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

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