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GGP’s Mall

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We are at zero hour.  If GGP is not allowed to move forward the anchor tenants will likely drop out.  And we, Norwalk, will lose the best development prospect we’ve ever had.   The question is, are we going to chase away a $400 million investment in Norwalk?  All because we did not realize that we don’t understand the dynamics of the commercial real estate market.

Let’s ask and answer the key questions.

 

Can a hotel can work here?  Answer, yes, but only if you scrap the Mall.

As designed, with the hotel perched on top of Bloomingdale’s, the construction costs are too high.  The resulting room rates needed to cover the construction costs are above what the market would support.   We know that since 12 different hotel operators have walked away from this opportunity. The margins are too thin, and the risks too high.

Some will argue that the entire project should be redesigned to accommodate the hotel.  But then you lose the $400 million investment that will happen starting next month and defer it for how long?  Another decade?

 

Is $3.5 million payment for not building the hotel enough?  Answer, yes, and maybe too much.

While sitting in the Common Council Planning Committee meeting this week I ran some numbers to answer this question.  Unfortunately I was not allowed to speak at that point.  Here is what I did.

I looked at the future value of $3.5 million paid to Norwalk today and assumed a 5 percent reinvestment rate.  I considered its value 10 years out, 15 years out, 20, 25 and 30 years out.  I did not account for the delay due to the enterprise zone.   Basically, the future value of $3.5 million dollars paid today is the equivalent of receiving $475,000 to $525,000 per year in taxes, assuming tax payments start this year.  That’s a range of $5.58 to $6.17 per square foot using the hotel’s 85,000 square feet.

To provide some context nearby high end hotels have the following taxes per square foot.

  • Double Tree:                       $2.44 per square foot.
  • Hilton Garden:                  $3.20 per square foot.
  • Stamford Marriott:        $5.56 per square foot.

Looks like a good swap for the City.  What troubles me is that I did this analysis in two minutes, but the City has not done this yet.

 

Is the Internet killing retail? And by default, will it kill this mall?  Answer, no, it’s just creating new opportunities.

I think they said the same thing about the Sears catalogue when it first came out in the 1800’s.  The Internet is facilitating retail sales, just as the Sears catalogue did.  And yes some retailers will fall by the wayside due to this disruptive change, but overall retail sales are growing and the retail industry is more efficient and better suited to catering to its customer base.

Class A malls are thriving.  Class C and low-end B malls are being closed simply because their time has passed and demographics have changed.  Old malls are losing market share to newer, higher quality malls built nearby.

The bulk of the brick and mortar disruption will be visited upon power centers (concentrations of big-box stores) and big-box stores in general.

It is highly unlikely that a Class A retail mall anchored by Bloomingdale’s and Nordstrom will go out of business.  This would only happen if Connecticut itself got into such economic trouble that it chased away large portions of our businesses and wealthy citizens.

 

What’s the Bottom Line?

We already lost two good developers here over the past 20-plus years.  Let’s not lose GGP and another decade.

 

Michael McGuire

Norwalk businessman

 

38 comments

Wineshine May 21, 2017 at 6:19 am

Maybe I wake up sometimes in a somewhat cynical mood, or maybe not. When I’d hole a 25 foot putt for a triple bogey, my uncle used to say, “that’s putting whipped cream on a “steamy pile”. With all due respect to the work put in after attending a Council meeting, that’s what we’re doing here.

A few questions:
1. How does the writer suggest the City of Norwalk segregate the $3M+ payment from GGP so as to have it earn annually compounded interest in a spendthrift environment where we all know fewer and fewer tax dollars will be coming back to us from Hartford for the forseeable future?
2. How on earth is Norwalk going to buck the global trend of failing malls?
3. Why in the world will online shoppers be convinced to log off and head to the mall when that would be contrary to all data showing retail trends?

Sue Haynie May 21, 2017 at 7:31 am

@Michael McGuire, in total agreement.

Michael Gould, the retired CEO of Bloomingdales (1991-2014) spoke on CNBC last week and made some great points. He said the department store model has to be ‘about the experience, and merchandise…about excitement…about engagement’. He made the same points that the folks from GGP are making, that to thrive, the mall concept needs to be adaptive.

