For a long time, there have been hints that the long-awaited redevelopment of the Oak Ridge City Center (Mall) might begin soon.
The latest hint comes from the Oak Ridge Fire Department, which has announced:
“Starting MONDAY, JUNE 16, the OR MALL common areas will be closed to the public. Exterior doors will be locked and exits from the anchor stores will not be used, with one exception. Goody’s has to keep their mall exit as an emergency exit only temporarily. IF customers have to use the mall exit during an emergency, they will exit into a roped off area that will lead them to the exit corridor between Penney’s and Goody’s. This situation is temporary - a new exit corridor is being constructed directly from Goody’s to the existing corridor. The mall office area, security area, and anchor stores (JC Penney, Goody’s, Sears, Belks) will be the only areas open to the public….
…The demolition of the mall areas is being planned right now….”
An article and editorial in this past week’s editions of The Oak Ridger reported that Doug Janney of the city’s Industrial Development Board (IDB) had asked the owners of Oak Ridge City Center LLC if they still wanted the $5 million in development assistance promised earlier.
These articles confused some people who remember the 2002 referendum that rejected the issuance of general obligation bonds for the City Center redevelopment project, but have forgotten the events that followed. To help refresh some memories, I’ve dug into the not-so-ancient history of the city’s agreements with Oak Ridge City Center LLC (Steve Arnsdorff and partners).
In 2003, after the referendum had failed, Doug Janney of the IDB developed a plan to aid redevelopment of the mall property without the use of general obligation bonds. The IDB proposed issuing $5 million in revenue bonds, which under Tennessee law do not involve the possibility of a referendum (unlike general obligation bonds, revenue bonds would not be backed by the full faith and credit of the city).
This was to be part of an in-lieu-of-tax arrangement in which the mall property would be deeded to the IDB (basically, a paper transaction) and redeveloped by its “real” owner. Then, instead of paying property tax to the city and county, the landowner would pay the IDB an amount equal to the tax otherwise due, and the IDB would use this in-lieu-of-tax money as a revenue stream to pay off the bonds. This was later modified (based on a recommendation by Councilman Willie Golden) so that only the taxes due on improvements to the property would be pledged toward paying off the bond.
The saga was pretty thoroughly reported in the Oak Ridger. Here are links to a partial selection of the articles about it:
Describes the proposed arrangement, Aug. 15, 2003
More on the arrangement, Aug. 15, 2003
Still more on the arrangement, Aug. 18, 2003
Article on IDB approval of the arrangement, Aug. 19, 2003.
Article reports on Arnsdorff’s agreement to the plan, Aug. 21, 2003
Article about bringing Anderson County into the conversation, Sept 4, 2003
Article about Anderson County Commission approval of the deal, Sept. 8, 2003. (Interestingly, one of the county commissioners told me this was the only time the city asked county commission to approve an in-lieu-of-tax agreement on a commercial project. In other instances, it seems the city has overtaken the county property tax without asking the county’s permission.)
Briefly explains the financial aspects of the proposed deal, Oct. 7, 2003.
Extensive information on the financial and legal aspects of the deal, provided in response to questions submitted by Councilman Leonard Abbatiello (Oct. 7, 2003)
About Councilman Golden’s proposal to modify the deal to increase property tax revenues to the city and county by giving them both the tax on the land and using only tax on the improvements to pay off the bond, Oct. 9, 2003.
Richard Cook op-ed piece on the deal, Nov. 28, 2003.
Article on Council’s vote approving the deal (they approved Golden’s modified version), Dec. 2, 2003.
Article on a progress report from Arnsdorff, March 16, 2004.
Points out that the Starbucks development counted a small part of the way toward the requirement for bringing in 50,000 square feet of businesses new to Anderson County, which was one of the criteria the city had established to qualify for the proposed bonds. (May 19, 2004)
This proposal was very controversial at the time, but when compared with the current Crestpointe proposal, the safeguards for the city in this earlier scheme look extremely solid to me (for example, in the City Center deal the IDB would title to some very high-value real estate in the center of town, but in the Crestpointe deal the IDB would have title to a smaller parcel in a problematic location). Also in hindsight, it is not clear to me that this was an exceptionally attractive deal for the mall property owner (although at the time I thought it looked good from the developer’s viewpoint).
Ironically, there was almost no public discussion later in 2004 when the city gave the IDB blanket authority to grant property tax abatements for retail developments (this authority was most notoriously used for National Fitness). See http://www.ellensmith.org/forum/viewtopic.php?t=22 for comments I made at the time.
Previously I posted my views on the Crestpointe proposal. The obvious follow-up question is “What would you do instead?”
My answer is “Let’s commit to redevelopment of the City Center.”
A little history may be necessary to explain what I’m talking about…
Back in 2000 the City (with the help of consultants) developed — and City Council adopted — a conceptual master plan for the 293-acre heart of the city (roughly, the area bounded by Oak Ridge Turnpike, South Illinois Ave., and Rutgers Ave., including the Oak Ridge Mall area, Civic Center, and Oak Ridge Associated Universities campus); see the city’s website for some details. Some of the details shown in the plan maps (such as relocati
ng Recording for the Blind and the Children’s Museum of Oak Ridge) were ill-conceived and caused citizens to criticize the entire proposal, but those were details, not the main thrust of the recommendations. At the heart of the plan was a recommendation to increase the overall density of development in the city center area, while reconfiguring the area with additional roads and walkways that would draw people in to shop, visit attractions, and participate in community events. Notably, the plan recommended “de-malling” the mall (which was already moribund), putting roads and pedestrian ways through it and eliminating about 40% of the enclosed space, to convert it into a “town center” type of shopping center development. The City’s consultants had concluded that the mall was greatly overbuilt (the local market could not support the amount of shopping space it contained) and recommended this change to bring new vitality to the area.
At the time, it was understood that implementing these concepts would require a public-private partnership — because the proposal promised to benefit both the community and center-city businesses, both the city and private landowners/developers would need to share the costs. City staff and prospective developers proposed a modified version of the “de-malling” plan in 2002, but the extravagance of the plan and other issues (too numerous to review here) caused the $23.2 million bond that was proposed for the project to be defeated in a referendum. Chattanooga developer Steve Arnsdorff ultimately purchased the mall with the intention of revamping it. He has publicly stated his intentions to proceed, but he has been offered far less city financial assistance than GBT Realty is now requesting.
If in 2007 Oak Ridge is now so desperate for retail that the City would spend $10.5 million in public funds to flatten a mountain to build a shopping center (in a location that is zoned industrial and is isolated from our existing retail areas), it stands to reason that we should be willing to consider committing some public funds to bring functioning retail back to the center of the city, particularly to the site of the dead Oak Ridge Mall, by recommitting to the vision that the City embraced in the City Center Master Plan.
There is no denying that there are significant issues to overcome in bringing new retail to the center city area (not the least of which are deed restrictions imposed when Wal-Mart bought the tract where its store is located from former mall owner Crown American), but I believe these issues are not insurmountable, and I am convinced that if we do not try to resolve these issues we will never recover a functioning retail sector in our center city.
