opinion

Four months after Vero Beach electric bill woes, Indian River Mall delinquent on property taxes

Four months after owners of the Indian River Mall came up with more than $410,000 to keep the electricity on, Kohan Retail Investment Group is late paying more than $250,000 in 2017 Indian River County taxes.

This year’s taxes were due April 2, said Debbie Gee, of the Indian River County Tax Collector’s Office.

The bill includes $5,249 in tangible personal property taxes and $248,817 in property taxes, by far the lowest amount in the 15 years listed on the tax collector’s website. The highest property tax bill was $834,020 in 2005.

That reflects declining property values at the mall, according to the Indian River County Property Appraiser’s Office: $10.4 million in 2017, $20 million in 2016 and $45 million in 2005.

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Kohan, based in Great Neck, New York, bought the mall, which does not include its anchor stores, for $12 million in June 2017. Mike Kohan, the company's principal, said Tuesday night the check is in the mail.

Kohan acquired the mall three years after Wells Fargo foreclosed on it and a nearby shopping center. Simon Property Group, the nation's largest mall owner, defaulted on its $71.3 million loan.

The mall’s owners the past 15 years paid their taxes in November, earning a 4 percent discount, according to the tax collector's website.

Unlike the threat of a mall shutdown in the middle of the Christmas shopping season, the shopping area legally could remain open for at least seven years without paying taxes.

When taxes aren’t paid by May 1, the Tax Collector’s Office advertises the delinquencies, then sells tax certificates on the properties at an online auction June 1, Gee said.

The winner of the auction is the investor who pays the county taxes, then agrees to take the lowest interest from the property owner when he eventually pays the tax after a year or more.

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Former tax collector Karl Zimmermann, a commercial Realtor, said some large property owners deliberately don’t pay their property taxes on time.

Large banks and other investors bid in the tax certificate auction expecting property owners such as the mall to pay the taxes within a year. That could generate 5 percent interest on the tax paid, Gee said.

After a year, however, that interest could drop significantly, Zimmermann said. Some large property holders might choose to deploy their cash elsewhere.

“At the minimum they would have a couple of years free ride at a quarter of a percent interest,” Zimmermann said.

After two years, tax certificate holders may put the property up for sale if owners haven’t paid the tax. The tax certificates mature at seven years. By then, most property owners come up with the taxes plus interest, Zimmermann said.

Penny Chandler, president of the Indian River County Chamber of Commerce, said she was concerned about continued uncertainty with the county’s signature retail complex.

“This is truly unfortunate,” she said. “For the most part the rest of the people in the business community pay their taxes, pay their utility bills and do their business using best practices.”

Vero Beach City Manager Jim O’Connor said Tuesday the mall remains current with its city utility obligations. In December, he said he’d never seen such a significant utility issue at a critical time in his three decades as a city official.

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In February, hopes were high at the mall when Oceans Unite Christian Centre moved into 17,000 square feet near Macy's between Zales and the martial arts studio. The 450-member church signed a five-year lease and spent about $400,000 on improvements.

“We’re doing everything that we can to try to make plans to revive the mall,” Billy Moss, a Vero Beach commercial broker, said at the time, adding he was trying to find new restaurant tenants.

Contact Laurence Reisman via email at larry.reisman@tcpalm.com, phone at 772-978-2223, Facebook.com/larryreisman or Twitter @LaurenceReisman.