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10/09/2003 - Minutes (2) PROCEEDINGS OF THE CITY COUNCIL OF SALT LAKE CITY, UTAH THURSDAY, OCTOBER 9, 2003 The City Council of Salt Lake City, Utah met in Work Session on Thursday, October 9, 2003, at 5:30 p.m. in Room 326, Committee Room, City County Building, 451 South State Street. In Attendance: Council Members Carlton Christensen, Van Turner, Eric Jergensen, Nancy Saxton, Jill Remington Love, Dave Buhler, and Dale Lambert. Also In Attendance: Cindy Gust-Jenson, Executive Council Director; Gary Mumford, Deputy Council Director; David Nimkin, Mayor's Chief of Staff; Rocky Fluhart, Chief Administrative Officer; Michael Sears, Council Budget and Policy Analyst; Russell Weeks, Council Policy Analyst; Janice Jardine, Council Planning and Policy Analyst; Lehua Weaver, Council Constituent Liaison; Sylvia Jones, Council Research and Policy Analyst/Constituent Liaison; Alison Weyher, Community and Economic Development Director; Edwin Rutan, City Attorney; Greg Johnson, Community Development Planner; Diana Karrenberg, Community Affairs Manager; Joel Paterson, Special Projects Planner; Doug Dansie, Downtown/Special Projects Planner; Valda Tarbet, Redevelopment Agency Deputy Director; and Scott Crandall, Deputy Recorder. Councilmember Christensen presided at and conducted the meeting. The meeting was called to order at 5:32 p.m. AGENDA ITEMS #1. REPORT OF THE EXECUTIVE DIRECTOR, INCLUDING REVIEW OF COUNCIL INFORMATION ITEMS AND ANNOUNCEMENTS. No items were discussed. See file M 03-5 for announcements. #2. INTERVIEW ROBERT "TOBY" ALIRES PRIOR TO CONSIDERATION OF HIS APPOINTMENT TO THE COMMUNITY DEVELOPMENT ADVISORY COMMITTEE. Mr. Alires said he had lived on the City's west side for approximately 48 years. He said he had a degree in sociology and worked in the Human Resource Department for Utah Transit Authority. He said he wanted to be involved with the community and looked forward to serving on the committee. #3. RECEIVE A BRIEFING FROM THE PLANNING DIVISION AND THE REDEVELOPMENT AGENCY (RDA) REGARDING A REQUEST FROM GATEWAY ASSOCIATES TO ALLOW DEPARTMENT STORES IN THE GATEWAY (Petition No. 400-03-20) . View Attachment Joel Paterson, Valda Tarbet, Russell Weeks, and Alison Weyher briefed the Council with the attached handout. Councilmember Saxton asked when Gateway and Main Street master plans were adopted. Mr. Paterson said the Gateway Development Master Plan was adopted in 1998. He said the Downtown Master Plan was adopted in 1995. Councilmember Saxton asked if the plans had been revisited or reaffirmed. Mr. Paterson said no. Councilmember Christensen said policy statements were made regarding the master plans. Councilmember Saxton asked when the policy statements were made. Mr. Paterson said in January, 2003. Councilmember Saxton asked about zoning changes which had taken place in the Main Street or Gateway corridors since the master plans were ratified. Mr. Paterson said the Gateway Mixed-Use zone (GMU) was adopted in late 1998 or early 1999. Mr. Paterson said the D-4 zone was developed for the area just east of Gateway and the D-3 zone boundaries were extended west of the Rio Grande Depot. Councilmember Saxton asked when that was done. Mr. Paterson said three zone changes were made in late 1998 or early 1999. Councilmember Turner asked about the 45,000 square foot restriction 03 - 1 PROCEEDINGS OF THE CITY COUNCIL OF SALT LAKE CITY, UTAH THURSDAY, OCTOBER 9, 2003 imposed at the Gateway after the development was underway. Ms. Tarbet said the original RDA agreement did not contain a square footage requirement for retail stores. She said zoning and master plan documents might have contained restrictions. Mr. Paterson said a 100,000 square footage restriction was in place under the definition of "department store". He said department stores were not permitted in the GMU zone. Councilmember Buhler said he understood 100, 000 square feet was the minimum requirement. Mr. Paterson said that was correct. Councilmember Jergensen asked if the original GMU zone or Gateway agreement had an expectation of a size restriction. Ms. Tarbet said there was confusion because zoning requirements were being mixed with RDA agreements. She said she did not believe RDA agreements anticipated a restriction on the size of a retailer other than what was required by zoning. She said the GMU zone was adopted after the RDA had executed its agreement with Gateway Associates. Councilmember Jergensen asked if a maximum square footage was contemplated. Ms. Tarbet said RDA agreements did not anticipate a maximum requirement. Councilmember Jergensen asked how the 45,000 square foot requirement came about. Ms. Tarbet said within the first six months of his administration, Mayor Anderson negotiated the size requirement with the Boyer Company along with an additional penalty. Councilmember Jergensen asked about penalties. Ms. Tarbet said the original agreement