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Defining Retail Down for GGP and The SoNo Collection

Send signed letters to [email protected]

This is an open letter to the Common Council members and the Redevelopment Agency, sent as public comment:

Previously I wrote to you to speak to the LDA/URP amendments with respect to removing the hotel from the plan after a long string of other concessions by the city. Now I want to focus on the other change being proposed—the change in the definition of “Mall Classification.”

 
Here is the proposed change:
Current:
It is the understanding of the parties that the Redeveloper shall maintain anchors of high quality (i.e., Bloomingdales, Nordstrom’s, Saks Fifth Avenue, Neiman-Marcus, Lord & Taylor, Macy’s and Von Maur) for a minimum of fifteen (15) years. The Redeveloper agrees that for a period of ten (10) years after issuance of a final certificate of occupancy, it shall not dispute the City tax assessor from considering the Project at a minimum as a Class A Mall for assessment purposes. A “Class A Mall” shall be defined as the dominant retail property in a metropolitan market, with two or more major anchors, and at least $425 per square foot in retail sales.”

New:
It is the understanding of the parties that the Redeveloper shall maintain anchors of high quality, which includes high quality tenants located in regional shopping centers further defined as Class A Malls herein, including but not limited to high-end department stores, high-end entertainment concepts, high-end fitness centers, high-end or specialty grocers and high-end furniture stores, for a minimum of fifteen (15) years. The Redeveloper agrees that for a period of ten (10) years after issuance of a final certificate of occupancy, it shall not dispute the City tax assessor from considering the Project at a minimum as a Class A Mall for assessment purposes. A “Class A Mall” shall be defined as the dominant retail property in a metropolitan market, with two or more major anchors, and at least $425 per square foot in retail sales.”

 
Since all of the “anchors of high quality” in the original definition tend to be in A or above class malls earning in excess of $500 per square foot, the muddying of the definition of what a Class A mall is should be eliminated by trying to qualify what the anchors can be. The industry already has a clear standard on what a Class A mall is. There is a simple chart and explanation in this article: https://www.ten-x.com/company/blog/for-elite-class-a-malls-its-good-to-be-king/
 
However, the definition of what constitutes “retail” will come into play. High end entertainment concepts in malls can be things like bowling alleys, laser tag, aquariums, theme-park type places (Snoopy Camp, Legoland), racetracks, etc. (See: http://eatertainmentvenues.com/retail-tainment.pdf
 
Fitness centers and theatres are also not “retail.” By embedding these possibilities into the LDA for future anchors, we are permitting the retail square footage in the mall to change in the future from what is in the current agreement. This has real consequences in a city that hosts multiple “fitness center” chains anchoring other retail strips along Connecticut, Westport and Main Avenues, as well as multiple small theatre chains (including those right in SONO).
 
Entertainment concepts that compete with activities in other area of the city could also cannibalize other areas of the city. (Indoor driving range? Aquarium? Bowling alley?)
 
High-end or specialty grocery is redundant in a city that hosts the original regionally-drawing “concept” grocery store – Stew Leonard’s. Why would anybody from south of Darien or north of Westport drive past multiple Whole Foods, Fairways, Mrs. Greens or Trader Joe’s, to get to another specialty grocery store in a mall?
 
Norwalk also needs to learn the lessons from past failures and thoroughly review this amendment asking the “what if” questions?
 
For example, what if, after receiving the certificate of occupancy, GGP chooses to sell the development to another mall operator? Will the guarantee to not challenge the Class A mall assessment bind the next owner?
 
What if one of the current anchors exercises an out in their contract with GGP and GGP cannot replace the anchor with a tenant that helps keep the mall’s retail sales revenues at the appropriate threshold? Will GGP be back to ask us to amend the agreement to lower the class of the mall voluntarily?
 
What if the occupancy rate of the mall lower the retail sales per square foot benchmark, even though the current anchors remain in place? Will GGP be back to ask us to amend the agreement to lower the class of the mall voluntarily?
 
GGP gambled, when it bought this property, that it could convince Norwalk to let them build a mall (whether all retail, or with some concessions). At what point does Norwalk stop being responsible for modifying its own plans for its downtown to ensure that that gamble pays off?
 
Debora Goldstein

12 comments

Sue Haynie April 28, 2017 at 6:25 am

Successful malls are reinventing themselves. Adding the language ‘high-end entertainment concepts, high-end fitness centers, high-end or specialty grocers and high-end furniture stores’ allows for that.

Nora K King April 28, 2017 at 8:38 am

Deb,

Why do you think that Norwalk doesn’t want the mall or retail? Your letter makes it seem that Norwalk caved to a developer here. That isn’t the case at all. I see no gamble to the mall at all but pretty much a sure bet!

Variances, permits and changes to zoning are a natural flow to growing, scaling and changing cities.

What Norwalk needs to do is to streamline their processes and moving things forward. The shovels need to go in the ground and this great addition to Norwalk needs to move forward.

V April 28, 2017 at 9:40 am

Deb-
Once again you are spot on. These proponents of this so called mall have been hood winked by prince harry. This will go down as one of the biggest middle fingers to Norwalk tax payers as there ever has been.

