Kandiyohi County confirms property values ​​of Uptown Willmar Mall properties – West Central Tribune

WILLMAR – Despite an appeal by Rockstep Willmar LLC, the owner of Uptown Willmar, the Kandiyohi County Board of Appeals and Equalization on June 18 affirmed the County Assessor’s Office’s assessment of the five shopping center properties, arguing that land sales surrounding the shopping center proved the properties’ assessment was accurate.

“The land is worth what it’s worth,” said Jennifer Halverson, an appraiser with the Assessor’s Office.

The value of the five parcels, which include the old Herberger site, the remainder of the mall and the Verizon building, two vacant lots on the west side of the mall and the mall on the south side, was set at $8,032,800 for 2024. This is a slight increase from the 2023 assessment, which was $7,859,300.

The address of the shopping center is 1605 S. First St. The properties are located approximately between First Street and Fifth Street Southeast, north of 19th Avenue.

“We have made no changes to this year’s assessment compared to last year’s assessment, other than some new construction for the new golf simulator facility,” Halverson said.

Rockstep had appealed and wanted the county to reduce the property value to $5,746,340, which was higher than the $4,344,108 the company had actually sought based on the property’s valuation based on net operating income.

“We wanted to meet somewhere in the middle,” said Tommy Stewart, COO of Rockstep, who attended the meeting remotely from Texas.

Macy Moore / West Central Tribune

Stewart said paying taxes on the $8 million value of the property would be a challenge.

“As you know, the property is under a lot of stress,” Stewart said.

Rockstep purchased the mall, then known as Kandi Mall, in October 2015. At the time, the property was valued at $9.2 million, but Rockstep paid $14.1 million. The following year, the property’s value rose to $11.4 million.

Stewart said when Rockstep bought the mall, it was not a distressed property. However, the mall soon fell on hard times when its main stores and many smaller retailers closed.

Kmart had closed in 2012, before being purchased by Rockstep, but Herberger’s closed its doors in 2018, followed by the Sears Hometown Store in 2019 and JCPenney in 2020. Other stores that have closed in recent years include Rue 21, GNC, Book World and Hallmark.

“Usually when the moderators leave, a lot of tenants in the mall leave as well,” Stewart said. “COVID has made things even worse.”

The mall owner has appealed the property values ​​several times since purchasing the mall in 2016.

In 2020, a settlement between Rockstep and the county was approved that included terminating a tax abatement agreement approved in 2016 and reducing the mall’s property value to 2016 levels over a three-year period.

This agreement, which prevented Rockstep from appealing the values ​​of its properties for three years, expired in 2023.

Although Rockstep has reached an agreement with a buyer to purchase Herberger’s portion of the mall, the sale price of $400,000 is significantly below the appraised value of $759,500.

According to information presented at the meeting, Rockstep is also trying to sell the shopping center that houses Lifetime Fitness and Golden Palace. There are three offers, the highest of which is $600,000, which is also well below the appraised value of $1,172,700.

“There’s a lot of work to be done on both buildings: exterior, roof, parking lot,” Stewart said. “Roofing costs have increased dramatically in the last three years.”

Halverson said the county took the physical condition of the mall into account when assessing it, but the mall’s land, totaling about 44 acres, is in a prime commercial location in Willmar, along First Street South and 19th Avenue. Land surrounding the mall, some of which was owned by Rockstep, sold for high prices.

For example, the property where the Auto Zone store now stands sold in 2017 for $425,000, or $15.18 per square foot, according to information presented at the meeting. The now-vacant property that once housed Pizza Hut sold in 2022 for $737,500, or $19.23 per square foot. It is now listed for sale for $850,000.

Other sales figures presented included the sale of the Aspen Dental building in 2020 for $2,270,000 and the purchase of the site of a former office supply store at the corner of First Street and 19th Avenue by TJ Maxx for $1,690,000 in 2022.

Aldi purchased the site in 2014 for $819,322 and Tidal Wave Car Wash purchased the property in 2022 for $858,500.

Macy Moore / West Central Tribune

Halverson said if the Herberger and mall sales go through and at lower prices, it could have an impact on real estate prices in the area. However, she would need to see more properties sell at lower prices before she could assume it was a trend.

“Two sales do not make a market,” Halverson said.

The Board of Appeals and Equalization, which is made up of county commissioners, was sympathetic to Rockstep but ultimately unanimously upheld the assessor’s office’s valuation. Rockstep can still appeal the decision by taking it to the Minnesota Tax Court.

“I know this is a difficult piece of land. I know there’s a good use for it out there somewhere,” said Commissioner Steve Gardner. “However, staff has demonstrated that the assessments are correct and appropriate and should be upheld.”