Tag Archive for Tax Increment Financing

Twin Peaks Mall (Village): not a true renaissance

Much has been made lately over the intent to build a new shopping district in Longmont. Its proponent wants one and all to believe this will be a new “mall,” and that the reincarnation of the mall property will generate a retail renaissance in northeastern Boulder County.

One has to wonder about property developers. I worked with them long enough to learn that “earning” a development fee comes first; supply and demand come later. In this case the property developer has even convinced or coerced the city of Longmont to become its financial partner, and that after the former basically “stole” the pre-existing, nearly shuttered improvements. One does not have to be a trained real estate analyst to see that the lead tenant in Longmont retail centers is “available.” Not so obvious is the underlying potential for demand for retail business.

Photo by M. Douglas Wray ©2011 FreeRangeLongmont.comAdd to the large empty spaces once occupied by Kmart, Sears (part of the old mall) and the original Walmart on a tract adjoining the mall, and a number of vacations by restaurants that chose to flee rather than fight unrealistic rent increases. Consider that when the economy seemed stronger (1990s), there were about 49 square feet of retail space in the country for every person. Now, with incomes and employment down, development activity has largely caved. Largely.

Allowing for a reasonable average of no less than $125 annual sales per square foot, Longmont’s 6.4 million (or so) square feet of retail space, owned or leased, need at least $800 million of disposable income. Assuming that the population is still 87,000, that means each man, woman and child must have more than $9,200 of income after taxes and rent (or mortgage), to support the existing retail base of 73 square feet per person. How many households do you know in Longmont pulling down that kind of dough (gross income would generally be two to three times the “disposable” sum)? Adding to the challenges, more than half of Longmont’s work force leaves town each morning. Many people shop near work as well as, or instead of, near home.

To be fair, the city hasn’t done everything wrong here. Its public tiff with Dillard’s came about in large part because a previous mall owner was desperate to keep Dillard’s when other anchors were moving out. By the way, Dillard’s right to veto improvement or redevelopment is worth something on its own; Dillard’s owns more than just a store. Perhaps Dillard’s wants no competition, or maybe the developer doesn’t want Dillard’s to stay. We may never know. What seems important is that a city so hungry for sales tax continues to ignore what might be its biggest asset: its historic downtown. Look around the country and see what I mean. The possible ambiance and amenities there can’t really be matched by a sterile, stainless-steel series of coffins parachuted onto a parking lot the size of some counties.

Longmont could take a page from London, where a 50-acre development will be designed as a “brand pavilion,” aimed at allowing global labels to set up interactive exhibitions linked to the growing online buying trend. To its credit London intends to include more than 1,500 homes within its new attraction.

The effective economic lifetime of Twin Peaks Mall was less than 20 years. In 2034 the tax incremental financing to be imposed for the new “mall” will not yet be retired. If malls per se are becoming extinct, wrecking ball operators in Longmont may want to keep their machinery well oiled.

Longmont City Council lap dog for developers

The new mall plan looks DOA to me. Basically, we are replacing Dillard’s with Sam’s Club. Why does Longmont need three Walmarts?

And what small businesses will want to be in the same mall as Walmart? Why cozy up with people who will undercut small business prices?

The stores that NewMark Merrill has in mind are not bringing new kinds of business to Longmont. On the contrary, they are aggressively overlapping with stores on Hover and Ken Pratt that have proven they can do business here. The mall’s intent is to siphon off that business, not develop new business.

Photo by M. Douglas Wray ©2011 FreeRangeLongmont.com

Twin Peaks redevelopment will use TIF to destroy what are now viable businesses

The tax increment financing is what the developer is looking to pocket, and reaping these tax dollars will also give them the upper hand in undercutting the prices of the existing stores they seek to undermine. That’s not a productive way to do business. It will use TIF to destroy what are now viable businesses, and will only replace them with a cheaper version. If you think Twin Peaks Mall has succumbed to urban blight, wait ’til you see what Hover and Ken Pratt will look like in 5-10 years.

Big-box abandonment will be pervasive. Or Longmont City Council will be dishing even more TIF money in an attempt to save them.