Adolph Neaderland April 28, 2017 at 10:57 am

Debora is on target with the “what if” question.

Had “what if” been applied before the big box avalanche, we would not be currently faced with their unintended consequences.

Adolph Neaderland

Debora Goldstein April 28, 2017 at 11:13 am

@Nora,

I noticed you did not answer my questions from yesterday, but as an elected official, speaking to an appointed one, I believe our dialogue (as long as it remains respectful and free of name-calling) will benefit the public, so I will answer yours.

Q: Why do you think that Norwalk doesn’t want the mall or retail? A: I never said Norwalk doesn’t want retail. There are clearly many among our electeds and appointeds who want the mall (or more probably the $4.7 mm a year in property taxes a year and the construction jobs that will come during that phase of the project). The short-term horizon and political nature of our governing bodies means that there will be a lot of crowing about how good this project is for the city. But, there is ample evidence that the city at large does not want a mall. Starting with the LDA and URP as modified over a thirty-year time frame. Never once in all of that time did anybody suggest modifying those documents to include pure retail on that site (never mind a mall). Our own POCD (which a Planning Commissioner and former Zoning Commissioner like yourself should know almost by heart) never uses the word mall and makes dozens of reference to mixed use, balancing retail and other uses, etc. The POCD is a product of REAL community outreach and a synthesis of the communities larger desires for Norwalk, as well as making reference to dozens more studies and documents that speak to best uses, desired changes for the city. You know when the mall was introduced to the economic development plan for the city? AFTER the proposal was made–a rather cynical effort to cheerlead for a developer who was proposing a plan that was not in keeping with the City’s own plans and desires for the area. Further evidence is the 18 month (expedited at the developer’s request to meet a 2018 opening date that has since slipped to 2019) among the CC and Redevelopment and all of the attendant public meetings. Wouldn’t that process have gone swimmingly fast if we’d just approved 100% retail up-front? We didn’t. Why? Because the City and Redevelopment, as well as members of the public who thought we were getting all kinds of amenities (a circulator run by GGP, public event space, training programs, police substation, etc) STILL believed that mixed use was the right choice for the space. GGP conceded to the City’s conditions by selecting (out of five other options) a hotel component.

Q: Your letter makes it seem that Norwalk caved to a developer here. That isn’t the case at all. A. I firmly disagree. Sum up negotiations over the long term: GGP buys lot with mixed use restrictions and plum enterprise zone credits attached. Asks City to put a mall there. City says yes, but you must have mixed use there. GGP says okay, we’ll do three uses, but only if you agree that public realm can be counted as a mixed use. City says okay. GGP agrees that a limited service hotel is the only viable third use among the six remaining choices. City say okay–done deal. GGP comes back two years later, one year behind schedule and asks us to remove the hotel. End result: GGP gets exactly what it wanted in the first place. If that’s not a cave-in, I don’t know what is.

Q: I see no gamble to the mall at all but pretty much a sure bet! A: And that comment, from an appointed official, is the problem in a nutshell. How many times are we going to negotiate a deal with the assumption that everything will work as advertised? Our job, as representatives of the people are to ensure that we also take into account what happens when it doesn’t… otherwise we wind up with situations like POKO. We’ve bought into the upside, but we are not making adequate arrangements for a downside.

Q: Variances, permits and changes to zoning are a natural flow to growing, scaling and changing cities. A. These are neither variances nor changes to zoning and permits have nothing to do with the amendment of the LDA and URP to remove the last qualified mixed use component.

For the record, the amended URP from 2015 says this: The general objectives identified by the original Plan remain valid as today’s goals. They are: Create development opportunities for an appropriate mix of uses, including office, retail, residential, hotel and non-profit institutions. None of those are public realm.)

I’m going to point out AGAIN, that Norwalk need to take a good look at the feasibility report supplied with the proposal with respect to the hotel. The assumptions in that report contradict what GGP originally proposed and thought was viable for the site, including making the representation that the FD Rich hotel would be a problem. They are designed to make the numbers look as bad as possible. GGP always maintained that a viable hotel would be a limited service one, and it knew about the FD Rich project at the time.

All of the rest of the numbers appear to be unchanged, and unless GGP has supplied our elected/appointed officials with “before and after” numbers for the whole project (not just property tax revenue) in a way that the public was not permmitted to see, then they cannot know whether the property tax buyout is fair or not.

And that’s yesterday’s discussion. Today, I am simply pointing out that GGP’s opening position is that only retail works for this site, but they are now proposing a change that incorporates into the definition of retail (under the guise of redefining what a Class A mall is) that includes the right to make one or both of its “tenants of high quality” a use OTHER THAN RETAIL. And that other than retail use is NOT ONE OF THE MIXED USE COMPONENTS required by the URP or LDA EITHER.

So now we are talking about (after 15 years, or sooner if one of the retail anchors pulls out or fails before then) less than the 960,000 gross square feet of floor area plus whatever replaces the 85,000 sq ft hotel in retail and some very large portion of that being converted to yet another use without further scrutiny.

