The property formerly known as the Hot Springs Mall generated more than $150,000 in annual real estate taxes prior to a Houston-based firm’s acquisition of it in an August 2015 foreclosure sale.
Through a series of appeals to Garland County’s Board of Equalization, County Court and Circuit Court, the real estate’s tax benefit to the community has decreased by two-thirds from what it provided in the 2014 tax year. The $6.5 million appraisal the equalization board approved Thursday lowered the property’s tax bill for the 2021 tax year to less than $60,000, money that will primarily benefit the Hot Springs School District.
Twenty percent of a property’s market value is taxed at millage rates the Garland County Quorum Court sets for the various taxing entities in the county. The 2021 tax bills will go out in February, with payment due by the following October.
The county appraised the property at $19,250,850 prior to RockStep Capital acquiring it for $5.5 million in the 2015 foreclosure sale. Over the subsequent six years, the company has successfully petitioned the equalization board, county court and circuit court to gradually lower the property’s market value, arguing that the changing retail environment has reduced the property’s income.
The property was valued at $7.5 million prior to Thursday. The $6.5 million valuation approved Thursday is the product of a settlement agreement filed last year in circuit court. The agreement, filed under seal, established a formula for determining the property’s income through the end of the year, Arkansas CAMA Technology, the appraisal firm the county contracts to value real estate for tax purposes, told the board.
“Based on the formula provided in the circuit decision, we have calculated a value of $6.5 million,” Barbie Weatherford, ACT’s chief commercial appraiser, told the board.
County Attorney John Howard told the board it’s bound by the court-approved agreement.
“You’re bound by the formula that was set out in the settlement agreement, which is covered by that protective order,” he told the board. “You’re bound to use that formula through 2021.”
Arkansas CAMA Technology, or ACT, will reappraise the property next year, when the county begins its five-year reappraisal cycle. The new property values will be reflected on 2022 tax bills that go out in February 2023 and are due in October 2023.
RockStep’s attorney told the board in 2018 that the property’s 2017 net operating income was 24% lower than its 2016 NOI, explaining to the board that the roughly $1 million in 2017 NOI wasn’t pure profit. It didn’t include the cost of servicing the property’s debt, tax liabilities or capital outlays.
RockStep told the board in 2015 that income generated for the previous owner couldn’t service more than $12 million in debt secured by the property, forcing it into foreclosure.
The property was rebranded as Uptown Hot Springs earlier this year. RockStep President Andy Weiner told The Sentinel-Record the new name reflects the property’s shift from retail to activity-based services. He said an activity center is planned for the space that housed Sears and more than a dozen other vacant spaces. The repurposed spaces will offer go-cart riding, trampolines, golf simulators and climbing walls, he said.