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Norwalk Council set to consider GGP’s hotel-less mall next week

Sally Marsico speaks to Norwalk Common Council members Monday in City Hall, as Attorney William Hennessy, representing GGP, listens.

NORWALK, Conn. – Opinions from the public Monday were weighted against building The SoNo Collection, as currently desired by GGP.

“The presence of a hotel on the city’s skyline speaks volumes. It’s welcoming and it speaks to the city’s success… what would compensate the city for the loss of this status symbol?” Sally Marsico asked members of the Common Council Planning Committee at the latest public hearing on the topic.

While five of nine speakers urged Committee members not to go ahead with the agreement that’s been described to the public, the proposal was advanced to the full Council next week for what has been described as “a vote.”

Language specifics have been amended, but it’s still basically the same deal: GGP would be allowed to build The SoNo Collection without a hotel and would pay Norwalk an additional $3.5 million for the privilege.

The debate among public speakers included analogies to a marriage as well as colorful language from one opponent.

“The city needs a proper negotiator in this. The mayor is not the man. Period. Subject closed. The other thing is, what is fall back plan if this thing goes down the crapper?” said a bearded man who identified himself as Lou Ruffman.

The senior said he lives at 2 Belden Ave. That’s the post office.

Marsico has previously spoken in favor of the mall, calling herself a retiree from the shopping industry. But while she was enthused in the summer of 2014, she has since urged the city to get a consultant.

“There is something bothering me a little bit about this request,” she said Monday, going on to describe conversations with hospitality industry higher ups.

“I am not getting the feeling that there are deals that cannot be made,” she said. “…A real estate executive at a hotel company, one of the largest, told me that the hospitality industry is quite healthy.”

“A hotel will mitigate some of the negative impact the retail mall will have on the South Norwalk business district,” Marsico said. “What would compensate the city for the loss of additional revenue to its locally-owned businesses in SoNo in the absence of hotel guests (or office workers) if GGP’s request is met?”

Norwalk’s tourism potential will be shattered without the visibility of a hotel from Interstate 95, she said, going on to ask, “What happened?”

Donna Smirniotopoulos first addressed GGP’s request to change the legal language regarding Class A anchor stores.

“I feel like you can call it ‘Anchors Away’ because we’re not really sure what we’re going to be getting,” Smirniotopoulos said.

The Land Disposition Agreement (LDA) is like a marriage between the city and GGP, and a couple of years into the marriage the partner is calling the relationship infeasible and asking for a change, she said.

“You can find productive ways to work with them… I don’t know if $3.5 million is enough to cover for the loss of the hotel,” Smirniotopoulos said.

“It’s not like saying, ‘My marriage is a problem’…. it’s like one spouse coming home and saying, ‘I have cancer,’” said Michael McGuire, who appraises commercial real estate.

“A hotel is feasible if you scrap the mall but you have to scrap the mall,” McGuire said. “Because if you’re building on top of Bloomingdale’s, your costs go exponential.”

“The purpose of an Enterprise Zone is to stimulate economic growth,” McGuire said. “This is economic growth, the best we are going to get. I don’t think we should be messing around and getting close to another Concert Hall crisis issue.”

It’s a specific retail market that is being slammed by Internet sales, McGuire said, specifying big box stores.

“There is no way in hell that a mall anchored by a Nordstorm and Bloomingdale’s is going out of business,” he said. “…The issue won’t be the mall going down, the issue will be Connecticut going down. High end malls do very, very, very, and let me repeat, very well. They are the darling of the investment world. They are gold.”

Also speaking in favor of GGP’s deal were Wini Mola, Patsy Brescia and Sue Haynie. Diane Lauricella asked the Committee to postpone the vote and try to get a better deal via an outside negotiator, while Deb Goldstein said she was very frustrated because she had nothing new to say – because new information was not made public.

Meetings have transpired and negotiations continue in private, with new legal language in front of the Committee but not the public, she said.

She questioned GGP’s claim that the hotel is infeasible, referring to studies down two years ago for a full-service hotel but not a limited service hotel.

The fact is the hotel was designed the way it was because GGP’s anchors demanded that the mall be laid out a certain way, she said.

“That is not on Norwalk,” Goldstein said. “Most commercial operators have to be held responsible for their own planning and their own decisions. These guys are no different.”

The Council has been told that it can’t say no at every step in the process, she said.