contained one penalty. She said the third amendment to the original agreement added another penalty. She said the original penalty was imposed on users who wanted to move to Gateway from Main Street or Trolley Square. She said the second penalty adopted in July of 2000, added a reduction to the tax increment reimbursement amount due Gateway if relocated retailers exceeded 10% of either the number of retail spaces available or square footage. The meeting adjourned at 5:50 p.m. sc 03 - 2 1 2cyce - . KT OFFICE OF THE CITY COUNCIL Salt Lake City Council AGENDA City Council Chambers City& County Building 451 South State Street,Room 315 Salt Lake City,Utah Thursday, October 9,2003 6:00 p.m. Please Note: The Work Session briefing,item A-3,and the Public Hearing, item C-1,regarding Gateway Zoning will be held jointly as the Redevelopment Agency Board and City Council. This Gateway and Downtown hearing will be televised on the City's cable-TV channel, Channel 17 at 6:00 p.m., and shown at 9:30 p.m. on RUED. 5:00 p.m., some Council Members may dine together in Room 125 at the City & County Building. (The room is open to the public.) A. WORK SESSION: 5:30 p.m., Room 326,City&County Building,451 South State Street (Items from the following list that Council is unable to complete in Work Session from 5:30-5:55 p.m.will be addressed in a Work Session setting following the Consent Agenda.) 1. Report of the Executive Director, including review of Council information items and • announcements. 2. The Council will interview Robert"Toby"Alires prior to consideration of his appointment to the Community Development Advisory Committee. 3. (Tentative)The Council will receive a briefmg from the Planning Division and the Redevelopment Agency regarding a request from Gateway Associates to allow department stores in the Gateway. B. OPENING CEREMONY: 1. Pledge of Allegiance. C. PUBLIC HEARINGS: 1. Ordinance:Petition No.400-03-20,amend the table of uses for the Gateway Mixed-Use zoning district to make department stores either a conditional use or a permitted use and related matters Accept public comment and consider adopting an ordinance amending the table of uses for the Gateway Mixed-Use zoning district to make department stores either a conditional use or a permitted use and related matters. (P 03-22) Staff Recommendation: Consider options. 451 SOUTH STATE STREET, ROOM 304, SALT LAKE CITY, UTAH S41 1 1 TELEPHONE: S01-535.7600, FAX: S01-535-7651 Salt Lake City Council Agenda Thursday,October 9,2003 2. Ordinance:Petition No.400-00-21,create an airport landscaping overlay district and adopt related changes to the Salt Lake City Code Accept public comment and consider adopting an ordinance creating an airport landscaping overlay district and adopt related changes to the Salt Lake City Code. (P 03-19) Staff Recommendation: Close and adopt. D. COMMENTS 1. Questions to the Mayor from the City Council. 2. Comments to the City Council (Comments are taken on any item not scheduled for a public hearing, as well as on any other City business. Comments are limited to two minutes.) E. NEW BUSINESS: (None.) F. UNFINISHED BUSINESS: (None.) • G. CONSENT: (None.) • H. ADJOURNMENT: Dated: October 7,2003 By: `, • • Deputy Ci R/ order STATE OF UTAH ) : ss. COUNTY OF SALT LAKE ) On the 7th day of October 2003,I personally delivered a copy of the foregoing notice to the Mayor and City Council and posted copies of the same in conspicuous view,at the following times and locations within the City&County Building,451 South State Street,Salt Lake City,Utah: 1. At 5:00 p.m. in the City Recorder's Office,Room 415;and • 2. At 5:00 p.m.in the Newsroom,Room 315. 2 Salt Lake City Council Agenda Thursday,October 9,2003 - • I. , Ph'City Deputy e•',rder y Subscribed and sworn to before me this 7a'day of ctober 2$13/ ' NOTARY PUBLIC G ' STATE Of UTAH /Ay Commission Expires Jul 10,2om NotaryPublic residingin the State of Utah ," c� SCOTT .CRANDALL 4' ,... ' 451 South State Street Rm.415 Sait Lake City,Utah 84111 Approval: D (,ofC7en(00 ., Executive Director Access agendas at http://www.ci.slc.ut.us/counciUagendas/default.htm.A sound system for the hearing impaired is available and headphones can be obtained for all public meetings upon four hours advance notice. Arrangements can be made for sign language interpreters;please allow 72 hours advance notice. TDD Number 535-45021. Assistive listening devices are available on Channel I. Large type and#2 Braille agendas are available upon 72 hours advance notice. • *Final action may be taken and/or adopted concerning any item on this agenda. After 5:00 p.m.,please enter the City&County Building through the east entrance. Accessible route is located on the east side of the building. In accordance with State Statute,City Ordinance and Council Policy,one or more Council Members may be connected via speakerphone. • 3 • MEMORANDUM DATE: October 7,2003 TO: City Council Members FROM: Russell