Gould also noted that all online shopping amounts to about 7% of retail, that leaves over 90% still being done in brick and mortar stores. I shop with my daughters; I shopped with my mom when I was a girl. It’s a chance to connect, lunch, talk, touch, see things, buy things. You can’t get that same experience on a computer screen.

Not enough money to fund our schools or city operating costs? Taxpayers will drive by the 95/7 hole for the next decade+ and have little sympathy for those cries if this fails to pass. Our property values are stagnant and our taxes keep rising. We know no help is coming from the State. We’re on our own.

Norwalk will be left with nothing but dirt on its hands for the next decade+ if the City leadership lets this fail.

Mary Jane Peluso May 21, 2017 at 8:12 am

Just do it! We need more than rental apartment after rental apartment in Norwalk. We’re overrun with new rental buildings. Build the Mall.

Mitch Adis May 21, 2017 at 8:44 am

I suppose anything we build that will generate tax revenue without loading up our schools will be better for the city. Plus we’ve already committed to a lopsided deal, so we might as well follow through.

jlightfield May 21, 2017 at 10:51 am

There are many people underwater on their property investments in Norwalk. Solving for a short term increase in property values causes people to make assumptions about what the future will bring. Norwalk has a long history of making assumptions about what the future will be like, instead of building the infrastructure of what the future will build on. A large building designed for a single purpose in a suburban city, is a repeat of planning decisions of the last 40 years.

Of course I’m talking about GE’s headquarters in Fairfield, which was abandoned by GE in favor of moving to a vibrant coastal innovation district with mass transit access to an airport, mixed use of residential, office, industrial and commercial buildings.

Donna May 21, 2017 at 10:54 am

Welll done, Mike, and I’m basically in total agreement that the CC should move forward with GGP on the SoNo Colletion. While I understand the cost metrics of a constructing a hotel on top of a mall, this configuration was an early requirement of Bloomingdales, and GGP knew it because they signed the anchor. Also I would imagine a high end mall would attract a hotel property in the same category of a top end Marriott or Hyatt.

My lingering concerns (and I haven no reason to believe I have any kind of a voice in this decision other than that of resident property taxpayer) relate mostly to the ability of our leadership to broker this deal from a position of strength and to allocate the 3.5 million dollar compensation for lost tax revenue in a manner that reflects what the loss of the hotel means to retail in South Norwalk. I’m troubled by the requirement that this money go to the general fund.

Also the entire City needs to get on board the developing problem in South Norwalk, and that is the aggressive efforts by Firetree, Ltd. to open and operate a Federally funded prison on Quintard Avenue. Firetree Norwalk Pavilion, if allowed to open, will degrade property values not only in my neighborhood but throughout SoNo. Firetree’s attorney is talking about 2 million in compensatory damages the town may be forced to pay to make Firetree go away. There goes more than half the compensation for the lost tax revenue from the hotel. And it’s not great PR for GGP that a notoriously slimy Federal prison vendor plans to operate a halfway house for felons just down the road from their 400 million dollar investment.

GGP should be concerned about the Firetree application–concerned enough to help the City and the neighbors stop this LULU from operating in South Norwalk.

Fred Wilms May 21, 2017 at 11:08 am

Excellent analysis Mike. Thanks for bringing your commercial real estate experience to bear on this vital issue for Norwalk.

Diane Lauricella May 21, 2017 at 11:54 am

Interesting analysis, but questions arise:
“Can have a hotel but without a mall”: Not sure you are correct. Why couldn’t we have had both, just constructing it elsewhere in the complex…not atop another structure making it more expensive automatically?

Who exactly limited the “Mixed use” options to only three, when all who care about smarter land use know there are many options for GGP to build, such as a YMCA, Wegmans, and/or an Incubator complex????

Has anyone from City or State or even GGP calculated effect on current retail business in all parts of Norwalk if GGP allowed to add even more retail???