Council member Tom Livingston (D-District E) began the Committee discussion with some pointed questions about language revisions agreed to by GGP in discussions with Attorney Eric Bernheim, special counsel to the city.

“You took out first class and made it high end,” Livingston said to GGP. “…There has to be (a reason) or you wouldn’t word it this way.”

“It sticks out like a sore thumb so we have to ask,” Council member Bruce Kimmel (D-At Large) said.

Attorney William Hennessey, representing GGP, said he wasn’t sure, and eventually Bernheim said that he thought the terms to be basically the same, so hadn’t thought there to be an issue.

The Committee unanimously voted to amend the language to make it consistently say “high end.”

GGP’s proposed new classification opens up the possibility of a high-end grocery store as an anchor, should Nordstrom or Bloomingdale’s either pull out or lose their Class A status.

Council member Faye Bowman (D-District B) asked for examples of high end grocery stores, and GGP Vice President Doug Adams named Wegmans or an upscale Whole Foods.

Livingston asked for a response to Goldstein’s comments about the type of hotel.

A limited service hotel has a “very tight range of revenues which is lower than a full-service hotel,” but the construction costs are basically the same, Adams said.

Building a tower over Bloomingdale’s is expensive, making the profit margins for a hotel too low, Adams has said.

“It seems as if you approached the construction of the hotel as if you were building a hotel from the ground up,” Kimmel said. “However, since push came to shove a lightbulb went off. … Did you just not anticipate the additional cost?”

“We underestimated the cost of the structured parking associated with the hotel that we have to build because of our anchor requirements as well as zoning,” Adams said. “… It’s a combination of things. No one thing was the straw that broke the camel’s back but it was a lot more expensive than we thought. We agreed to it; the easiest way for us to get our project built is to build what was approved. We would not be here if we could avoid it. We just cannot attract the capital to build the hotel.”

GGP has paid for its foundation permit and the $1.2 million for the easement, Bernheim said, mentioning that technically it’s late and that would be grounds for calling GGP in violation of the LDA.

“That (easement) originally covered the tunnel that was proposed and the building over North Water,” Adams said. “We are not building the tunnel but we have not required that the easement area be reduced and therefore the price be reduced.”

Bowman said that District B members had expected that GGP’s $3.5 million would go to South Norwalk but language specifying that was being taken out of the LDA. She was therefore abstaining, she said.

“The money has to go into the general fund,” Committee Chairman John Kydes (D-District C) said.

The Council will decide where it goes, Bernheim said.

“I agree with you, it should be spent there but we shouldn’t have anything with GGP telling us how to do it,” Livingston said.

Council member Shannon O’Toole Giandurco (R-District D) asked if GGP was ready to pull a building permit.

“If we stay on our schedule, that has been requested of us, are you on schedule for everything that needs to be done?” she asked.

“We are going to begin excavation,” Adams said. “I mean, some of the waterline relocation work has already begun. Excavation followed by foundation. The permit set for the full core and shell has been and is in review with the city’s building permit, so we can continue along while that gets finalized with any comments that come out. So, we have no other contingencies on our side and we are on schedule.”

GGP LDA revision 20170516

Michael McGuire, left, speaks to Norwalk Common Council members Monday in City Hall. Listening at right are members of GGP’s team.

8 comments

Missy Conrad May 16, 2017 at 9:59 am

Any money coming from the change to the LDA, & it should be more than $3.5 million, should go for $35-65 Housing that would be shared in small, 2-3 units around our city (Mayor Rilling has received a report on this from our Fair Housing Director & our local NAACP’s person who follows Housing.)
Originally, that was a neighborhood with many black residents, but the land was seized by eminent domain. Recently, an article in the Hour newspaper noted that the most calls to the 211 Helpline were for housing.
In the May 1, 2015, New York Times, N.D.B. Connolly, Asst Prof of History at Johns Hopkins University & author of “A World More Concrete: Real Estate & the Remaking of Jim Crow South Florida,” wrote: “Slavery was not so much a labor system as it was a property regime, with slaves serving not just as workers, but as commodities. Back in the day, people routinely borrowed against other human beings. They took out mortgages on them.”…”Now housing & commercial real estate have come to occupy the heart of America’s property regime, replacing slavery. And, damage to real estate, far more than damage to ostensibly free black people, tends to evoke swift responses from the state. What we do not prosecute nearly well enough, however, is the daily assault on black people’s lives through the slow, willful destruction of real estate within black communities.”
Please advocate for the GGP $ to go for $35-65 Housing!

