Updated, 12:10 p.m.: Clarification about Bloomingdale’s lease.
NORWALK, Conn. — The SoNo Collection will not be a purely luxury center, but a Class A mall with a broad mix of retailers, GGP Vice President Doug Adams said Thursday.
Also coming out of the Common Council Planning Committee meeting is the news that Nordstrom is committed to a 20-year lease in the center, with Bloomingdale’s having a similar commitment, and a comment that Norwalk tried to get $7.5 million out of GGP as compensation for dropping the hotel from the plan.
“The city asked for a lot of money. Quite honestly, at one point, the developer got up and walked out and didn’t respond again for a couple of weeks. Then they came back. … with a number of that was in the range of what the leadership felt was fair. When they did, we said it should go to the Council and the Redevelopment Agency to see if it was sufficient,” Attorney Eric Bernheim said, in response to Council member Faye Bowman (D-District B).
The city announced on April 11 that it and the Redevelopment Agency had “reached an agreement with GGP, the developer of The SoNo Collection, to move forward towards the start of construction.” This deal — worked out in months of talks between Mayor Harry Rilling, Council leadership, Redevelopment leadership and others — included GGP paying the city $3.5 million in lieu of building a hotel.
There will be up to six public hearings on the proposals, Redevelopment Agency Executive Director Tim Sheehan said, including a Planning Commission meeting and a Zoning Commission public hearing.
A schedule of public hearings, posted on the city’s website:
- Planning Committee, Tuesday, May 9, at 6 p.m. in the Common Council Chambers
- Planning Committee, Monday, May 15, at 7 p.m. in City Hall room 231
- Redevelopment Agency, Wednesday, May 24, at 7 p.m. in City Hall room A300
Some of the conversation at Thursday’s meeting centered on comments made by GGP CEO Sandeep Mathrani in a Monday morning earning’s call.
“How should we view ‘everything on the table’? What does that mean?” Council member Tom Livingston (D-District E) asked, mentioning that he had been a securities lawyer.
“There is a wide discount between public and private markets,” Mathrani said Monday. “The sum of the parts is far greater than GGP’s current stock price. We are reviewing all strategic alternatives to bridge the gap.”
“I am not a securities lawyer so I am unsure what to say,” Adams said.
The value of GGP’s assets, as assessed by the market, are significantly above the net asset value of the company, and GGP has a duty to its shareholders to maximize the return on the stock, Adams said.
Mathrani also said GGP is considering increasing the retail square footage of The SoNo Collection.
He was speaking about Gross Leasable Area (GLA), Adams said, explaining why Mathrani said 300,000 square feet of retail when the mall is planned for 660,000 square feet.
GGP is looking at renting more space for small stores between the anchors, fulfilling the maximum allowed in the Land Disposition Agreement, 700,000 square feet.
“Had a lot of questions the past few days, ‘Are we going to be back in asking for an increase?’ The answer is no,” Adams said.
“Do you anticipate filling the 300,000 GLA?” Livingston asked.
“Absolutely,” Adams said.
Bernheim, who is an independent legal counsel hired by Norwalk as a consultant on The SoNo Collection, said he had reviewed GGP’s leases with Nordstrom and Bloomingdale’s last week. The leases are confidential and he could not take notes or keep copies, but Nordstrom has a fully executed, lease for 20 years, with six 10-year options, and a notice of lease has been filed in the land records, he said.
Bloomingdale’s lease is also fully executed, but a notice of lease has not been filed yet, he said, calling the terms “very similar” to Nordstrom.
“I think that for all intents and purposes, the city should feel very confident, unless something goes very awry, that they will have Nordstrom and Bloomingdale’s when the mall opens,” Bernheim said.
The Redevelopment Agency analyzed how much GGP would have paid for the hotel in 10 years worth of property taxes, Sheehan said.
That’s 10 years at full price, no reduction for an Enterprise Zone, he said.
“I ran it at full value, based on existing hotel rooms,” Sheehan said.
“If you add the present value it turns out to be 17 years,” Bernheim said.
Bowman said she found out about the deal in the paper.
“We got feedback on the meetings, it was no secret to the Democratic caucus,” Council member Bruce Kimmel (D-At Large) said.
Bowman, who does not attend caucus meetings, protested that nothing had been put into emails.
The leadership came up with something to bring to the caucus, Majority Leader John Kydes (D-District C) said.
“I felt 3.5 took in a lot of factors: taxes, easements that are not being used but still funded by GGP,” Kydes said. “Trust me. Everyone in the room wanted to get as much as we possibly could out of them for the removal of the this, and that’s our recommendation to you.”
“I don’t see what the rush is. I am totally interested in really getting into details,” Bowman said.
“Certainly, you guys aren’t obligated to rush into anything that you are uncomfortable with agreeing to,” Bernheim said, explaining that the leases GGP has with Nordstrom and Bloomingdale’s call for the mall to open in October 2019.
Bernheim said he has no expertise in mall construction but GGP has been very consistent in saying that it needs to begin construction now to open in October 2019.
“If you take them at their word, that this needs to happen so they can get the project, so the city can have a project, that is the reason for the rush,” Bernheim said.
Attorney Larry Cafero, representing GGP, said that within a two week period GGP will have paid Norwalk nearly $2 million.
That’s the money already paid as part of GGP’s commitment to a circular, the easement over North Water Street, a fee for the water treatment plant and the fee for a foundation permit, he said.
“That money is paid with obviously no guarantee that any vote will take place,” said Cafero, former state representative. “I mention that to show you, or to just sort of highlight, the worth of this project to the city of Norwalk. Within a two-week period of time the city of Norwalk will receive $2 million from a project that has not yet been officially approved. It is a project the likes of which, if it is approved, we have never seen before. The revenue generator from that project, if memory serves me as a lifelong Norwalk resident, this city has never seen before. And that’s without the assumption of a hotel.”