Are there any doubts that public partnership has been key? Lets all realize that this IS a public-private partnership…because in truth GGP and the developers before them benefitted from public tax credits, lots of city staff time, infrastructure improvements at discount rates, enterprise zone, and especially the government’s ability to take private homes and businesses oh so long ago.

Rick May 21, 2017 at 12:31 pm

It was nice seeing the letter this morning it shows interest in our city .

We read construction brings in jobs, as in the past it has all from out of state.

The fence that usually surrounds these landmark projects come from out of state as well.

Workers on day st so far have been from Mass and Pa the cheap lego construction is also from PA built in PA. So no real carpenter pool of jobs came from Ct so far on Day St.

Then we have the experts Im sorry Fred when we I asked for your support on Quintard ave you were rude and to the point I wont help you its not my issue then asked if there was anything else you could help me with.That was a bad call I hope the mall works well for you.

for the other two postings you are not on the GGP info email list I apologize for that .

Aside from wanting the mall the actions seen at a mall meeting from Fowler to saying to his team of 4 supporters outside in the hall the councils is going to screw things up many times one has to wonder who actually is running Norwalk.

I asked two of the supporters what will happen if the mall brings in what’s in South Norwalk already ,simply said the mall will have parking it was like too bad for Sono and most of the strip malls Norwalk has already has.

Malls have changed they are targets of violence and neglect some are GGPs some are Simons this week one burned to the ground where a firefighter was killed.

Is Norwalk ready for a mall? No substation has been accepted by the city yet GGP is still banking on help to maintain it.( they know what goes on at malls) How many times a day does the Norwalk police respond to small strip malls with arrests by loss prevention better yet how many time to the same place in one day? Yes it takes only a few minutes to do that research online trust me.

This brings into play how long two marked police cars take retrieving loss prevention arrests preventing them from patrolling our streets at the mall . We are still obligated to protect the city after the mall is built correct?

Then we hear GGP will have and offer cameras for the Norwalk PD they explain the cooperation given to the city, yet when Stantec offered one camera for the multi million dollar Ryan Park completion and it was said the department didn’t have the resources to monitor what most deem a very dangerous place at night.

My findings are substantial they suggest some people in the city are not aware of the con to all the pros delivered by the same people who think they know what Norwalk wants instead to what they need.

This Hollywood production from GGP is outstanding is it odd the hotel was cancelled days after GGP met with Trump?

That’s my speculation no casino for Norwalk as far as the other speculators that Nancy so nicely hosts I have to admit the arguments are just pro mall.

Not for nothing had to add this a shooting just now sounds serious in Norwalk its whats happens in a city of 100,000 and its happens all the time. I would think security not just at the mall but the city would be a concern.

Donna May 21, 2017 at 1:38 pm

The loss of the hotel will have a negative impact on local businesses, and we have no analysis regarding the potential losses in rent and retail sales. The idea was that other vacant and poorly performing retail near the mall would benefit from both the mall and the hotel.

Debora Goldstein May 21, 2017 at 2:39 pm

For everyone’s information, Sears STARTED as a mail order enterprise in the 1800s. It didn’t open its first retail store until 1925. (http://www.searsarchives.com/history/index.htm) so there was no retail business to threaten.

The fact of the matter here is that we are now presented with a false choice: give in on GGP’s idea of what is fair consideration for the removal of the hotel or kill the mall.

But, GGP engineered the design that made the hotel infeasible, and they negotiated the timelines with the anchors. They also knowingly purchased land that was encumbered by a mixed use requirements. Their consultant assumed an already approved hotel project was not going to be built.

Norwalk is not obligated to accommodate the fact that GGP continually maneuvered themselves into a spot where they cannot profitably meet the obligations they agreed to in the LDA amendment a few short years ago.

This, after dangling many more mixed uses before the public and the city during negotiations.

It IS Norwalk’s responsibility to make sure that they are getting value in exchange for incentives and givebacks. As Mr. McGuire points out, nobody has done the comparative analysis to other hotels. Neither has the RA or the CC received or requested an analysis of lost economic impact from the direct loss of jobs and economic activity in the area.

Nor has it evaluated the difference in economic activity for a mixed use project on the site vs a mostly retail / some non-retail commercial project.