Weeks RE: Proposed Ordinance: Petition Requesting Approval to Amend the Zoning Ordinance Text of 21A.31.050 to Allow Department Stores in the Gateway Mixed-Use District(Petition No.400-03- 20) CC: Cindy Gust-Jenson,Rocky Fluhart,David Nimkin,Alison Weyher,Louis Zunguze, Gary Mumford, Janice Jardine,Joel Paterson This memorandum pertains to Petition No.400-03-20.The petition Requests that the City Council amend the Zoning Ordinance text of 21A.31.050 to allow department stores in the Gateway Mixed-Use District. The City Council has scheduled an October 9 public hearing on the petition.It tentatively is scheduled to act on the petition on October 14.The City Council also will convene as the Salt Lake City Redevelopment Agency Board of Directors for both meetings. KEY POINTS • The central focus of the City Council's discussion and action remains two proposed ordinances.Both ordinances—if either is adopted—would allow department stores to locate in the Gateway Mixed-Use District. • The difference between the two ordinances is one would allow department stores in the Gateway Mixed-Use District as a permitted use.That proposed ordinance is the result of Petition No.400-03-20 which requested approval to amend the Zoning Ordinance text of 21A.31.050 to include department stores as a permitted use in the Gateway Mixed-Use District.The other proposed ordinance would allow department stores in the Gateway Mixed-Use District as a conditional use.The Administration recommended the latter ordinance in the Administration's September 9 transmittal to the City Council. • The Community and Economic Development Department also made three other recommendations contingent on adoption of the proposed ordinance to make department stores in the Gateway Mixed- Use District a conditional use: 1. Review the Gateway Development Master Plan to determine appropriate specific amendments to ensure consistency between the master plan and the proposed text amendment. 2. Review the Salt Lake City Council Policy Statement on the Future Economic Development of Downtown to ensure consistency between the Policy Statement and the proposed text amendment. 3. Review the Salt Lake City Redevelopment Agency agreement with Gateway Associates(The Boyer Company)that imposes a limit on the maximum size of retail spaces at the Gateway Mall to eliminate a potential conflict with the proposed text amendment to allow department stores in the Gateway Mixed-Use District. (Administration Transmittal,Page 7.) • • The Salt Lake City Planning Commission held a public hearing on August 27 regarding Petition No. 400-03-20.The Commission found that the proposed text change to allow department stores in the Gateway Mixed-Use District as a land use is not consistent with the applicable current Gateway District Land Use&Development Master Plan and City Council policies.The Commission recommended that the City Council not approve the petition to allow department stores in the Gateway Mixed-Use District. • The Planning Commission then initiated petitions to: 1. Refine or revise the current definition of"department store"in the Zoning Ordinance's Section 21A.62.040 and to clarify the intent and application of the term"large scale uses,such as retail uses that are part of a center or complex"in the Gateway Development Master Plan. 2. Review the extent to which current zoning regulations relating to the location of department stores—presently allowed in the Central Business,Downtown Support, Sugar House Business and Community Shopping districts—are consistent with current policy of making Main Street the primary location of department stores. • The City Council may adopt, deny, or amend either proposed ordinance. • There appears to remain a mid-October deadline for the City Council to reach a decision on the proposed ordinances. Potential Options 1.)Approve petition No.400-03-20 and lift 45,000 square-foot limit in RDA/Gateway agreement. Potential Upsides Potential Downsides Nordstrom stays in downtown but in the Effect on Crossroads Plaza tenants. Gateway development. Mall development partner may leave Gateway solidified with anchor. project. Potential to attract more tenants. Potential replacement anchor uncertain. National retail industry may view Salt Lake Effect on ZCMI Center anchor. City favorably. Longer time to redevelop Crossroads Plaza and ZCMI Center. National retail industry may view Salt Lake City unfavorably. 2.)Decline to approve petition No.400-03-20 or lift 45,000 square foot limit. Potential Upsides Potential Downsides Crossroads Plaza/ZCMI Center Nordstrom leaves downtown. development partner probably solidified. Effect on Gateway tenants. Potential replacement anchor less Effect on Gateway ownership. uncertain. Effect on Gateway ability to attract more More solid timetable to renovate two malls. tenants. ZCMI Center anchor solidified. National retail industry may view Salt Lake National retail industry may view Salt Lake City unfavorably. City favorably. 