he's trying to negotiate a payment plan with the district.
District officials won't comment on its legal battle with the owner.
Select Board Chairman John Goerlach doubts the mall's situation will improve with Kohan at the helm.
"This guy isn't really any good to us. It was a poor decision on the banks' part when they sold it to him," Goerlach said.
Dick Lindsay can be reached at firstname.lastname@example.org and 413-496-6233.
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