Nobody has done a baseline analysis of what that property would be commanding if the mixed use that existed before eminent domain was used were still in play.

FTR, GGP projects that 115 construction jobs and 105 jobs in the operation phase would go away when the hotel is removed. And it projects absolutely no change in retail projections for the mall itself when the hotel goes away–so, Norwalk loses the local multiplier economic activity from all of those jobs, plus it loses the lifetime property tax value for the hotel, plus some undetermined value for what the site would produce if there was, in fact, mixed use on the site.

In exchange, we get a finite tax payment, equal to WHAT WE WOULD HAVE RECEIVED ANYWAY, if the hotel stayed in.

In addition, nobody has answered the question that Bob Welsh originally asked. How much is not building the hotel worth to GGP, in savings on construction and operation? Apparently, a marginally profitable hotel is not good enough, even though it contributes NOTHING to the overall value of the project. Remember, it was the developer who created the conditions that made it too marginally profitable for any partner to risk it.

All of the lost value is on the Norwalk side of the equation. I maintain, given the circumstances, Norwalk is not getting reasonable consideration for removing the hotel from the agreement. If the developer wants to kill this project over a few million dollars when it is realizing considerable savings on the construction and future tax revenues, that is on the developer, not on Norwalk.

The citizenry needs to remember that the mall is NOT cost-free to Norwalk. Those $4.7mm in annual tax revenues are gross figures, and the Urbanomics report provided to the council estimated that the mall will cost the city $3.2mm a year, so every other lost dollar of economic activity should be recaptured, if at all possible, if we are going to further hand GGP another concession.

Nobody is suggesting the mall would go out of business, but a steady decline in occupancy and quality of the tenants is possible. And anchors can and do pull out of malls (https://www.minnpost.com/twin-cities-business/2015/01/missing-anchor-drag-mall-america)

$3.5MM may be a fair analysis if the ONLY metric is the lost property tax revenue, but is that the correct metric to be using?

carol May 21, 2017 at 4:29 pm

enough all ready–let the council wake up,approve the “no hotel” and move on. if we lose this one the entire council and other city officials should resign.

Donna May 21, 2017 at 4:57 pm

Deborah Goldstein raises excellent points that should given serious thought when the CC votes. This is not an “enough already, let’s get the shovels in the ground” moment for Norwalk. And you don’t have to be an expert in the field to see that the loss of the hotel is better for GGP than it is for the City. Mike McGuire offers a good analysis but provides no support for the contention that it’s an either/or situation–hotel only or mall only. The developers knew the land use requirements and agreed to mixed use–mall + hotel. They studied it. They planned for it. If it were an either/or on the hotel, they’d have said so from the start.

The City has an opportuinty to negotiate from a position of strength, not weakness, and all the clambering to get going already makes Norwalk sound desperate.

Few are suggesting Norwalk close the door on GGP. And no one has argued convincingly that a 3.5 million dollar, single-time payment to the City compensates adequately for the loss of the hotel. It covers a finite amount of taxes ONLY. It does not cover losses to local business, job losses, rent losses for the empty retails spaces that will remain empty because the hotel foot traffic never appears. If the City continues to accept less for itself, it will never amount to more than it is.

John Levin May 21, 2017 at 5:08 pm

Michael – I’m confused by the actual math you used to get:
“I looked at the future value of $3.5 million paid to Norwalk today and assumed a 5 percent reinvestment rate. I considered its value 10 years out, 15 years out, 20, 25 and 30 years out. I did not account for the delay due to the enterprise zone. Basically, the future value of $3.5 million dollars paid today is the equivalent of receiving $475,000 to $525,000 per year in taxes, assuming tax payments start this year.”

$3.5 million earning 5% each year pays $175,000, in perpetuity. I’m not exactly certain what “a 5 percent reinvestment rate” is, but how is that different than earning a 5% rate on $3.5m? I know that some comments suggest yours is an excellent analysis, and it might be, but I struggle to understand how your #’s make sense. A little help, maybe?

