Correction, 7:31 p.m.: GGP originally said construction would begin in 2015.
NORWALK, Conn. – Norwalk could be figuring out a correct economic metric to value to its loss of a hotel right off Interstate 95, Deb Goldstein said.
GGP really could walk and abandon its site if the numbers don’t work, Common Council member Michael Corsello (D-At Large) said, in response to one of Goldstein’s letters.
These opposing ideas collide Tuesday as the Council takes on the proposal to allow GGP to build The SoNo Collection without a hotel as a mixed-use component, as an action item with a probable vote. The deal, as negotiated, includes a $3.5 million payment to the city and a change to the definition of “Class A anchor,” diversifying it beyond a Nordstrom or Bloomingdale’s, though both are said to have 20-year leases with options for 60 years beyond that.
The Redevelopment Agency will then pick up the ball, with two public hearings – both scheduled for 7 p.m. Wednesday.
GGP has said it was struggling to get a hotel operator for its project, and the death knell really came when F.D. Rich began construction of a hotel on South Main Street.
Some say that the city should get more than $3.5 million from GGP. Others say take the money, make sure it goes to a good cause and get the mall built.
“We’re going to get $9.7 million,” Council member Eloisa Melendez (D-District A) said Monday as she left the Democratic caucus – a joke.
“Stay tuned,” Council President John Igneri (D-District E) said, declining to comment further.
Although many connect the proposed $3.5 million to lost property taxes, that was not in the original press release that announced the deal.
“The $3.5 million that the city would receive if the council approves this item tomorrow night was based on many different factors, including the lost tax revenue from the hotel,” Majority Leader John Kydes (D-District C) said in an email.
The Council’s big vote comes a scant six weeks after the mayor’s office announced that the city and the Redevelopment Agency had reached an agreement with GGP, as described above. “Agreement” may not have been the right word, as both the Common Council and the Redevelopment Agency have to approve the deal. But there’s a rush – GGP’s contracts with its anchors call for an October 2019 opening, and the company is seeking accelerated approvals to meet its deadline.
“It’s a very aggressive modification schedule that the city and the mayor’s office have been pushing to try to accommodate (GGP),” Attorney Eric Bernheim, special counsel to the city, said recently to the Zoning Commission.
Redevelopment will have its hearings on May 23 and then vote on May 30, he said. The Zoning Commission will have a public hearing on June 8, he said.
Norwalk is in “the homestretch of an irreversible decision to alter the LDA (Land Disposition Agreement) and the URP (Urban Renewal Plan) for the Reed Putnam sites solely for the purpose of maximizing the benefit of the project for GGP, without due consideration for maximizing the value of the project for the benefit of the residents, businesses and public resources of the City of Norwalk,” Goldstein, a Third Taxing District Commissioner, said in her latest email to the Council and Redevelopment.
The packet for Wednesday’s Redevelopment Agency meeting offers other views.
“I am generally in support of the mall,” Brad Hall wrote. “I know many Norwalk residents that will shop in the high end retail establishments. I am also not overly concerned with the lack of a hotel. I would rather we have one thriving hotel than two floundering.”
News reports say that discount- and high-end malls are thriving, Hall said.
“If GGP is willing to invest their money, they must believe in the location,” Hall wrote. “I do worry about the mall going dark in 10 or 15 years however. Last year I attended a downtown revitalization program in NJ and heard about towns requiring bonds for such an event. Should the mall go dark, the city pulls the bond in order to get the funds to take the mall down. I strongly urge you to require the developer to get such a bond. With the bond, Norwalk will be covered for the downside risk of having an empty structured attractive to vagrants. An empty lot would be better than an empty structure.”
Stephanie Pelletier, a Bridgeport resident who is a marketing consultant to SoNo businesses, called the mall “a big idea and the right idea for Norwalk, Fairfield County and the region.”
“Take the train on any given weekend. Guess where people are going? To NYC to go shopping!” she wrote. “… The marketing muscle that GGP will bring to the Collection will be unrivaled from any other asset: social media, website, community engagement, pr, advertising and promotion are the marketing tools that GGP will bring to bear. The ‘Sound of Norwalk’ needs to be the sound of cash registers ringing up merchandise along with happy people ‘making happy sounds’ of satisfaction.”
Plus, she wrote, “The $3.5 million payment to the City in lieu of the hotel is a boon that other cities only dream about. Stewardship of this fund will ensure that the greatest good benefits the most people. This is a good, if not great thing. The other great thing is that this project is a class act with class act tenants. Allowing GGP to clarify the intended flexibility in the definition of ‘anchors of high quality’ demonstrates that the City of Norwalk and GGP can successfully partner in this project through mutual understanding and consideration of proactive and diligent project management so no one Is caught by surprise years down the road.”
There’s also an anonymous letter in the packet, from “A Concerned Norwalk Citizen,” who said, “It has been written about, reported on and blogged all over that malls are quickly becoming a thing of the past, so why in God’s name would Norwalk choose to build something that will obsolete in a couple of years? I just can’t wrap my head around it.”
Goldstein urged the Council members to bring their own proposals to the table, “based upon real value that is being lost/gained by changes.”
One possibility would be:
“The difference between the estimated gross assessed value of the mall in its first (and most valuable year) and the full assessed value of all of the taxable property that stood on that site before eminent domain, in today’s dollars, with reasonable inflation escalations over the last 25 years. This is more that reasonable, because GGP is getting the full market value of property that the City paid (in time, administration, and acquisition costs) for when they thought they would get a mixed use result on the land, in keeping with its own planning, and its own Redevelopment plan.”
GGP initially predicted it would begin construction on The SoNo Collection in mid- to late-2015, and Goldstein said this means Norwalk has already lost $4.7 million in tax revenues, basing that on GGP’s analysis.
“GGP argues that this delay is a result of various permit requests taking more time, but I have been present at some of these presentations to zoning and they were triggered by changes to the design that was agreed upon (for example, a special process permitting moving, digital signage on the exterior, which was specifically NOT included in any of the design proposals). These are options that GGP chose to pursue on its own, not delays imposed by the city,” Goldstein wrote.
Then there’s the time spent by volunteers and staff members in approving GGP’s original proposal, in an expedited fashion,” Goldstein said.
“If GGP had come at the outset and proposed a mostly retail, plus some non-retail commercial on the site, we might have turned it down flat and used all of those hours and resources on something that is having an equal impact on the City – the Walk Bridge,” Goldstein wrote.
Corsello responded to one of her earlier letters, saying:
“Unfortunately, we are negotiating with an entity who up until now has only invested a fraction of the $400+million that this project will cost them. The possibility of GGP abandoning the entire project is therefore realistic if the ‘numbers don’t work’. As we are aware of the property’s 20 year history of having no development offers which even approached the financial ‘upside’ of the mall one must seriously question whether we want to risk losing it. Certainly, once GOP expends more substantial revenues in the project the leverage in negotiations will shift dramatically.”