Norwalk finally reveals proposed business terms with mall developer

Massing model of GGP mall as seen from the Northwest.

Massing model of GGP mall as seen from the Northwest.

NORWALK, Conn. – The proposed business terms between Norwalk and The SoNo Collection calls for the developer to give the city $1 million up front for “air rights” and other easements, as well as making sure Norwalk gets property tax income from the $300 million projects as soon as it is built.

Norwalk would, in the proposed agreement, for every year of the first seven years, reap 50 percent of the property taxes assessed for the mall that General Growth Properties (GGP) would build on the 95/7 site. This differs from the current terms of the Enterprise Zone that GGP inherited when it bought the site from Spinnaker Real Estate Partners, which call for no tax payments in the first two years and then a gradual increase over the next five years.

The proposal would net slightly less over the seven years but would give the city a big boost up front, Common Council Planning Committee Chairman Doug Hempstead (R-At Large) said at Wednesday’s Planning Committee meeting, where the changes to the Land Disposition Agreement for the site were finally revealed to the public after being negotiated in secret for months.

GGP would also pay a one-time $550,000 contribution to the “circulator” that’s been mentioned for the area, described as a trolley in some conversations. It would pay $1.022 million for the easements – the right to build under West Avenue, over North Water Street and on part of the city-owned Crescent Street – within 30 days of getting Zoning approval of the project, in the drafted amendment to the LDA.

GGP could, within 20 months of the start of construction, back out of building a hotel as part of the development and opt for one of the other uses permitted in the LDA, such as office space, in the proposal.

GGP would also guarantee that it would not challenge its assessment as a “Class A” mall for 10 years, which Attorney Eric Bernheim of Halloran & Sage said was somewhat a moot point as GGP is also agreeing to keep its high quality anchor stores for at least 15 years.

Hard to argue it’s not a Class A mall if Nordstrom and Bloomingdale’s are still there, he said.

The Enterprise Zone for the property was extended to Spinnaker 5 or 6 years ago, Councilman Rich Bonenfant (R-At Large) said.

Under those terms, GGP’s real estate taxes would be abated for the first two years. In its third year that abatement would be cut in half, and GGP would pay 50 percent of its tax assessment. It would pay 10 percent more every year after that, so it would pay 60 percent of its assessment in year four, 70 percent in year five, and so on, until it’s paying its entire obligation in year eight.

Hempstead said it took a long time to negotiate the proposed terms, the 50 percent every year. He called it a “good compromise.”

“Considering what is going on in our school system – I see a bunch of emails going around, ‘We need more classrooms, etc.’ – this gets the money more upfront,” Hempstead said. “In totality it’s a little less money than we’d get the other way but we are getting present value today for this, it gets it into the city’s coffers now.”

“I am just disappointed that we didn’t do it a little bit better on this,” Bonenfant said. “It was never intended for this developer, it was intended for the last developer, he turned around and flipped it and used the asset to increase the property value he had, and got paid handsomely for it, for something that we didn’t intend for these people.”

Bernheim, who was hired by the city just to negotiate with GGP, said it wasn’t possible to take the Enterprise Zone benefits from GGP, under state statutes.

“It was a tough negotiation, they gave a lot, we gave a lot also,” Bernheim said.

The Enterprise Zone is local, not eligible for state reimbursement, Bonenfant said.

“It is completely locally funded, but I don’t think it’s correct to say that you can just take away everything and not give them anything,” Bernheim said.

Councilman Bruce Kimmel (D-At Large) called it a fair compromise, “close to a wash.”

“I am OK with that,” Kimmel said.

The councilman went on to dissect the challenges in trying to see that local workers get hired to build the mall, calling the complications a “dilemma.”

This was in reference to the amendment that tells GGP to use its “best efforts” to have at least 10 percent of the work done by Norwalk residents. Not so easy to do – the necessary skills may not be found in Norwalk, or you might find a Stratford company that has its own workforce, he said, as two examples of the challenges.

Hempstead agreed that South Norwalk needs to benefit from the mall’s construction.

The committee chairman set about thanking people, “Some of the individuals who spent a lot of extra meetings in the middle of the day, on phones over the weekend, from this side, myself and others.”

There was “almost a fisticuff over the phone,” he said.

“There are some items in here that they are not happy that they had to give,” Hempstead said.

Changes to the Concept Master Site Plan were also discussed. That will be the topic of another NoN story.

A public hearing is expected later this month, just to get input from Norwalkers although there is no legal reason to do so, Hempstead said. He tentatively set a date for another Joint Committee meeting, but needed to check with the Redevelopment Agency to see if it is feasible.

One comment

Michael McGuire September 3, 2015 at 11:53 am

Sounds like a reasonable deal – $1.00 dollar today is worth more than $1.00 received in 5 years. Either way, with locked in long-term revenues to the Grand List its a net benefit to Norwalk and will enhance our bond rating.

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