Donald May 21, 2017 at 7:26 pm

Tell GGP to hit the road. Anyone that believes that this mall will last more than 5 years is fooling themselves. Heck I bet half of the stores that singed leases will be out of business by opening day.
Norwalk made this same mistake many years ago as in Pathmark.

Donna May 21, 2017 at 10:11 pm

Is there no middle ground between shovels in the ground and hit the road GGP? The deal GGP is offering isn’t the best deal they have to offer. Who’s the hero who’s going to find the middle road between selling out and a hole in the ground?

J George May 21, 2017 at 10:40 pm

Does anyone go to the mall anymore? This place is going to be a nightmare for traffic. Build a park and shop on Amazon.

Lisa Thomson May 22, 2017 at 12:04 am

Mike McGuire – I appreciate your analysis. Shame something like that doesn’t come from the city. Deb Goldstein raises some good points about value.

Just found out about a commercial waterfront property in the village of Rowayton that is massively undervalued in its tax assessment. I’m hearing and getting evidence of others. If the city can’t get small commercial properties right – what faith should I have in the city’s ability to value the hotel? I don’t claim to know anything about valuing commercial real estate, but neither does our municipal government. Partly the reason, our residential taxes keep going up despite all the development.

Danny May 22, 2017 at 9:45 am

WTNH Channel 8 did a piece on Malls in America and how they have become a thing of the past. They went on to explain how developers are struggling to reinvent the current malls that exist to ‘make it work’. And here we are, building one in Norwalk. I cringed.

Norwalk needs to bring in heavy hitting companies to set up shop here in the city. Their employees can walk to the train station and employers can pull from a large radius because of the rail line. That area of Norwalk should be filled with skyscraper/office buildings while the remainder of the city remains as quaint little villages.

Norwalk has so much potential. Don’t give into the builder’s dream of copious amounts of apartment buildings, fast food restaurants and malls. Be strategic and think of our future.

And for goodness sakes, lay off those greedy teachers and hire graduates looking for a job at 1/2 the price to save us taxpayers money!

Sono Spirit May 22, 2017 at 10:36 am

Another option to have GGP consider is to build the hotel next to the church on West avenue and the mall on the remaining area. Eliminate the glass sky bridge meant to connect the two parts of the mall. Then just build the mall taller to accomodate any lost square footage in the other areas. This would eliminate the extra cost of building the hotel atop the mall plus the expensive cost of the sky bridge.

Patrons of the hotel could simply walk across the street to the mall when desired as happens all over the country already.

Danny May 22, 2017 at 1:44 pm

@SoNoSpirit You mean the malls that are closing up and failing? I may not have the answers and I admit it – but we need to hire people who HAVE the answers! We just can’t take suggestions from taxpayers! WE NEED professional help!! 🙂

Michael McGuire May 22, 2017 at 2:07 pm

Its easy to lose sight of what’s a stake here. A long vacant tract of land has a proposed $400 million investment ready to go by an developer that already paid $35 million for the right to build here.

But we appear to be stopped by citizens concerned over the whether a portion of the development is feasible, or not, and if not what is a suitable payment in lieu should be.

All the while these same citizens don’t understand the larger market dynamics at work. For instance, suggesting a YMCA in place of a hotel. A YMCA would likely cost more than the hotel and have a much lower revenue stream – In fact it likely would not even cover the loan on the construction costs.

But my beef is not with misguided citizens, I applauded their passion and interest.

The beef is our process. This process gives vent and traction to unfeasible notions like a Y; fails to adequate educate the populace, or the CC members; doesn’t do its due diligence, and in all likelihood, is not sure what the due diligence should be; is reactive and not proactive; and is largely unaccountable because in realty no one is in charge. The result is a massive loss in time and money – both the developers and ours’.

In development, time is your key challenge simply because markets shift over time.

The 95/7 site was long ago made an Enterprise Zone whose sole purpose is to generate commercial enterprise. Something is very wrong with us, not the developers, if development deals here keep being killed off.

Time for Norwalk to take a good hard look in the mirror.

