As the Moorestown Mall struggles, residents will pay higher taxes because of its losses

A weekday trip to the Moorestown Mall puts its plight in focus: the stores had few customers, the food court was bustling and the restaurants that sell liquor were preparing for the dinner crowd.

In recent years, the mall lost its flagship Macy’s, and other stores have closed. And that, coupled with the changing tides of retail and the rise of online shopping, has challenged its finances.

Now, Moorestown taxpayers are being asked to pay more to offset a reduction in the mall’s taxes, a result of its struggles.

Over the past decade, the Pennsylvania Real Estate Investment Trust, the mall’s owner, has appealed its tax assessments, arguing in filings to the state tax court that Moorestown was asking it to shoulder too high a local tax burden. In two settlement agreements, the township said it would refund a total of $4.7 million.

In Moorestown, a Burlington County township of 20,000 residents, the mall is the biggest taxpayer, representing about 2.7 percent of assessed properties. To offset the loss of taxes from the most recent appeal, the township is asking the average homeowner to shell out $32 more in property taxes in each of the next five years.

"The Township and Mall both have an interest in working together to address the impacts consumer changes have had on all malls over the past several decades,” township manager Tom Neff said in an email.

Many Moorestown residents say they prefer to shop online. Moorestown officials say the mall is “in transition” and critical to the community.

PREIT filed three separate tax appeals alleging overassessments since 2008. The first settlement with Moorestown was in 2017 for $3,125,271 and the township used part of its budget surplus to pay it off. A second settlement in 2018 was for $1,625,000. Last month, in approving its budget, the township council voted to increase municipal taxes to pay off the $1.6 million.

The tax hike to pay the settlement will amount to $32, but combined with other budget expenses, the typical taxpayer with a home assessed at $454,000 will pay an extra $45.40 for 2019.

Moorestown Councilperson Michael Locatell, who voted against the tax increase, said he worries the hike may affect the township’s working-class families.

“They’re concerned for every dollar,” Locatell said. “When you increase taxes, it affects everybody in different ways. Fortunately for the people who live in the bigger houses, it’s a bite they can manage.”

Moorestown Deputy Mayor Nicole Gillespie said she voted to raise taxes to save the township’s surplus for possible emergency expenses and prevent further budget cuts.

Tom Merchel, the town’s chief financial officer, said the mall’s vacancy rate, currently at seven percent, contributed to the over assessments.

The Moorestown Mall is far from the only shopping hub to struggle as E-commerce expands. From 2017 to 2022, the number of malls in the United States is projected to decrease 20 to 25 percent, according to a 2017 study by Credit Suisse.

University of Pennsylvania marketing professor Barbara Kahn said mall closures often follow the loss of key anchor stores that attract shoppers to other stores.

The mall poised itself for an upscale makeover half a decade ago to serve affluent Moorestown, which has a median household income of $133,000. PREIT in 2011 pushed for a local referendum to allow traditionally dry Moorestown to issue four liquor licenses for exclusive use at an enclosed mall.

Voters consented, and the firm paid $4 million to acquire the licenses -- part of its strategy to court high-end restaurants. In 2012, the shopping center touted planned openings for restaurants like Osteria, a pizzeria-trattoria with a rustic edge, and Distrito, modeled after the West Philadelphia Mexican restaurant. Osteria and Distrito have both since closed their mall restaurants.

But the loss of the mall’s classic anchor, Macy’s, in 2017, stifled foot traffic at the center. The previous tenant was replaced by HomeSense, Five Below and a Sierra Trading Post. A Michael’s will open up on former Macy’s property as well in 2020.

Kahn said many malls have re-branded as mixed-use developments, which include traditional retail components as well as movie theaters, restaurants and housing units. This shift has helped several smaller malls maintain relevance amid the rise of online vendors like Amazon, which Kahn said have chipped away at mall business.

Locatell said the township and PREIT have discussed the possibility of developing housing on the mall’s property. The residential component -- 20 percent of which would be dedicated to affordable housing -- would further position the mall as a “lifestyle center" and increase sales, Locatell said.

Lisa Milideo, marketing director at the Moorestown Mall, declined to comment on the proposed housing, but said the center is “thriving.” She said a number of projects will allow the mall to connect with the community through initiatives such as “Launch,” which invites local entrepreneurs to submit business plans for the opportunity to win $2,000 as well as two months free rent in a vacant mall space. Applications are due at the end of August.

But Moorestown native Joann Brandimartol, 62, said she has watched the mall decline.

“It’s very depressing from what it used to be,” Brandimartol said. She said the loss of Macy’s dealt a blow to mall business, and she misses KB Toys, where she used to take her children before the company declared bankruptcy and closed in 2009.

Brandimartol still goes to the Moorestown Mall a few times a month, usually to shop at Boscov’s and avoid the drive to Cherry Hill Mall, four miles down the road.

Dave Cavalieri, 61, of Mount Laurel, said that if he has to go to a mall, he chooses Moorestown. He said it is close, and since it is usually “dead,” he can get his shopping done quickly.

Julie Woodrow, a Moorestown resident, said the added taxes from the mall settlement do not bother her.

“I’m surprised that malls are still a thing,” she said.

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