What tumbling property values at Neshaminy, Oxford Valley malls mean for your taxes

The sad state of the Neshaminy and Oxford Valley malls could result in higher property taxes for the rest of Bensalem and Middletown and lead to cuts to local services and schools.

Every year, Bensalem and the Bensalem School District, Middletown and the Neshaminy School District receive hundreds of thousands of dollars in property taxes from Bucks County's two largest malls.

Once commercial heartbeats and hangouts for many in Lower Bucks, the Neshaminy and Oxford Valley malls are also among the largest sources of property tax income, though their assessed property values have dropped significantly in recent years.

In Bensalem, the assessed property value of the Neshaminy Mall has dropped 42%, from $6.3 million, since 2020 to $3.6 million currently, county records show.

Changes in the mall's perceived value are unlikely to shock shoppers. Regular patrons will find two vacant department stores ― once a Sears and a Macy's ― and more than a dozen smaller, retail spaces in the mall and without tenants.

Has the township taken notice?

"This is huge for us," said Mayor Joseph DiGirolamo. "We talk about it all the time."

Appearing downcast, Bensalem's mayor said the owners of the mall recently came to him seeking solutions. "They came to me asking, 'what should we do?'"

"We had talk of a Wawa," he said of the mall, "but that's not going to change things for Neshaminy."

Brookfield Properties acquired the Neshaminy Mall in 2007 and controls thousands of other properties worldwide. In the U.S. alone, Brookfield runs more than 100 shopping malls.

Brookfield, based in Canada, submitted a report to the Bucks County Board of Assessment in mid-2020 with arguments for why it should pay less in local taxes.

Even before the pandemic, Brookfield stated that "the retail marketplace was struggling" and noted competition from the nearby Oxford Valley and Philadelphia Mills (formerly Franklin Mills) malls.

A report submitted by the mall's owners stated that some tenants were struggling to pay rent and suggested that some movie theaters might not be able to pay their leases. Neshaminy is home to an AMC 24-screen theater.

According to documents submitted by Brookfield to the county, Round 1 Bowling & Amusement had signed a lease to operate in a part of the former Sears department store at Neshaminy Mall, but "the deal fell through and they will no longer occupy the space."

And recently, a Chick-fil-A pulled out of the food court.

Opened in 1968, the struggling Neshaminy remains a significant, if much reduced, source of income for the township, paying $646,596 in annual property taxes with $506,540 going annually to the Bensalem School District, according to county records.

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Built in 1973, the nearby Oxford Valley Mall might be the single largest source of property tax income for Middletown. Property taxes on the mall also provide a significant revenue source for the Neshaminy School District.

Since 2018, county records show the assessed value of the Oxford Valley Mall has dropped by more than $1.7 million on the tax rolls, so that it pays about 15 percent less in property taxes.

At the current tax rate, the owners paid $2 million in property taxes in 2022, according to county records. Of that amount, $1.6 million went to the Neshaminy School District.

In February 2022, the Simon Property Group submitted its last annual report to investors. Simon said Oxford Valley was 79% occupied and listed as major tenants an a movie theater, Macy's and J.C. Penney's department store.

A former Boscovs location at the Oxford Valley Mall will soon be an apartment complex. Construction is ongoing and local officials in Middletown are watching closely.

“We can go back to the recession of 2008, and we, as municipal governments, experienced a lot of assessment appeals,” said township manager Stephanie Teoli Kuhls. “Of course, it has an impact [on taxes].”

For Teoli Kuhls, the situation with the Oxford Valley Mall is different from the Neshaminy because Oxford Valley’s owners are working to fix the problem.

With the construction of an apartment complex, the value of the Oxford Valley will go up, she said. So will the amount Middletown can tax the property.

“That is the goal," said Kuhls. “That is the hope.”

Also, officials hope the housing also draws more and better commercial tenants to the mall, further improving its ratables.

More:Construction begins on luxury apartments at Oxford Valley Mall in Middletown

Assessed and market values of the malls

The assessed value — or taxable value — of the malls is different from their estimated market value. Market value is a guess at how much someone might pay for a property. The assessed value is a calculation used by governments in figuring out the rate of tax, and it rarely changes.  It can largely be based on the size, the use and condition of a property.

As an example, many home prices soared in 2021 and 2022. But the taxable value of those homes has not changed. (If it did, you’d be paying a lot more in local property taxes.)

If a property owner, either commercial or residential, believes the assessed value of their property is too high, they can appeal to the Bucks County Board of Assessment and, in some cases, take the government to civil court.

This news organization compared the assessed values of all properties in Bucks County between the years 2019 and 2022. In most cases, the assessed values increased, meaning local governments can draw more in revenue from property taxes.

For those who work in real estate, the government's way of taxing property can seem grossly unfair. In March, attorney C. Scott Schwefel testified before the Connecticut State Legislature on the property tax system. Schwefel specializes in corporate law and real estate litigation.

“Property tax assessments are, in fact, oftentimes inaccurate," Schwefel said. "Many municipalities retain mass appraisal companies to determine values on all real property.

"These companies use computer-assisted formulas in calculating value and fail to consider uniqueness of the individual properties," Schwefel told this news organization. "These valuation methods do not comply with the (uniform standards) and often result in an increase of inaccurate property assessments.”

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In Middletown, Oxford Valley Mall was the only real standout with the Simon Property Group, a real estate investment trust, that sought several property reassessments from the county. Few other commercial property owners in Middletown sought a lower property value, and in turn a reduced tax bill.

The Oxford Valley Mall appears on county tax rolls as several properties and the owners applied to reduce the taxable value of each. Neshaminy Mall also appears on the tax rolls as multiple parcels of land, which were considered separately by county officials in public hearings.

In addition to the malls, the post-pandemic trend of working from home might impact the tax values of office space in Bucks County.

In Bensalem, a handful of local office buildings were reassessed so that they pay less in taxes to the local government.

Located near the Pennsylvania Turnpike and Route 1 interchange, the Northbook Corporate Center was reassessed, lowering its value from $292,400 to $185,060 in January 2021, according to county tax records.

A second office building located near the intersection of Street and Hulmeville roads dropped in assessed property value from $376,000 to $199,200 with the latest reassessment in July 2022, government records show.

Brookfield Properties and Simon Properties did not respond to requests for comment on the Neshaminy and Oxford Valley malls.

This article originally appeared on Bucks County Courier Times: Neshaminy, Oxford Valley malls drop in property value on Bucks County tax rolls