Donna May 22, 2017 at 2:41 pm

Oh, Mike McGuire, I wish we weren’t so misguided! Thank goodness there is an expert in the field to set us straight! All kidding aside, the process is the problem. Norwalk doesn’t have a plan of development that they are required to follow. The plan exists, but there doesn’t appear to be any reason to follow it–it’s more like a suggestion than a requirement.

An open process is essential in order to create community buy-in. While the developer has been at this for a good, long while, the change to eliminate the hotel is relatively recent, and the public must weigh in, no matter how uncomfortable and nonsensical the wiser, more experienced minds may find the public portion of the process. The public already lacks faith in their leadership’s ability to hammer out deals with the common good in mind. The public already suspects–with good reason–that bad deals are hammered out in private and minds are often made up before the time for public comment even takes place.

The only way to circumvent a reactive development process is to 1) create a plan of development (we have one) 2) require all town bodies to abide by it (we don’t have that) and 3) hire a City Planner (we don’t have that either).

I agree that a new Y, while highly desirable, is not feasible for Norwalk. It’s cost prohibitive and depends on public support for both its construction and its ongoing operation. And there are too many other, better run Ys a few minutes down the road in Westport, New Canaan and Darien.

Westport waited 20 long years to build its new Y. However, while the Y was forced to let a few excellent offers pass them by because the town objected to first proposal, eventually, things came together and there is both a new YMCA and seemingly decent downtown development that honors the historic value of the original structure. It is easy to imagine that the impulse among some Norwalkers to walk away from GGP means Reed Putnam will be an eyesore forever. But that is rarely what happens. Developers are like busses. Another comes along every 20 minutes. And the depressed state of the economy in CT is perhaps pushing Norwalk to settle for less when it deserves more.

Michael McGuire May 22, 2017 at 4:51 pm

Donna,

Great opening line – now that’s funny!

Similar to Westport we’ve been waiting 20 long years for something to be built here as well.

I don’t think most people understand – CC and city Staff included. This site is not suitable for mixed use. It’s excellent for retail. Marginal for housing at best. A non-starter for office. A hotel is just OK but could only work if the entire project were revamped. All the other uses sited – school, park, Y, etc. have limited to no revenue generating capacity to compensate for the cost so toss them out.

What are we left with…..retail.

So lets make the this the best damn retail center around. To do that who would you choose? Hint GGP is on a very short list.

Deb Goldstein – Developers like to develop. They don’t like to make developments smaller. GGP is reacting to the marketplace. GGP doesn’t build hotels, they find a hotel partner to do that. They asked 12, none would partner with them on this project.

Does that mean GGP is manipulating Norwalk? Or, that this site is not suitable for this level of hotel development at this time?.

Donna May 22, 2017 at 6:43 pm

Can we all at least agree that Norwalk needs to revise its charter, that a plan of development be the governing document for all subsequent development decisions (a binding document and not a suggestion) and that Norwalk must have a City Planner? If Norwalk had these things, we wouldn’t be debating the mertis of mall or no mall, hotel or no hotel, office space or no office space. Anchor positions in struggling malls have been reimagined and reinvented away from the department store model. The change in language to the LDA will enable this. But if Reed Putnam was never suitable for office space to begin with, the LDA should have been amended BEFORE looking for suitors. GGP is an excellent mall developer. In fact, they’re so good, I would rather put them in charge of that 3.5 million than I would the city.

Mike McGuire May 22, 2017 at 7:01 pm

V – good question. two reasons. One the cost to build good quality office space requires rents north of $50 per square foot to amortize the costs. Best rents now in Norwalk hover in the low $30 per square foot. This does not factor in the large amount of empty space we have floating around in SW Fairfield county?

Two – new office development needs 50 percent releasing prior to construction beginning. That usually come in the form of 1 or 2 anchor tenants for the office space. That is 42500 sf of office tenants needed (assuming 85,000 sf of office) at a rent that is well above market. It’s not feasible at this point to find tenants like this.

Lisa Thomson May 22, 2017 at 7:17 pm

Donna – So far a lot of lip service to charter revision as well as ignoring practices in the charter. Not a priority of this administration.