I think the contract should mean what it says and say what it means. If GGP wants to introduce another component, it should define the square footage that can be “non-retail commercial” (and add that caveat that it still could be retail, and will be retail for the first 15 years). That is really what it is asking for.

==========================================================

So, Nora, I will ask you if you will also answer mine now? You made reference to a spreadsheet that shows we have lost millions of dollars due to our commercial property not being assessed correctly.

And I asked the following:

Nora, would you kindly share your spreadsheet with the rest of the citizenry via NON? I just reached out to the city to try to figure out a way to assemble this information. Someone else was speculating that our commercial real estate is chronically undervalued and I thought I’d try to help get the question answered. It sure would help if various well-intended citizens weren’t duplicating efforts.

It would also help for all of the “experts” in real estate to explain to the rest of us how the introduction of a massive new retail center fixes the undervaluation of commercial property elsewhere in Norwalk. Aren’t the odds in favor of this project being undervalued and under-collected too?

Especially since GGP has a history of challenging its assessments? A history of rewriting its own agreements with the city?

Donna April 28, 2017 at 3:17 pm

@Debora Goldstein continues to present an excellent case against revising the LDA. When @Nora King says, “the shovels need to go in the ground and this great addition to Norwalk needs to move forward,” I wonder what her motives are. As a former member of the zoning commission, it is disheartening that Ms. King has so little regard for the plan of development or for the LDA, which ever and always stipulated MIXED USE for the Reed Putnam site. Why now do so many city officials, former officials and “wannabes” champion this project as an unequivocal win for Norwalk? If 100% retails was always a win, why did the LDA ever stipulate mixed use in the first place?

Stamford has been able to quite recently develop Harbor Point into a successful mixed use area. Are Norwalk City leaders really incapable of doing likewise? Granting endless concessions to the developer isn’t the way to go here.

Debora Goldstein April 28, 2017 at 4:02 pm

Nora’s motives are not in question here. She works hard as a volunteer and does what she believes is right for the city. We just happen to disagree on what that is.

Patrick Cooper April 28, 2017 at 5:46 pm

First off – thank you Debora Goldstein.

Ok, so I’m a home owner and tax payer who lives in Norwalk. Since 1994. I’ve spent most of my life working for various consumer product companies building brands, and driving sales volume via every channel of distribution. I know virtually all the players.

Maybe two years ago, I voiced my dissent (in NoN) to this project based on my vision of where the retail business sector was headed, given several mega-trends, and the overall move towards disintermediation. I also have some personal philosophies regarding the future of economies largely based on consumption, the irrational drive for growth without planning, and the value of land in Fairfield County (which I was surprised to see whole parts in articulate editorials written by Mr. Gordon Tully). So, my feelings are not impulsive, without insights or expertise, and are far more complex than I intend to state here. In summary, here is why I have been against this mall, and why I remain so.

Location/Location/Location. This specific parcel sits at the epicenter of the single worst traffic bottleneck in all New England. Read that again. The additional traffic brought by this kind of development (is it 11 cars per minute, average?), will create a significant, pervasive negative quality of life issue for those who live in the host city. The feature (retail stores) and the benefit (shopping) are already beyond saturation within a 30-minute diameter. The store names are irrelevant – there is no predictability who will survive in the near term. The rate of consolidation that Retail is experiencing is a result of many factors, but the primary drivers are not relenting, they are increasing and expanding.

The area has other needs, and the parcel is so unique, that the disposition should follow a plan (LDA) that provides for the maximum benefit for the city, not our neighbors. In short – we don’t need it, and by adding it – it’s quite likely we will overwhelm the infrastructure. We are taking an unnecessary risk with an irreplaceable asset. We can and should do better. Call me a naysayer.

BUT. I am not naïve enough to think this train will stop – because there are too many pressures to get something done. GCP – exceptionally well prepared by mercenaries Cafero & Adams, knows to push during an election year – especially in a city of 85,000 (plus about 20,000 that don’t make the census) that is as politically mature as Mayberry. All I can encourage our CC to do is remember – this is business. It’s not personal. We hold the cards. Be smart, and get the max. If they threaten to walk away – let them. It must be right for Norwalk.

Donna April 28, 2017 at 9:54 pm

Why are so many willing to throw out the baby with the bathwater? Malls never become mixed use after the fact. They are 100% retail or they fold and become ghost malls. When did good enough become good enough for this city? There was a whisper of a vision that stipulated mixed use for this parcel. And the vision has slipped away. No housing. No commerical real estate. No hotel. No trolley. I’m not certain a fallow field would do less for Norwalk than an abandoned mall in 15 years. And 15 years is all GGP is offering.

Debora Goldstein April 29, 2017 at 3:18 pm

@Patrick Cooper,

You’re welcome.

Everyone else,

Note that the Planning Commission of the Common Council is meeting on May 4th at 7pm in room 231 to discuss the LDA amendment. You are encouraged to attend and observe. Brave souls may even speak for 3 minutes during public participation–for or against.

Debora Goldstein May 9, 2017 at 3:49 pm

For those interest in the amendment(s) to the LDA/URP, please note that there is a public hearing being held by the planning committee today May 9 at 6pm.

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