This is a poisonous project and NM should be kicked out of here. It is self-destructive for Longmont to continue with this plan.

That the new mall will restore Longmont’s reputation as the armpit of Boulder County is really the least of our problems. This is a financially unsound plan, designed to benefit the developer and not the city or residents. It will damage Longmont seriously. Longmont’s tax dollars would be far better spent in redeveloping Main Street, Kimbark and Coffman.

Baum’s “used car” salesmanship

Photo by M. Douglas Wray ©2011 FreeRangeLongmont.com

Longmont's getting malled

Mayor Bryan Baum came into office on a wing and a promise.   And in the black art of “used car” salesmanship, he’s hoping you won’t notice the sleight of hand.

During the 2009 campaign Baum repeatedly chastised the 2007 City Council on their progress on reviving Twin Peaks Mall and claimed that he would make it happen.  And what has been Mayor Bryan Baum’s position on the Mall since his election?  “Oh, well, there’s nothing we can do about it.  The Mall is private property and the city has no control over it.”

Mayor Baum, you knew all along that this was private property but you chose to use the state of the mall to agitate your way into public office.  Voters are getting mighty exasperated with politicians making promises that they don’t keep.  And you made a whopper.  No matter how you cut the mustard, you have done nothing.  Fool them once, shame on you.  Voters won’t be fooled twice.

Longmont Mayor Bryan Baum - Dim moment

Longmont Mayor Bryan Baum - Dim moment

During the run-up to the 2009 city election Mayor Baum totally dismissed the previous council’s action to “blight” the mall and surrounding properties.  And we all know that the qualifications for “blight” are broad enough to drive a Mack truck through them.  It would have been just as supportable to deny a blighted condition.

The 2007 Council also arranged for mall development experts to conduct a two-day charette in October 2008 to determine how the entire mall area might be designed and developed to meet the many needs of the citizens and City of Longmont.

The community might be very interested to know that when the final chapter of that event was to be presented – the financial analysis by Panattoni – their computers (all of them?) failed and there were NO numbers produced.  More than curious.

The city was negotiating with Panattoni on how Tax Increment Financing (TIF) might be used, but Panattoni wanted $15 million in bonds for Phase I only, an outrageous amount of exposure for the city.  To pay off these public bonds, Panattoni wanted to use 100% of all new property taxes and 90% of all new allowable city sales taxes collected at the mall to construct their version of Phase I.  The public benefit to the city would have been a mere 10% of new sales taxes generated.  Panattoni further disregarded not only the ideas generated in the charette, but disregarded the public’s input from numerous public meetings on Twin Peaks redevelopment.  Their “my way or the highway” negotiating position caused the negotiations to break down.

Incidentally, lost property taxes to our schools from TIF have to be backfilled by the state.  As everyone knows, budget shortfalls at the state level have resulted in repeated cuts to education.

Panattoni purchased the mall at the height of the development craze in July 2007 for $37 million.  And it wouldn’t surprise me to learn that intentions were expressed, if not promises made, to Panattoni by the sitting council at the time of the purchase.  In February the mall was valued at $17 million.

Panattoni hired NewMark Merrill, a shopping center management firm known for specializing in distressed properties, to handle the mall’s myriad of problems.  Just recently Bank of America placed Twin Peaks Mall into foreclosure.

The Baum SquadBut then I suspect that foreclosure was anticipated by those that Baum has called “connected.”  Connected, in this case means Longmont’s “Old Guard,” its oligarchy, select movers and shakers within the business community but far from all of Longmont’s business community.  It certainly does not include those council members who are not part of the Baum majority.

If/when the mall is sold, it clearly will be a short sale.  How low the fire sale price goes will depend on how big a bath Bank of America wants to take.   Panattoni put $8 million down on the property.

Should Longmont be fortunate to have a new mall owner – one that is not looking for a deal that includes the sun, moon and the stars – I hope that Longmont will have a mayor who will look out for the interests of the entire community and not one who will give out the city’s PIN on yet another wing and a promise.