3.)Approve petition No.400-03-20 as a conditional use and lift 45,000 square-foot limit. le Potential Upsides Potential Downsides More Planning Commission control of Effect on Crossroads Plaza tenants. design. Mall development partner may leave Nordstrom stays in downtown but in project. Gateway development. Potential replacement anchor uncertain. Gateway solidified with anchor. Effect on ZCMI Center anchor. Potential to attract more tenants. Longer time to redevelop Crossroads Plaza National retail industry may view Salt Lake and ZCMI Center. City favorably. National retail industry may view Salt Lake City unfavorably. 4.)Decline to approve petition No.400-03-20 but lift all restrictions in RDA third amendment to agreement,including financial penalties for businesses that relocate from Main Street to Gateway. Potential Upsides Potential Downsides Increases Gateway potential to attract anchor May increase efforts to move tenants from tenants. CBD to Gateway. Close to Planning Commission Nordstrom leaves downtown. recommendation. Effect on Gateway tenants. Puts all parties at roughly the same place they Effect on Gateway ownership. were before third amendment adopted—minus Effect on Gateway ability to attract more Nordstrom. tenants. Crossroads Plaza/ZCMI Center development National retail industry may view Salt Lake partner probably solidified. City unfavorably. Potential replacement anchor less uncertain. graMore solid timetable to renovate two malls. ZCMI Center anchor solidified. National retail industry may view Salt Lake City favorably. 5.)Eliminate department store restrictions in Zoning Ordinance,but restrict total amount of retail square footage at Gateway;renegotiate RDA agreement to define contractually what kinds of retail stores are allowed at Gateway. Potential Upsides Potential Downsides Nordstrom stays in downtown but in Gateway Time constraints on petition No.400-03-20? development. Effect on Crossroads Plaza tenants. Total amount of retail defined. Mall development partner may leave project. Kinds of retail defined. Potential replacement anchor uncertain. Gateway solidified with anchor. Effect on ZCMI Center anchor. Potential to attract more tenants. Longer time to redevelop Crossroads Plaza and National retail industry may view Salt Lake ZCMI Center. City favorably. National retail industry may view Salt Lake City unfavorably. 6.)Approve petition No.400-03-20 and lift 45,000 square foot limit but end tax increment reimbursement to Gateway. Potential Upsides Potential Downsides Potential tax increment increase to RDA to Requires contract renegotiation. redevelop more areas in RDA Depot District or Effect on Gateway owners uncertain. fund housing citywide. Except for housing,money stays in Depot Nordstrom stays in downtown but in Gateway District,not Central Business District. illdevelopment. Effect on Crossroads Plaza tenants. Gateway solidified with anchor. Mall development partner may leave project. Potential to attract more tenants. Potential replacement anchor uncertain. National retail industry may view Salt Lake Effect on ZCMI Center anchor. City favorably. Longer time to redevelop Crossroads Plaza and ZCMI Center. National retail industry may view Salt Lake • City unfavorably. It should be noted that Redevelopment Agency staff has prepared one other option.The option reads, "Adopt a resolution indicating that the Participation and Reimbursement Agreement(between the Redevelopment Agency and Gateway Associates)will not preclude the construction of stores which are larger than 45,000 square feet,if Salt Lake City Corporation issues a General Building Permit for construction,and amending Exhibit"F"Developer Improvements removing the hotel designation(on a portion of the Site Plan)." It is City Council staffs understanding that the option's intent is to handle retail development at the Gateway on a case-by-case basis.As that,it appears to contain the same potential upsides and downsides as changing the Zoning Ordinance text to allow department stores as a conditional use. Issues/Questions for Consideration • If the City Council adopts one of the two proposed ordinances,it also,as the Redevelopment Agency Board of Directors,probably would have to amend the agreement between the Agency and Gateway Associates at least to lift the 45,000 square-foot limit on the size of retail stores that could locate in the Gateway Mixed-Use District. • The Council,as the RDA Board of Directors,also could amend the agreement between the Agency and Gateway Associates to lift the 45,000 square-foot limit without amending the Zoning Ordinance requested in petition No. 400-03-20,or it could repeal the entire third amendment to the agreement.The third amendment contains additional financial penalties involving the relocation of stores to the Gateway mall. • • The Zoning Ordinance has prohibited department stores in the Gateway Mixed-Use District since the district was added to the ordinance. • The 45,000 square-foot limit was not added—through adoption of the third amendment—to the RDA agreement until 2001. (Please see attached Redevelopment Agency memorandum.) • Are the following two statements mutually exclusive? 