Donna May 22, 2017 at 7:25 pm

So even with a revised charter, the tendency of elected officials to ignore best practices remains a problem. That is a shame. Or maybe it’s a sham. Hard for Norwalk to rise higher than its highest elected officials.

Debora Goldstein May 23, 2017 at 4:07 pm

We have ALREADY lost sight of what’s at stake here, because this continues to be framed as an issue of losing the mall altogether, unless Norwalk concedes the hotel (which will save GGP millions in costs) in exchange for the figure GGP has decided Norwalk should accept. The figure is no where near what GGP is gaining in savings and nowhere near what Norwalk is losing.

We have heard that some large number was floated as a counteroffer and that GGP balked. But would they walk away from $4.5mm? $4mm? $3.75mm? $3,500,001? Why is 10% of their purchase price for the land the magic number? Why does GGP get to decide both what the want out of the agreement (lose the hotel) and what the City should accept in exchange?

We do not appear to be stopped by what citizens think about anything related to this project. Nothing has slowed or changed the scope of this latest round of customizing our URP and LDA to the liking of whichever developer happens to own the property. Nor are real numbers from GGP’s own experts making a dent in the discussion.

I maintain that market dynamics are the concern of the developer. Complying with our own Urban Renewal Plan is Norwalk’s concern. So is ensuring that the public good is served when private property is taken under eminent domain.

The council recognized when it FIRST agreed to amend the LDA for GGP that they would be seeking a site that is largely retail. It also recognized that elements of mixed use (such as a Y) that did not produce revenue would be unattractive to GGP, so they agreed to the menu of choices that could produce revenue (office, housing or a hotel).

It actually wasn’t all that long ago (less than 10 years) that the 95/7 site was included for Enterprise Zone tax credits. The purpose was to help the former developer (Spinnaker) over the hump after the 2008 downturn. They were specifically approved to encourage the development of that site in accordance with the LDA that existed at the time–not to attract retail (or any other developer) to the site.

Once again, a council, who failed to ask the “what if” questions, failed to put a claw-back process in place if the developer for whom the credits were approved decided not to do so. Nor did they contemplate that someone would expect to collect those tax credits and dictate what should go on the property.

Something IS wrong here. Norwalk cannot stick to a plan of any kind for development in the city and developers know it.

This site is not only suitable for mixed use, it WAS mixed use, until the city came along and decided that they could do better. We will continue to have a problem understanding this issue if we continue to allow GGP to define what feasible is…the break point is not at the point where the hotel is not profitable…it’s where they consider it profitable ENOUGH.

Here’s another question. Would one of those hotel partners agree to come on board if GGP instead paid THE HOTEL PARTNER the $3.5mm to get them past the hump stage? How about if the hotel partner was entitled to some of the enterprise zone tax credits for their operation? Isn’t that what they are for?

The fact of the matter is that GGP came along and bought a property intending to put a mall there, not the mixed use that was required. If they’d applied to change the LDA for pure retail, this would have been DOA. Don’t believe me? Here is a quote from GGP after they purchased the site in 2013:

“The market has strong demographics to support a Class A retail property. We look forward to working with the mayor, city officials and community groups to create a high-quality retail and dining locale, a destination unique to the market”

Here’s another fun quote from 2009, as Spinnaker was lobbying the city for tax incentives in order to proceed after the downturn.

“The Redevelopment Agency remains committed to the mixed-use development concept across the city’s’ urban spine,” Sheehan said. “Office space, however, is the economic engine of the mixed-use experience.”

@Michael McGuire: You say “Developers like to develop. They don’t like to make developments smaller.”

Funny, but removing the hotel and not replacing it with anything else IS the very definition of “making this development smaller”.

You say GGP is reacting to the marketplace. GGP doesn’t build hotels, they find a hotel partner to do that. They asked 12, none would partner with them on this project. None would agree to partner with them AS IT IS CURRENTLY DESIGNED. That design is a function of the preferences of its anchor stores–again, not Norwalk’s problem.

I say they are reacting to the rules in place when they bought the property–rules they knew about and accepted when they paid $35mm for the site. They banked on getting the city to amend the agreement, and pursued a strategy to get that agreement. Manipulation? No. Strategic? Yes.

