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Leaders accuse owner of 2 Pittsburgh-area malls of running down his properties

Facing pressure from online shopping, it's been a tough time for malls, which need a fresh round of investment in order to survive. 

But some Pittsburgh-area towns accuse one mall owner of deliberately running down his properties, not doing routine maintenance, not paying taxes or utility bills and ignoring citations and fines.

The Crown Center Mall in Washington County is a near-empty shell. Since its purchase a decade ago by New York developer Michael Kohan, it's been in steady decline. Today, you could shoot a cannonball down its hallways and not hit a soul.

"It went from a vibrant mall with about 90 percent capacity to a vacant mall with 90 percent vacancy," said North Franklin Township supervisor Bob Sabot. 

Times are tough for malls, but Sabot blames the tenant exodus on the Kohan Retail Investment Group, which he says has not invested a dime in the property and has let it fall into disrepair while being chronically delinquent on taxes and utilities.

When the Bon-Ton and the movie theater filled with water from a broken main, Sabot says Kohan declined to fix it and the township had to step in and do the job. To date, Kohan has amassed close to $200,000 in unpaid code enforcement fines, but Sabot says he doesn't return phone calls or take any action.

"To this day, not figured out why, but he seems to do it everywhere," Sabot said. 

Crown Center fits a pattern of Kohan-owned malls across the country. He currently owns 48 malls and faces numerous lawsuits in a half dozen states for unpaid taxes and utilities and unsafe conditions. There's even a wrongful death suit from the family of a stabbing victim in Ohio who said the mall there had no security or operating surveillance cameras. The host towns say Kohan buys the properties at a discount and runs them into the ground through disinvestment.

Kohan bought the Mall at Robinson three years ago for $46 million, far below its assessed value of $88 million, and resulting in a $200,000 loss in property taxes for Robinson Township. Since then, the property appears to be headed down that same road. Tenants say the grass hadn't been cut all summer, the escalators haven't worked since February and buckets collect water from leaking roofs.

Foot traffic has slowed to a trickle as a dozen tenants have left and others privately tell KDKA-TV they won't be renewing their leases. Robinson Township has begun citing Kohan in district court for code violations and says he hasn't paid for township-provided security. 

"We noticed they did not pay us for three months, which equates to $24,000. So we told mall management that we can't provide the service until we are made whole, and to this day we still have not been paid," said Robinson Township manager Frank Piccolino. 

KDKA-TV called Kohan, who didn't respond, though soon after, his company did cut the grass.

Mall management also declined to be interviewed but later sent KDKA-TV's Andy Sheehan a text, referring only to the other problems at Robinson. "We're navigating these operational challenges and are near resolution," the text read. But what remains unclear is why Kohan operates his properties in this manner.

A Kohan-owned mall in Iowa went dark for more than a year for non-payment of utility bills, but Kohan recently made a $6 million profit selling it to a new owner. Duquesne University marketing professor Audrey Guskey says the company strategy of disinvestment sometimes pays off.

"They'll buy a particular retail investment property and not invest anything in it, not pay taxes, not pay any of the utilities, and as a result, they run it down and so they end up making money, believe it or not, by reselling it — sometimes for double the price that they paid," Guskey said. 

Happily for North Franklin Township, Kohan recently sold Crown Center to new owners who are promising to bring it up to shape with $40 million in reinvestment. And Robinson Township says they're hoping for a similar outcome before its mall declines any further.

"That would be nice, yeah, or at least come to the table with some type of plan of action of what you're going to do, or some type of investment," Piccolino said. 

But Sabot has a warning for any town with a mall: try to block any sale to Kohan.

"Because he is going to take their mall and he is going to do this to it. That's not me predicting it. The writing's on the wall. You see it wherever he owns a mall," Sabot said. 

With tens of millions of dollars of investment, the Washington Crown Center Mall should be transformed, but towns like Robinson have not been so lucky. They continue to fight until he divests. 

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