1. "This is viewed as not only a fight for downtown Salt Lake,but it affects the retail industry in the whole state of Utah.This one decision can affect the whole retail environment in the state." ... Utah is among the last states retailers look at when they're scouting sites.Misunderstandings about the local culture and retail environment make it hard enough to attract the Crate&Barrels and Cheesecake Factories.Adding the perception that Salt Lake City rejected Nordstrom would only exacerbate a difficult situation."Retailers talk amongst themselves,"he said."They'll say, `If Salt Lake City doesn't like Nordstrom,they won't like me, either."'(Source:Deseret News, September 24.) 2. "The entire retail industry is watching Salt Lake right now.If the City Council turns its back on the millions of dollars of private retail and non-retail investment that's been spent in recent years in reliance on the City's planning policies,it will be a clear sign that Salt Lake is not a place they will want to do business."(Source: Bruce Heckman,Taubman Centers Inc.,City Council fact-finding hearing, September 18.) • Three sets of consultants who spoke at the September 18 City Council fact-finding hearing indicated that Salt Lake City's downtown is actually larger than what has been considered downtown's central • core.However,they seemed to indicate that the central core is a necessary component of the larger downtown. Given the consultants' observations, should the Central Business District be viewed differently than it has been in current and previous City policies? • The consultants said that retail,particularly apparel and household goods,already is split among three commercial groupings. However,the scale of the kinds of retail stores addressed in petition No.400-03- 20 currently remains grouped along the Main Street corridor. Should the scale of the Central Business District remain the same,or should the scale be spread among a wider area? • If the City Council declines to adopt a motion approving the petition,what is the potential effect of Nordstrom following through on its stance that it would leave the Salt Lake City market?Conversely,if Nordstrom moves to the Gateway,what is the potential effect on Property Reserve Inc.'s plans to redevelop the Crossroads Plaza and ZCMI Center malls? • Although the need and desire of people to purchase retail goods appears to be constant,the retail industry itself appears to change rapidly. Consultants addressing the City Council during the September 18 fact-fording hearing indicated that City policies should be flexible to accommodate that industry's fluctuations and shifts.What are the various ways in which the City could establish flexibility in zoning for retail industry fluctuations but still not compromise its planning policies? ARGUMENTS FOR APPROVING PETITION/RETAINING CURRENT ZONING Arguments: Changing Zoning Ordinance vs. Retaining Current Zoning Arguments to Change Ordinance Arguments to Retain Current Zoning • Although the Zoning Ordinance prescribes land Although the Zoning Ordinance can be uses based on City master plans,it can be and amended,on the whole it reflects long-term has been amended when circumstances warrant goals of City master plans and policies and it. provides clear direction for land uses.As such, amending the Zoning Ordinance should be done carefully. The Gateway owners knew the Zoning "Gateway's specialty stores will be given retail Ordinance prohibited department stores in the support by two to three brand retailers(150,000 Gateway Mixed-Use District.However,they sq.ft.).These brand retailers will form the third believed that"department stores"meant stores anchor of Gateway.The anticipated brand such as Sears,J.C.Penney and ZCMI. retailers will be very different anchor tenants Moreover,the previous Administration from those found in the typical local mall: encouraged them to try to lease to at least one Nordstrom,ZCMI,Mervyn's,J.C. Penney, large-scale retail apparel store.The City's Dillards and Sears.Note that these anchors are interpretation of the term"department stores" nearly substitutes for one another.The retail is much broader than the Gateway owners ever anchors at Gateway will not be department imagined it could be. (Source: Roger Boyer, stores, general merchandise stores or women's City Council fact-finding meeting.) clothing stores but rather retailers such as Crate &Barrel,Virgin Records and Niketown. Gateway's anchors will be distinctly different from one another to increase market penetration,i.e.,to appeal to a broader base of consumers including a higher percentage of both men and families."