No tax hike seen in Filene's exit, town officials say

For South Shore shoppers saddened by the loss of their beloved Filene's, there are two pieces of good news. Discount store Filene's Basement won't be affected. And neither should property tax bills.

To many customers, the recent news that Filene's, a longtime Boston-area retail institution, will convert to Macy's by the end of next year in a department store merger marked another blow against the region's distinctive character. But municipal finance officials said the conversion of four Filene's in the region -- and the loss of two other department stores in the process -- is not likely to have an appreciable impact on their tax contribution, which communities rely on heavily to curb residential taxes.

''If this became a trend throughout commercial real estate, it would pose a problem," said Eric Kinsherf, the finance director in Braintree. ''But I don't see a lot of plywood up in town, so they should get someone to take their place soon."

There will, of course, be a change in the retail shopping landscape. In two area malls that have had both Filene's and Macy's -- South Shore Plaza in Braintree and Westgate Mall in Brockton -- Federated Department Stores Inc. plans to sell Macy's locations and convert the Filene's stores in those malls into Macy's, said company spokesman Jim Sluzewski. The decision was based on square footage and positioning within the mall, among other factors, he said. He said the company was just beginning to talk to potential buyers about the stores now occupied by Macy's.

At Hanover Mall and Independence Mall in Kingston -- where there have been Filene's, but no Macy's -- the existing Filene's store will simply become a Macy's, with no other part of the mall affected.

Greg Greenfield, principal of Gregory Greenfield & Associates Ltd., an Atlanta-based retail real estate firm that owns the Westgate and Hanover malls, said the merger presented an ''unexpected opportunity" to pump fresh retail blood into the malls. He said that while the Filene's name carries weight in New England, Macy's has a strong Northeastern presence as well, and he did not expect Filene's absence to hurt business, particularly after a likely marketing push.

''The name [of the store] is less important than what they do in conjunction with changing the name," he said. ''It looks like their plan is to reinvent the franchise."

Federated Department Stores Inc. announced last week it would convert all remaining Filene's into Macy's and close about a dozen stores in New England, including the flagship store in Boston's Downtown Crossing. Federated is completing a $17 billion merger with Filene's parent company, May Department Stores Co., that will add 330 new Macy's stores nationwide. May Department Stores bought the Filene's chain in 1988.

Finding a new store to fill the gap in Braintree and Brockton should not be too difficult, specialists say. Greenfield said he expected ''substantial interest" from big-box retailers in the Westgate Mall, and credited big-box stores with spurring the revival of shopping centers. Kinsherf, meanwhile, said a robust retail market, especially in Braintree, should attract a comparable tenant, leaving the mall's tax burden relatively unchanged.

Retail sales do not affect commercial taxes, and vacancies usually affect property values only if they are prolonged.

Malls often rank among the largest taxpayers in a community, and their values go a long way to determining towns' financial health and stability. The Hanover Mall paid $732,000 in local taxes last year. In Braintree, the South Shore Plaza paid $3.4 million in local taxes last fiscal year.

In fact, if the mall can attract a tenant to sign a more lucrative lease, overall property values could rise.

''What the tenants are paying drives the property value," said Bob Brinkmann, Hanover's assessor. ''If they get someone to replace it at a higher rate, it could have a positive impact."

Brinkmann recalled that similar fears over reduced retail sales and lower property values arose when Ames Department Store, a discount chain now out of business, announced it was leaving the Hanover Mall two years ago. But when Wal-Mart stepped in as its replacement, the mall's business increased.

''As long as there's not an empty anchor tenant, there shouldn't be a major drop-off," Brinkmann said.

In Brockton, Mayor John T. Yunits Jr. said he expects Filene's closure at the Westgate Mall will only amount to a glancing retail blow.

The mall has experienced a strong resurgence in the last five years, increasing its occupancy rate from 20 percent to 100 percent. Filene's opened in 2003 to much fanfare, widely seen as the culmination of three years of redevelopment. It replaced a Bradlees store.

''The mall will take a small retail hit but it'll have a quick resurgence," Yunits predicted. ''We're not overly concerned."