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NEW BEDFORD — The city has filed to foreclose on the Star Store to recoup more than $525,000 in unpaid property taxes.

The case was filed in state Land Court against the building’s owner, Star Store Holdings, last week. The $525,000 in outstanding taxes sought in the lawsuit are only for fiscal year 2023, the tax year that ran from July 2022 through June 2023. The company also owes nearly $1 million more for other tax years, according to a press release the city issued on Tuesday.

The Union Street building housed the UMass Dartmouth College of Visual and Performing Arts until Aug. 2023, when the university abruptly closed the arts campus. A recent report by the state’s inspector general found that multiple public entities mismanaged the property’s lease, stopping the state from purchasing it for $1 and ultimately wasting millions of taxpayer dollars.

In a written statement, Mayor Jon Mitchell said the city’s intention is to speed up the vacant building’s redevelopment. If the Star Store’s owner doesn’t repay the overdue taxes and a judge approves the foreclosure, the city could forcibly sell the property, recouping the tax debt, and pass the remaining sale proceeds back to the owner.

“Every property owner of course is required to pay their fair share of taxes,” the mayor’s statement said. “Given the size and prominent location of the Star Store, it is incumbent upon the City not to wait indefinitely for a new owner to materialize and pay the outstanding tax bill on the property.”

Paul Downey, who owns the property’s holding company, did not respond to a voicemail requesting comment. Neither did his spokesperson.

Downey’s spokesperson previously told The Public’s Radio that Downey was disputing recent changes in the property’s tax assessment.

City records show discrepancies

The city’s lawsuit states that Star Store Holdings owes $487,796 in property taxes, plus penalties, for fiscal year 2023. But public records available on the city assessor’s website say the Star Store’s property taxes were only $45,002 that year — less than a tenth of the figure in the lawsuit.

The assessor’s “state-of-the-art” online property lookup tool was launched in May of this year, showing property cards for every parcel in the city. The tool shows that the city’s estimate of the property’s value shot up from $1,506,100 in fiscal year 2023 to $21,452,600 in fiscal year 2024.

But the records are inaccurate and misstate the Star Store’s value by several million dollars, said city spokesperson Jonathan Darling. 

“The property cards are wrong,” he said during a brief meeting with a Light reporter in the mayor’s office on Thursday afternoon. “The property cards are an informational tool, not the letter of the law.”

Darling emailed another response later in the day, writing that the true value of the Star Store during fiscal year 2023 was $17,590,000, according to the city’s “financial accounting system,” a significantly higher value than the $1,506,100 displayed on the property card.

Darling did not immediately respond to The Light’s request for a copy of the record from the accounting system showing the higher valuation.

Darling added that Star Store Holdings owes $547,600 in property taxes for fiscal year 2024 and $124,148 for the first part of fiscal year 2025.

The city does not comment on the reasons for assessments on individual properties because of privacy concerns and “the potential to compromise the City’s position in future tax appeals,” Darling said.

An unusual tax dispute

The city took an unusual step by issuing a press release about Downey’s unpaid taxes — commercial tax disputes are typically resolved quietly behind closed doors, a New Bedford Light investigation found earlier this year.

The case is also unusual because disputes over a property’s tax assessment are normally settled through the Appellate Tax Board, a state agency that functions like a court. But that ship has sailed for Downey. The board only has jurisdiction over cases where the property owner has paid their taxes on time, experts told The Light.

“He has no right of appeal at the Appellate Tax Board,” said David Saliba, a tax lawyer.

Star Store Holdings has not filed an appeal with the Appellate Tax Board, a spokesperson for the board said.

The foreclosure case is among the first few Land Court cases the city has filed since the Legislature made new rules for tax foreclosures this year. 

State law previously allowed tax collectors to keep all the proceeds in a foreclosure sale, no matter how little the property owner owed. Critics called the practice “home equity theft,” and in 2023, the U.S. Supreme Court found that a similar law in Minnesota violated property owners’ Fifth Amendment rights. State Sen. Mark Montigny attached an amendment to this year’s state budget that ensured property owners are entitled to any excess proceeds in a foreclosure sale.

New Bedford officials had paused tax foreclosure filings while they waited for the Legislature to clarify the law. Now, the Star Store case is among four new tax foreclosure cases the city filed last week. The other cases include vacant properties with numerous code violations and a scrap metal dealer.

Editors note: This report was amended on Oct. 25, 2024, to update information from the Appellate Tax Board.

Email Grace Ferguson at gferguson@newbedfordlight.org

2 replies on “City moves to foreclose on Star Store for unpaid taxes”

  1. This is the one time I am happy with New Bedford’s high taxes. Brilliant move, New Bedford. The owner knows the deal was too sweet. Now, the city planners should send these details to nonprofit developers.

  2. The valuation goes from 1.5 million to 17 million in one year. Something doesn’t smell right. Apparently assessors can make up whatever number they want.

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