Redevelopment proposal for Watson Plaza to be discussed by Crestwood board

By MIKE ANTHONY

Executive Editor

A $12.5 million redevelopment proposal for Watson Pla-za that calls for a Gordmans and a PETCO as well as re-taining existing tenants was scheduled to be discussed earlier this week by the Crestwood Board of Aldermen.

The Board of Aldermen was scheduled to discuss the re-development proposal submitted by G.J. Grewe during a work session before a regular meeting Tuesday night – after the Call went to press.

The Board of Aldermen instructed city staff last summer to prepare a report detailing the implementation process for creating a tax-increment financing holding district that would include five potential project redevelopment areas comprised of 51 parcels along the city’s Watson Road Bus-iness District.

One of those five potential redevelopment project areas was Watson Plaza. Besides Watson Plaza, this 18.01-acre area comprised of seven parcels includes Jack in the Box, U.S. Bank and Rayburn Park. In December, aldermen voted to issue a request for proposals to redevelop Watson Plaza, which is adjacent to the city’s Watson/Sappington Road Redevelopment Area where a new Kohl’s is scheduled to open this fall.

“The city feels that a redevelopment proposal which lev-erages the Kohl’s project to the east to attract high-quality retail uses to the frontage along Watson Road would be most desirous. While the city has included Rayburn Park within the redevelopment area, prospective respondents are strongly encouraged to submit proposals which minimally impact the nature of park and provide for no commercial vehicle access to Fox Creek Court from the retail portion of any proposed development,” the request for redevelopment proposals stated.

The deadline for proposals was Feb. 28 and one proposal was received – from G.J. Grewe Inc., headquartered in Crest-wood, which owns 92 percent of the property within the redevelopment area. The only parcels not owned by the company are Rayburn Park and the former Service Merchandise site. Service Merchandise filed for bankruptcy in 1999 and the rights to the Crestwood site are owned by Devel-opers Diversified Realty, a real estate in-vestment trust based in Cleveland, Ohio.

G.J. Grewe’s proposal to redevelop Watson Plaza would utilize six of the seven parcels within the redevelopment area, excluding the parcel containing Rayburn Park.

“Rayburn Park is undisturbed and will continue to serve as a natural buffer to the residential area,” the redevelopment proposal states. “The redeveloped Watson Plaza will be much more than a retail shopping center; it will provide an attractive complement to (the) city of Crestwood’s super regional mall and offer the city of Crestwood and its residents popular, high-quality retailers.

“Working with the existing tenant base as well as ‘re-tenanting’ the former Service Merchandise building and Tippins Pie Pantry are the key to revitalizing the Watson Plaza. Commitments are in place to re-tenant both facilities with first-class, high-quality retailers,” according to the proposal.

Among the changes proposed by G.J. Grewe are a new Gordmans that would oc-cupy the former Service Merchandise build-ing, a new PETCO that would be built next to Gordmans and a new Walgreens that would be built on the site of the former Tippins, plus improvements to the intersection of Glenwood Drive and Watson Road for improved access to Watson Plaza.

“The property, in its current state, presents challenges that can be overcome with tax-increment financing assistance and the formation of a Transportation Develop-ment District,” the proposal states. “These challenges include the acquisition and re-modeling of the former Service Merchan-dise building, the demolition and cleanup of the former Tippins Pie Pantry, the former Linen & Things building and 1,510 square feet adjacent to the Walgreens premises. In addition, infrastructure modifications will be made to Watson Road.”

The total cost of the redevelopment project is estimated at $12,527,025. The estimated cost includes a request for $2.5 million TIF assistance, but excludes the costs of bond issuance and the creation of a TDD to fund the actual costs of transportation improvements.

As proposed, $4 million of the proposed costs is earmarked for additional land ac-quisition and assemblage costs.

The proposal also states that G.J. Grewe will require that the city use its eminent domain power to acquire the former Service Merchandise building should the developer fail to reach an agreement with the current owner.

City Administrator Don Greer told the Call that the city received several contacts about the request for redevelopment proposals for Watson Plaza. Given that, he was a bit surprised to receive only one submission. “… I was kind of surprised when we only got one, but I was also quite pleased that the one we got was from Gary Grewe. The Grewe real estate people own 92 percent of that site today,” he said.

“The response we got from Gary, on the one hand, I was very pleased that we did get a response from Grewe, but, on the other hand, I wasn’t quite as excited as I was hoping I would be to see what we’re going to see in there,” the city administrator said. “And it’s not that I have any problems or concerns with any of the businesses that he’s suggesting or that he’s wanting to bring, I’m terribly excited about that because they are retail businesses. But the site’s not going to be drastically changed and that’s what we think is one of the long-term issues with the site is that the configuration is not what it should be.

“I’m going to liken that quite a bit to the current economy and the unwillingness to make that kind of an investment today and what would have to be done to totally tear that site down and bring it all closer to Watson and things like that. On the same hand, I’m not in a position that I want to recommend to the Board of Aldermen that we do any large subsidies of development costs. Watson Plaza’s a site that from my particular standpoint my recommendation to the board would be that if we provide assistance in some fashion it be minimal – it be related to specific issues, property acquisition or the cross access (to the Kohl’s site), the Glenwood intersection.

“Those kinds of things are public improvements or those are improvements we can make or we can assist with making, but it’s not a good time for the city to be leveraging its future … because the economy’s just not there … That doesn’t mean to say I’m not preparing to recommend that we participate in this because I think we can and I think we can keep our assistance minimal and have a significant impact.”

One of the difficulties in redeveloping the site, he said, is the fact that “the bankruptcy court has assigned the development rights or the lease rights to DDR, which is a real-estate holding company out of Ohio … ”

That company plans to lease the site to 24-Hour Fitness, which previously sought city approval to operate at the former Ser-vice Merchandise building, but later withdrew its request.

“We have some pretty strong indications that they’re coming back,” Greer said. “I have no experience with 24-Hour Fitness, I’m sure it’s a fine company. From the city’s standpoint, from a purely selfish city standpoint, 24-Hour Fitness does nothing for the economics of the city of Crestwood. It takes a very large retail box and turns it into almost no sales tax for the city of Crest-wood. Watson Plaza is next to Kohl’s, which we anticipate is going to do quite well. The best reaction that we can have is to assume Watson Plaza will benefit from their association with Kohl’s and that’s what we’ve been operating under for quite some period of time. To take the largest square footage out of that plaza and allow its use for something other than retail, is going to have significant impact on our revenue.”

While Grewe’s proposal may need to be tweaked somewhat, Greer said, “It’s our opinion that if the city were to show support for Grewe’s proposal … that the bankruptcy court would look favorably upon providing a mechanism to assure fair market value for the Service Merchandise property. The bankruptcy court we believe is in the position of making the decision that’s best for the creditors of Service Merchandise and by being in a position to make a fair-market-value offer to the bank-ruptcy court, we believe that they would look very favorably upon reassigning the rights to that building. That’s how the city could work with Gary Grewe,” he said, noting Grewe would have to petition the court in an effort to make that happen.

“If the board is willing to, we could go on record as saying that we are prepared to confirm the process that will assure fair-market value,” he said, adding that if a favorable ruling is handed down, “then that gives Gary Grewe site control. And with site control, then we’re in a much better position to see that site retain its retail flavor. From the city’s perspective, part of our willingness – and this is what I’m going to tell the board Tuesday – part of our willingness to do this would be to formally lock up the manner in which the Glenwood and Watson intersection is redesigned and the cross access between Kohl’s and Watson Plaza is completed.”