Embattled Pittsburgh Mills mall in Frazer could go to sheriff's sale

The Pittsburgh Mills mall in Frazer could go to sheriff’s sale this fall.

According to court filings, a notice of sheriff’s sale for real estate that includes the mall property will be held at 9 a.m. Oct. 2 in the Allegheny County Courthouse.

Filings indicate Pitt Galleria Reality LLC, Pitt Reality LLC, Pitt Galleria CH LLC and Galleria Nassim LLC — commonly known as Namdar — owe about $11.5 million in special assessment taxes on four parcels. Those include the mall building, the former Sears building and two nearby vacant commercial properties.

Macy’s is not part of the properties in danger of sheriff’s sale.

An attempt to reach Namdar officials was unsuccessful.

“We’re obligated to collect the special assessments that are due, and we’re hoping they will pay,” said attorney Matthew Marshall of Cranberry-based firm Dillon McCandless King Coulter and Graham, which is representing Frazer.

If the outstanding special assessment taxes are paid before Oct. 2, the properties would not be eligible for sheriff’s sale.

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Township Secretary and Supervisor Lori Ziencik said that, in 2002, the Redevelopment Authority of Allegheny County was authorized to pursue a tax increment financing protocol, or TIF, for the Mills Corporation Development Project. That project includes the mall and outparcels such as Lowe’s, Walmart and Sam’s Club, known as the TIF district.

Bonds were sold, Ziencik said, and Allegheny County, Frazer and the Deer Lakes School District agreed to divert a portion of the real estate taxes from the TIF district properties to pay the debt service on the bonds. Frazer and Allegheny County agreed to forego 75% of their tax revenues, and Deer Lakes agreed to allow 80% of its taxes to go toward the bond payments.

Money from the bonds was used to pay for infrastructure for the mall, such as utility services and roads.

The TIF finance plan depended on enough money from real estate taxes to pay off the bonds with interest, much like a traditional loan.

Once Namdar acquired the property, it was granted a reduced property assessment, which was one of several over the years. With that reduction, the income from real estate taxes in the TIF district was not enough to pay the bonds and the interest on them, Ziencik said.

Ziencik said other properties in the TIF district appealed their assessed value and also were granted a lower assessed value — further reducing the tax revenue available to pay off the bonds.

She noted all of the property owners in the TIF district pay their real estate taxes to the three taxing bodies, and none are delinquent.

Ziencik said, in anticipation of a potential revenue shortfall, the TIF plan required Frazer to create a neighborhood improvement district. That district would alert the township when tax revenue was unable to meet the debt service on the bonds, enabling the township to issue special assessment notices — extra money TIF district property owners were required to pay — to make up the shortfall. That’s something Frazer has done for several years.

Namdar did not pay its special assessment bills, so now Frazer is required to initiate a sheriff’s sale, Ziencik said. She noted that none of the special assessment revenue is retained by the township, but rather is sent to Wells Fargo to pay bondholders.

Likewise, in the event of a sheriff’s sale, the $11.5 million, if the sale price is that high, would be paid to bondholders, not the taxing bodies.

The township’s position, she said, is that it’s unfortunate a situation has again occurred where a mall owned by an “absentee landlord” is neglecting its financial responsibility, buildings and roads around the complex.

Mason Asset Management of Long Island, N.Y., worked with Namdar Realty Group to acquire struggling malls and acquired Pittsburgh Mills in 2018.

Namdar owns and operates retail property nationwide and in the region, including the Uniontown Mall, Logan Valley Mall in Altoona, Nittany Mall in State College and Beaver Valley Mall in Monaca.