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Guilderland Archives The Altamont Enterprise, November 20, 2008
Walgreens worth what?
By Saranac Hale Spencer
GUILDERLAND Property at the corner of routes 155 and 20 is probably worth at least twice as much as it’s assessed for, claims Republican Councilman Warren Redlich.
The property, which houses a Walgreens but is owned by a company named for the intersection, 155 & 20 of Albany LP, has been at the center of controversy lately on the split-party town board. In a letter to the Enterprise editor this week, Redlich writes, “This $6 million commercial property is assessed at only $2.7 million.”
Since the property carries a $4,575,000 mortgage, it probably has a value of $6 million or $7 million, Redlich said.
“Assessments don’t equal value,” said Steve Enfield, managing director of Dexia Real Estate Capital Markets, the lender, which was called Artesia Mortgage Capital Corporation when the loan was made on May 25, 2006.
A mortgage for $4.6 million on a property worth $2.7 million would be “very, very, very non-typical,” said Enfield, who would not comment specifically on this loan. The assessment may be based on property and construction costs, he said.
“We would hire an appraiser,” Enfield said of his company’s practices when giving a loan. The appraiser would consider the tenant on the property, in addition to the worth of the property itself, he said, and Walgreens would be considered a good tenant because of its high credit rating and long leases, typically 20 years.
Initially, the property had been assessed at $3.2 million, but, in June, the board voted, 3-to-2, along party lines, to settle with Walgreens, which had filed a grievance, and reduce the assessment to $2.7 million. Carol Wysomski, the town’s assessor at the time, arrived at her first assessment by using the cost of buying the property and building the store, she said in June. She recommended settling with the national chain because the nearby town of Colonie had recently had a similar situation that they took to court and lost.
“We are in line with Colonie,” Wysomski said of Guilderland’s final assessment figure, for $2.7 million, in June.
“It’s certainly not typical, but it could happen… especially at this day in age,” Hany Shawky, a professor of business and economics at the University at Albany School of Business, said of that kind of a loan. A bank may well be inclined to give a loan on the credibility of the company that owns the property and the company to which it leases. He noted the likely length of Walgreens’ triple net lease on the property and said, “It may not be typical business practice, but there’s… nothing terribly wrong with this.”
The town board’s two Republicans, both in their first year on the formerly all-Democratic board, brought the property back into the public eye last month when they accused the town’s Democratic lawyer, Richard Sherwood, of having a conflict of interest when he handled the assessment settlement for Walgreens in June. Sherwood has denied the charges.
“There is a serious ethical issue involving Guilderland Town Attorney Richard Sherwood and the town’s assessment process,” Republican Councilman Mark Grimm wrote in a letter to the Enterprise editor last month.
“We have now learned that Mr. Sherwood is connected with the property owner,” Redlich wrote in a letter, dated Oct. 28, to Democratic Supervisor Kenneth Runion.
Kenneth Segel, who signed the mortgage for the property, was a founding partner of the Segel, Goldman, Mazzotta & Siegel, P.C. law firm, said managing partner, Thomas Mazzotta, but he retired in March of 2005. Sherwood was an associate with that firm for about five years, starting in 1991, he said. Both Sherwood and Segel are now of counsel for the firm. Lawyers with that kind of affiliation to a firm can do a varying degree of work; in Segel’s case, Mazzotta said, he’s listed as being of counsel almost entirely to keep his name affiliated with the firm and to retain clients.
“It’s ridiculous,” Sherwood said of the accusation that he has a conflict of interest. “There is no conflict.”
Runion referred the matter to the town’s ethics board, which has yet to issue an opinion.
“That reduction costs the Guilderland School District alone over $10,000 a year in lost revenue,” Grimm wrote in his letter last month, referring the $540,500 assessment reduction and its effect on school tax revenue.
School won’t pursue case
In a letter dated Oct. 29, Runion asked Neil Sanders, the school district’s assistant superintendent for business, if the district would be interested in reopening the case and defending the town’s original $3.2 million assessment.
“It’s far more likely we could spend more [in litigation costs]… than the potential tax loss,” Sanders said at the school board’s meeting on Tuesday, explaining why the district isn’t interested in pursuing the matter. “We get several of these every year,” he said.
“We go through a standard process each time,” school Superintendent John McGuire said last week of how the district determines which assessments to defend.
Sanders told the board on Tuesday about the three steps he usually goes through when presented with a case. “First, we determine the likely reduction amount,” he said. Then, he looks at the loss over three years in this case, it would total about $30,000 over that span. Finally, Sanders said, he looks at the cost of litigation, which he estimates could range from $27,000 to $45,000 for this situation; the estimate includes attorney and appraiser fees and the cost of expert witnesses’ testimony.
“Assuming a 85% - 15% split, the school district could anticipate expenses of between $40,000 to 51,000 to defend the case,” Runion wrote to McGuire in a letter dated Nov. 4, referring to the split of expenses for litigation between the town and the school district. Runion, a lawyer, concluded, “Pursuant to state law, if an assessment is reduced, it is for a three year period or until a town wide re-valuation, whichever is sooner.”
McGuire said last week that he was aware of Runion’s figures, but the school district had done its own research and come up with similar estimates. Of pursuing litigation, he said, “It’s not a favorable scenario for us to engage in.”
Melissa Hale-Spencer contributed reporting from the school board meeting.