(Source: Gateway Retail Development and Downtown Revitalization,Bureau of Economic and Business Research.) Although the Gateway is doing well, Given the increase in housing at the Gateway particularly on weekends,nationally urban and areas surrounding it,and given the entertainment centers have not performed as potential for future increases in housing,there • expected.They have had to remake themselves are a variety of retail stores that would serve as lifestyle centers.The Gateway needs a current and future residents there better than a "proximity to retail"to solidify itself and large-scale,high-end,apparel store.(Source: attract customers throughout the week. Ron Pastore,Bruce Heckman,City Council (Sources:Roger Boyer and Stan Eichelbaum, fact-finding meeting.) City Council fact-finding meeting.) It is more important that Nordstrom remain in It is more important that Nordstrom,or a store Salt Lake City's downtown than in a specific like it,remain in Nordstrom's current location place downtown. and not somewhere else downtown. 1.) Nordstrom is a key catalyst of 1.) If Nordstrom is allowed to move from economic development in Salt Lake its current location,it will result in a City. zero-sum game of moving from one 2.) Salt Lake City lost retail market share place to another without contributing to to the suburbs during the I-15 and the overall whole. light-rail construction. 2.) The key to maintaining the vibrancy of 3.) Having Nordstrom downtown is Main Street as a core retail facility is essential to preserving Salt Lake City's one must have indisputably a central market share and building on it. place in the downtown where unique, 4.) If Nordstrom leaves it first would hurt one-of-a-kind stores are located. recruitment of selective retailers highly 3.) The number of unique stores—and the desirable to the Salt Lake City retail pool of customers who would shop at market. them—are finite,even limited. 5.) Secondary effects of Nordstrom 4.) Given that,one should not confuse leaving may include the loss of potential retailers—or shoppers—about • convention shoppers to suburban malls, where they should go.The end result the loss of convention bookings which would be losing both to suburban would lead to the loss of people eating shopping malls. at Salt Lake City restaurants. 5.) Major fashion retailers like to locate 6.) The loss of Nordstrom,retailers who near each other to create a dynamic of might come to the Salt Lake City comparison shopping. market,convention shoppers and 6.) Major retail corporations need to have bookings,and restaurant patrons predictability for their future ultimately would have negative effects investment,and the current Zoning on commercial office rents and Ordinance provides that predictability. residential desirability. 7.) Although there are three commercial 7.) Downtown retail already is split into at nodes in the downtown,only one node least three major nodes of activity. contains the scale and floor space that 8.) Nordstrom cannot survive another define it as the central retail core. round of construction.Having another 8.) Although it may take a number of structure in place would allow years to reconfigure the older malls, downtown retail to continue while doing it in phases will not disrupt the older malls are reconfigured. (Sources: downtown and will maintain the Roger Boyer, Stan Eichelbaum, momentum of the market. (Sources: consultants, City Council fact-finding Ron Pastore,Bruce Heckman,City meeting.) Council fact-finding meeting.) S BACKGROUND/DISCUSSION - • It appears that the City Council faces two issues. One,represented by petition No.400-03-20,involves an apparently immediate decision that may have long-term implications for Salt Lake City's long-term development and revenue.The other,suggested by the three groups of consultants who spoke to the Council, involves long-term planning and cooperation among various facets with long-term interests in the downtown. Gateway mall developer Roger Boyer characterized the first issue at the September 18 City Council fact- fmding hearing on the petition this way: "Our request is simple, give us a new defmition of department stores,or give us a new department store zoning to put all of downtown on a level playing field." The second issue may be summarized by two statements,one from David Wilcox,senior vice president of Economics Research Associates,the other by Urban Land Institute Senior Fellows Michael Beyard and Maureen McAvey.According to Mr.Wilcox,a decision on petition No.400-03-20"probably is a'now' decision leading to"future decisions about repositioning"(the downtown) ... which is the core of"remaking the crossroads of the West."According to Mr.Beyard and Ms.McAvey,"It was also evident that Gateway and the two malls depend on each other.The success of one will lead to the success of the other,and there should be efforts to make them complementary.This is because the team believes that there