New Bedford’s Star Store at center of tax battle after art college’s abrupt exit

The private owner of the Star Store is facing a massive property tax increase from the City of New Bedford, a move that increases pressure on him to return the building to public use following the abrupt exit of UMass Dartmouth’s art college last summer. 

Local developer Paul Downey leased the Star Store to the public university’s College of Visual and Performing Arts for more than 20 years, during which he enjoyed a special property valuation that substantially lowered his annual tax bill.

Downey had redeveloped the former department store, a four-story building that spans half a block of downtown New Bedford, during the late 1990s through a public-private partnership. Downey was gifted the building at no cost and invested his own money to renovate it, in exchange for a long-term lease-to-own agreement with UMass Dartmouth where the university paid over $2 million in rent per year. 

The redevelopment of the Star Store brought faculty and hundreds of new students into a fading downtown each year, helping spark a revival that yielded new restaurants, bars, art studios, coffee shops and retail stores. The City of New Bedford helped support the project by limiting the Star Store’s annual property taxes to about $50,000. 

But on Oct. 31, two months after UMass Dartmouth was forced out of the building, the New Bedford assessor’s office revised its valuation of the Star Store, raising the property’s annual tax bill from about $50,000 to over $540,000. The Star Store is now assessed at $21.45 million, making it the most valuable commercial property in New Bedford, according to a database of property assessments provided by the city. 

The Star Store has remained vacant since its 22-year stint as an arts college came to a bitter end in August. Elected officials had disagreed with state property managers and UMass Dartmouth administrators over whether the state should act on an expiring option to take ownership of Star Store and, if so, how to pay for extensive renovations required under new green building codes for state-owned property.

Downey, who rejected a belated offer to take ownership of the building after the lease expired, emerged from the disagreement with permanent ownership of the Star Store and no paying tenants, displacing hundreds of art students and leaving the surrounding community in the dark about the future of a property that has long served as a cornerstone of downtown New Bedford’s growth. The Public’s Radio’s South Coast Bureau was also displaced by the Star Store’s abrupt closure. 

Downey, who has not given any public interviews about the Star Store, said through a spokesperson that he is disputing the latest tax bill. As of Friday, Downey’s holding company owed the city more than $260,000 in unpaid taxes and interest for the Star Store, a figure that could continue to rise with each quarterly tax bill. 

A spokesperson for the City of New Bedford declined to comment on the methods that went into the latest property assessment.

Several local realtors contacted by The Public’s Radio said the assessment looks like an overvaluation. 

One of them, who requested anonymity because of concerns their clients could face retribution, called the $21.45 million valuation of the Star Store by the assessor’s office “ridiculous.”

“I don’t know how they have the guts to even write that,” the realtor said. 

A comparison by The Public’s Radio found the tax assessor’s office valued the Star Store at a far higher price than other downtown properties. The DeMello International Center, a fully occupied office building larger than the Star Store, is currently assessed at $14.37 million, which itself is a significant hike over the previous year’s valuation. The other large commercial and office buildings in downtown New Bedford are all currently assessed under $5 million. In other parts of the city, active factories and large residential towers, some with more than 100 units, received lower assessments than the Star Store.

Dartmouth State Rep. Chris Markey said the DeMello International Center and the Bank of America office building at 700 Pleasant St. — assessed by the city at $4.66 million — should have been considered comparable properties when assessing the value of the Star Store.

“It’s an empty building with one real purpose now,” Markey said. “So I’m not sure if it really is worth the $21 million.”

Because of the new property valuation, Downey will now need to cover about $500,000 in new expenses every year he keeps the Star Store in the private market.

“A tax bill like that certainly impacts the viability of development. It’s prohibitive in a market like New Bedford,” said Jay Lanagan, a realtor and development consultant who’s worked on several downtown projects. “It’s probably an incentive to get the thing figured out.”

Different stakeholders have proposed a wide range of potential uses for the Star Store. New Bedford Mayor Jon Mitchell said through a spokesperson that getting UMass Dartmouth students back into the Star Store remains his “top priority” for the building. 

UMass Dartmouth Chancellor Mark Fuller said in an interview in November that he sees no viable pathway to do that. The university is already drafting designs for a small building with art studios and a gallery on its Dartmouth campus to make room for programs displaced from the Star Store.

Markey, meanwhile, has floated ideas of converting the Star Store into private housing or a shared office building and event space for local nonprofits. 

Downey himself remains silent about his plans for the Star Store.

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