An assessment appeal filed by the owner of the mall, Warren Mall Realty Management, was denied last week by Judge Maureen Skerda.
An appraiser hired by the mall to determine its value established that the fair market value should be $1,032,051, not the $2,194,161.20 that is the current valuation.
Skerda ruled that the appellant, Warren Mall Realty, failed to meet its burden of proof.
While the judge ruled that appraiser William Bender of Dan McCown and Company used the proper approach for determining the value of the mall, his "income capitalization approach was fundamentally flawed in several respects."
The capitalization rate was calculated using a project income rather than the last known actual net income, Skerda wrote in the conclusions of law section of her ruling.
Also, he "used the incorrect purchase price in calculating his figures."
Skerda also took exception to the "comparable sales" of malls cited by Bender. She said the mall sales "are not credible comparable sales, but rather... malls from different states, obtained under different circumstances, such as purchasing the malls out of bankruptcy, and are malls serving vastly different markets in Virginia and North Carolina."
"Furthermore, a tax refund of approximately $150,000 was inexplicably excluded from the 2010 income and expense statement, resulting in an artificial reduction of the fair market value of approximately $500,000," Skerda wrote.
Attorney Barry Klenowski, representing the Warren County Board of Assessment Appeals, questioned whether the sale price of the Warren Mall from former owner George Zamias of Zamias Services Inc. to Mike Kohan of Warren Mall Realty was a fair one.
Skerda ruled that, because the "sale occurred in part at the direction of the mortgagee... who wished to remove the 'toxic asset' from their books... the mortgagee was not primarily motivated to acquire fair market value."
"Thus, the court does not rely on the recent sale price as an indicator of fair market value," she wrote.
"Taken as a whole, the appellant's appraisal reflecting a fair market value of $1,030,000 cannot be viewed as credible," Skerda wrote. "Accordingly, the assessed value of the property remains at the figure assessed by the Warren County Board of Assessment."