are not two downtown retail areas,but one downtown with different districts." BACKGROUND To review briefly,the following events led to the current situation: • In the mid-1990s Salt Lake City and the Utah Department of Transportation had the opportunity to shorten inbound and outbound viaducts leading to Interstate 15 as part of the • reconstruction of I-15. Shortening the viaducts also allowed the removal of railroad lines on City streets a railroad yard west of the Union Pacific depot. • In August 1998 the City Council adopted a master plan for the future development of roughly 650 acres west of 400 West Street between North Temple and 900 West streets.At roughly the same time the City Council, as the Redevelopment Agency Board of Directors initiated a blight study of the 650 acres.Ultimately,the RDA Board created two redevelopment areas—the Depot District and the Granary District—where tax increment could be used to redevelop both areas to solidify the City's western urban boundary at I-15.The master plan contemplated a full build out in about 50 years.The master plan did not contemplate that"department stores"would be located within the 650 acres.However, it did contemplate"large-scale facilities"including "a variety of museums,arts and cultural uses that are local and regional attractions ... a children's museum,planetarium,art and history center,natural history museum,galleries and exhibits,performing arts facilities,ethnic cultural halls and exhibits, an educational campus or complex,and a theme retail shopping center." The resultant Zoning Ordinance chapter regulating the Gateway Mixed-Use District did not include"department stores"as a permitted or conditional use. • In December 1998 the RDA Board adopted a resolution approving a Participation and Reimbursement Agreement with the developer of the Gateway mall.It should be noted that the agreement is a contract.The original agreement did not place a limit on the square footage of retail pads to develop. It authorized the remission to the developer of about 37 percent of tax increment generated by the Gateway mall.The remission was capped at about$16 million. • • In February 2001,the Gateway developer and the current Administration reached an agreement that included a 45,000 square-foot limit for any"retail merchant,or combination of retail merchants under common control, operating a store under one name or similar names."The agreement also included an increased forfeiture penalty to the Gateway developers if stores within the"Main Street Corridor"moved to the Gateway mall and closed their stores in the corridor"within two years after occupying the Gateway Project."The Main Street Corridor was defined as"the area from the north side of North Temple to the south side of 600 Southr and from the west side of West Temple to the east side of 200 East." • In December 2001 officials from Nordstrom told City Council members that the store chain no longer wanted to remain at the Crossroads Plaza mall and instead wanted to relocate to the Gateway when its lease at Crossroads expired in 2005. • In March 2002 the City Council indicated to Nordstrom officials that it was"not in favor of changing zoning or previous agreements between Salt Lake City's Redevelopment Agency"and the Gateway developer and urged Nordstrom to work with the then-owners of the Crossroads Plaza"to work together"toward finding"creative solutions"to keep Nordstrom at Crossroads. • In April 2002 Nordstrom officials replied to the City Council,saying,"Having given a great deal of thought to all of our options,we still believe Gateway is the only retail project in Salt Lake City that meets the needs of our business. ... Once Gateway opened it changed the retail environment in Salt Lake City and we must respond to that fact." • In January 2003,after several months of research and public discussion,the City Council adopted the Salt Lake City Council Policy Statement on the Future Economic Development of Downtown.The statement included the following language: The City Council recognizes that Main Street is the core of our downtown commercial, tourist, and convention activity. To encourage the relocation of retail or other commercial businesses or other key "anchors"away from Main Street will undermine these activities to the long-term detriment of downtown, including the Gateway and other developments. The continued vitality of Main Street is • essential to the economic and cultural health of our great city. • In June 2003,the Salt Lake City zoning administrator informed the Gateway developer that its request for a zoning interpretation of whether Nordstrom should be a"retail goods establishment"instead of a"department store"had been reviewed and that Nordstrom was considered a department store. • In July 2003,the Gateway developer filed petition No.400-03-20 requesting that department stores be a permitted use in the Gateway Mixed-Use district. • In August 