Donna May 16, 2017 at 1:02 pm

The purpose of last night’s meeting was to solicit public input in advance of a vote by the Planning Committee. With the exception of Faye Bowman, however, it appeared that many minds were made up before the public even walked into the room. When Mr. Bernheim described the in-house analysis of the 3.5 million compensation for the loss of the hotel, I felt like I was listening to a GGP rep instead of a paid Norwalk employee. After a while, it was hard to tell whose side anyone was on, including members of the “public” who appeared to be speaking on behalf of the developer rather than the city. I’m glad Mike McGuire corrected my analysis of the requested change to the LDA as less of a martial problem than a cancer. Usually with cancer, though, in order to survive you cut out the offending parts and blast the rest with poison. Norwalk uses the novel approach of going into business with cancer. Ms. Lauricella made a brave suggestion that the CC and Planning Committee bring on a professional negotiator to give Norwalk the best chance of survival. In cancer treatment it’s called getting a second opinion.

Sadly, very few of the concerns raised by the public were addressed by the planning committee, especially the suggestion that the CC owes it to the citizens of Norwalk to negotiate a better deal and one that hews more closely to the intent of the original LDA. To the extent that GGP needs the CC to approve the change in the LDA and needs other approvals in order to proceed, it is completely false to suggest that this is NOT a public-private partnership. GGP needs approval from the CC. And the CC needs approval from their constitutents. Negotiating for the best possible deal is not equivalent to kicking the developer out the door.

Bill Nightingale, Jr May 16, 2017 at 2:05 pm

Missy Conrad

Sorry but I disagree. There is no reason that the “fee” for dropping the hotel should be earmarked for anything but the general budget funds of the city of Norwalk. Similarly, property tax revenue (whatever is left after the enterprise zone tax abatement) should also go to the general budget pool.

The benefits of this project should be claimed by any particular special interest group.

Donna May 16, 2017 at 5:55 pm

There is a loss of revenue associated with the loss of the hotel that is not limited to property taxes. Hotel guests would have been within walking distance of South Norwalk shops and restaurants. GGP has offered no compensation for these losses. And they are real losses, all in South Norwalk. As a resident of this district, I’m inclined to believe that South Norwalk should receive some direct benefits from the 3.5 million dollar kickback. GGP themselves suggested that the money be used to benefit the surrounding community. This is why I have suggested–again last night–that GGP include additional community enhancements as part of their project instead of paying the City for the loss of tax revenue from the hotel. My suggestion was not addressed last night by anyone on the planning committee. But I’m convinced that GGP could make better use of that 3.5 million, with tangible results for South Norwalk. Booting that money to the general fund will not have the same net positive impact on the city as a whole in my opinion. A hotel will bring patrons to South Norwalk, and long empty commerical and retail spaces may find tenants, bringing business and tax revenue to the City. The change to the LDA that GGP wants and that the planning committee seems to want to give them doesn’t return back to South Norwalk what the loss of the hotel has taken away.

Debora Goldstein May 18, 2017 at 12:29 pm

The public should know that the Planning Commission met the other night to review the agreement changes and approved them, as well. Admittedly their hands were tied because theirs is to be only a recommendation, and they could not consider, within the scope of planning, the economics of the proposed compensation.

Danny May 19, 2017 at 9:43 am

Did anyone see Channel 8 WTNH’s story on malls, that aired 5/18/2017 at 5:00PM? I almost fell over!

HUGE story! @Nancy, you might want to find it and post it! They showed the statistics on the failing of concept of malls, what developers are trying to do to revitalize them, etc.

And here we are, opening up a mall in Norwalk. Yikes!

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NancyOnNorwwalk.com was conceived as the place to go for Norwalk residents to get the real, unvarnished story about what is going on in and around their city. NancyOnNorwalk does not intend to be a print newspaper online; rather, it exists to pull the curtain back and shine a spotlight on how Norwalk is run and what is happening regarding issues that have an impact on taxpayers’ pocketbooks and safety. As an independent site, NancyOnNorwalk’s first and only allegiance is to the reader.

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Nancy came to Norwalk in September 2010 and, after reporting on Norwalk for two years for another company, resigned to begin Nancy On Norwalk so she engage in journalism the way it was meant to be done. She is married to career journalist Mark Chapman, has a son, Eric (the artist and web designer who built this website), and two cats – a middle-aged lady and a young hottie who are learning how to peacefully co-exist.