All of which begs the question. Will the council and the redevelopment agency look at any other way to value what we are losing and make a good faith effort to extract some real value for the loss of the hotel? Will GGP seriously walk away from the deal AT ANY OTHER PRICE, despite that fact that the site is the last prime location in the area and they are not losing anything by removing the hotel from project, and aren’t willing to share their gain with the city that has agreed to everything they asked for until now? Stay tuned…

Donna May 23, 2017 at 5:22 pm

Deborah, what would the CC need to do at this point to yield the greatest good for Norwalk? I’m intrigued by your suggestion that GGP return to the drawing board here, take the 3.5 million and use that money as leverage to lure a hotel purveyor as originally planned. Clearly, 3.5 isn’t enough to compensate Norwalk for the loss of the hotel. It only covers anticipated tax losses, and does nothing to address lost jobs and vacant store fronts. But now at the 11th hour, what could the Common Council do to broker a better deal for their constituents? They are still beholden to us, right?

Debora Goldstein May 23, 2017 at 5:45 pm

@Donna,

Thanks for the thoughtful question. You’ve actually touched upon another issue here that has stuck in my craw with regard to this latest round of changes, but I haven’t brought it up, because I’ve been focused on advocating that we get proper value for the loss of the mixed use, incentives, and a private developer benefiting from eminent domain takings.

The “agreement” that led to the $3.5mm figure was negotiated by “leadership” of the council, the mayor and someone(s) from redevelopment. Unless I missed the vote where the 15 member council appointed a small committee to negotiate on behalf of the whole council, this is not a legitimate way to conduct city business. The suggestion that the leaders of caucuses can conduct city business and solicit decision-making under caucus seriously undermines our electoral franchisee. Especially because not all members of council are currently participating in caucuses.

The council ought to get together and let all fifteen members approach the valuation of the loss of mixed use and multiplier effect economic activity from the hotel. Staff and other experts should provide timely analysis of any particular approach. Collectively, all of our representatives should be involved, unless that authority was delegated to a smaller group.

I’ve made a number of suggestions for valuing the loss of the hotel in my last open letter (which has not been published in its entirety anywhere, as of this time). The ones above are two more. Urbanomics, who did an analysis of the site for the council back in 2015, also made reference to an appropriate way to value payment in lieu of taxes on this site.

You can lead a horse to water, but you can’t make it drink.

Donna May 23, 2017 at 8:14 pm

Debora (sans ‘h’), Thank you for helping to bring me up to speed and for reminding me why I got pissed off in the first place. The process is curious and opaque based on what you’ve described and what I’ve observed during the very limited time I’ve been paying attention. We are the stakeholders. The CC are our representatives. But most CC members were left out of this bargain that we are now supposed to believe is the best possible deal for Norwalk.

We should all be outraged that a deal was made under a cone of silence. Somewhere along the way, I went from outraged to resigned to the inevitability of a hotel-less mall. And mystified by the chorus of “let’s get the shovels in the ground.” Yes, let’s do that, but first, let’s make sure Norwalk doesn’t get left holding the shovel while GGP rakes in the dough.

The Mayor and a few others worked out a deal with GGP under a cone of silence. That’s the illegitimate process that led us here.

One last question. When can I expect to see Mayor Rilling talk into his shoe phone?

Debora Goldstein May 24, 2017 at 8:32 am

@Donna,

I have to say. Your wordplay is fun. I look forward to meeting you one of these days.

Donna May 24, 2017 at 11:44 am

@Debora, we did meet after the last planning committee meeting. The range and depth of your knowledge of Norwalk’s development and governance history is mind-blowing, and you can crunch numbers with the best of the experts. Frustrating that Norwalk has all this talent and passion among its citizens and often settles for mediocrity in its decision-making.

Debora Goldstein May 24, 2017 at 1:23 pm

Kind words. But all i do is read the public records. There are plenty of talented people doing the same. Perhaps some will even consider running for office this year. Or sitting on one of the city’s many boards, commissions, authorities and agencies.

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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.