Initial redevelopment plans for mall will be presented on June 10 to Crestwood board

City attorney expects ruling this summer in cities’ TIF litigation against state

By BURKE WASSON

The Crestwood mall’s new owners are scheduled to present initial redevelopment plans for the shopping-center property at the Board of Aldermen’s June 10 meeting.

After originally expecting to show those plans at the board’s May 27 meeting, new mall owners Centrum Properties of Chicago and Angelo, Gordon & Co. of New York will further fine-tune those architectural designs, according to Mayor Roy Robinson.

“I had stated in my town-hall meeting that we expected to meet with the new owners on the 27th to come before the board,” Robinson said. “They’ve informed me that they’d like to delay that until June 10, which is the next board meeting, due to the fact that they don’t think they will be fully prepared to give the presentation.”

The companies are set to take those design ideas to the International Council of Shopping Centers’ spring convention for feedback this week in Las Vegas, Nev., before divulging any plans.

Additionally, Robinson said he is set to meet May 27 with Centrum managing partner Sol Barket to discuss tentative plans of the mall property’s redevelopment.

Centrum and Angelo, Gordon purchased the former Westfield Shoppingtown Crest-wood in March for $17.5 million, according to St. Louis County records.

The Westfield Group originally acquired the property in 1998 for $106 million.

The two companies merged on the sale as brothers Sol and Keith Barket, originally from the Affton area, represent both. While Sol Barket is Centrum’s managing partner of retail development, Keith Barket is senior managing director of Angelo, Gordon.

The property is expected to be redesigned as a “town center” with a square or fountain serving as a centerpiece. Its focus will remain retail, but some residential pieces are being considered. In addition, Centrum and Angelo, Gordon are planning a larger movie theater, restaurants and a facility to house outdoor concerts.

While the mall today is roughly 1 million square feet, the new owners have indicated that the new redevelopment would be 500,000 to 1 million square feet.

The mayor is pleased with initial efforts from the two companies to not only redevelop the mall property, but also focus on keeping current tenants.

From the time that the two companies entered sales negotiations last fall until they purchased the property in March, Robinson said 21 stores had closed.

Between the drop in stores and a year-to-year drop in sales-tax revenue at the mall, which city officials estimated to produce roughly $600,000 less in 2007 than 2006, city officials hope for redevelopment.

To do so, Robinson has encouraged the use of such tax-incentive tools as tax-increment financing, or TIF, as well as a community-improvement district, or CID, and a transportation-development district, or TDD, to assist the owners in development.

With the granting of TIF assistance, tax receipts for school districts, fire districts and other taxing entities are frozen at existing levels for the length of the TIF. As land within the TIF district increases in value, the incremental tax revenue — 100 percent of property taxes and 50 percent of sales and utility taxes — will be used to retire the TIF obligation. TDD and CID also can achieve that reimbursement to developers through a sales tax or property tax.

But until a Cole County circuit court decides the fate of a suit that a group of St. Louis County cities, including Crestwood, filed this year to challenge new TIF laws approved in 2007 by the state Legislature, no bonds for a TIF can be issued. Robinson broke a 3-3 tie among aldermen in a February closed session to vote “yes” to authorize Crestwood’s participation in the lawsuit at a cost not to exceed $10,000.

Because the Legislature mandated the establishment of new 12-member TIF commissions in St. Louis County, Jefferson County and St. Charles County, the powers of existing TIF commissions in various municipalities have been questioned.

City Attorney Robert Golterman in-formed aldermen last week that a hearing on that lawsuit will take place in the near future with a ruling coming this summer.

“The lawsuit involving the TIF Act passed in 2007 pending in Jefferson City has now been fully briefed by both the state and by the cities in the municipal league and will probably be scheduled for a hearing in front of a judge in the near future with a ruling hopefully by mid-summer,” Golterman said.

Robinson has told the new owners that he would prefer that the mall property be redeveloped in phases to allow the city to continue collecting revenue from existing stores.

But to offset inevitable losses in sales-tax revenue through redevelopment, aldermen voted last week to place a 35-cent tax-rate increase on the Aug. 5 ballot. The tax-rate increase would have a six-year sunset and generate an estimated $1,130,528 a year.

With a $600,000 loss in sales-tax revenue from 2006 to 2007 as well as a vacancy rate of roughly 50 percent, city officials are fearful that continued drops in sales-tax revenue will occur while construction is taking place and certain sections of the mall property will close for development in phases.

The city also will lose property-tax revenue as the mall site — purchased in 1999 for $106 million by Westfield — has sunk to a sale price of $17.5 million in March.

“We have no idea,” Robinson said. “We know it’s going to be less. But we don’t know how long it takes for those things to go through the process of being reassessed. That’s one of our concerns … That’s the thing that caused me to (support a tax increase). Not only with the economy the way it is and the decreases we saw in the first quarter, but also knowing that over the next three to four years, there’s redevelopment of that mall.

“The people who bought that are trying to do their best to maintain as many of the businesses as they can. But there’s no assurance of what’s going to happen there. And over the course of the redevelopment, we’re not sure where we’re going to be financially because we rely on so much of our revenue to run this city by sales tax. And when you don’t have that and when that changes, it really has an effect on what we do here.”

Sales-tax revenue comprises 52 percent of Crestwood’s overall budgeted revenue, according to city officials.

And with that loss of retail sales, Robinson hopes that residents will approve the six-year tax-rate increase to provide a safety net while the mall is redeveloped.

“We need an adjustment backup because of the loss of retail,” Robinson said. “And I hope the citizens understand that. We’re trying to make sure we can maintain our city until we get those retail projects back to where they should be.”