2003,the Board of Adjustment upheld the zoning administrator's interpretation that Nordstrom was a department store and,as such,was not a permitted use in the Gateway Mixed- Use District.The Planning Commission in the same month adopted a motion recommending that the City Council deny petition No.400-03-20 but initiated two petitions described earlier in this memorandum. • On September 18 the City Council held its,fact-fmding hearing on petition No.400-03-20. DISCUSSION One way to approach the issue before the City Council is to look for what is common among the three groups of consultants who made presentations at the September 18 City Council fact-finding hearing and weigh their common observations against the City's current policies regarding land use and economic development. Here are six observations that appear common among the consultants: • Salt Lake City's downtown is geographically larger than what is usually considered the Central Business District. • • Downtown Salt Lake City's"assets"—many of them developed in the last 15 years—are solid. • The potential relocation of Nordstrom masks a more far-reaching issue of addressing the entire downtown's positioning of itself to retain its place as a regional commercial draw markedly different • from suburban commercial centers. • The Central Business District and the Gateway need each other to succeed,and connecting the two more closely is a key to each's future success. • To insure that downtown Salt Lake City remains a regional draw Nordstrom probably should be allowed to relocate to the Gateway because:A.)It would make it easier to continue to keep a store like Nordstrom in the downtown's retail mix while the Crossroads Plaza and ZCMI Center malls are renovated.B.)The Gateway probably needs retail anchors of some kind to solidify itself as a commercial area. • The retail market,nationally and locally,is fluctuating rapidly and reinventing itself every few years to appear fresh to consumers. The consultants' observations were countered by the current Crossroads Plaza and ZCMI Center mall owner and its consultants Ron Pastore of AEW Capital Management and Bruce Heckman of Taubman Centers. Many of their arguments appear earlier in this memorandum,but one point perhaps bears repeating.To paraphrase,the Central Business District should remain the downtown's commercial and retail core because: A.) It gives Salt Lake City its identity as Utah's financial and commercial capital as well as its seat of government. B.)City policy—from the 1962 Second Century Plan to the Salt Lake City Council Policy Statement on the Future Economic Development of Downtown have aimed to preserve the Central Business District as the commercial and retail core.C.)Public investment has for the most part followed that City policy. Gateway mall owners responded to the above point with a question—to paraphrase—If preservation of the Central Business District is City policy,why does the Zoning Ordinance allow department stores to locate on 47 blocks downtown but not in the Gateway? • The Salt Lake City Planning Commission addressed the question by initiating a petition to"review the extent to which current zoning regulations relating to the location of department stores—presently allowed in the Central Business,Downtown Support, Sugar House Business and Community Shopping districts—are consistent with current policy of making Main Street the primary location of department stores." Allowing department stores on 47 downtown blocks seems at odds with the following statements from the 1988 Regional/Urban Design Assistance team study—a study on which much of current City policy is based: The entire Salt Lake valley and the Central Business District of Salt Lake City have developed historically on a north-south axis. ... This axis can be reinforced and formalized by improvements to State Street. ... State Street serves as the principal organizing element for the urban design framework of the downtown. ... Main Street is the retail street.Retail uses not fronting on Main Street are secondary."(R/UDAT study,Page 10.) The Gateway owners also contend that the Gateway District Land Use&Development Master Plan contemplates an area shopping center—and it does.However,it should be noted that one of the"guiding principles"in the Gateway Specific Plan is to"Encourage development which strengthens and compliments the Central Business District. LONG-RANGE ISSUES A City Council Member asked Council staff to address potential long-range planning and economic development issues, in particular issues that may apply to the south end of the downtown. This section is staff's attempt to do so. Perhaps one of the most important issues raised by the Urban Land Institute consulting team was this observation: "The ULI team feels that what is most needed is a win-win situation. The following are suggested elements for creating this situation.A STRATEGY for downtown retail—not a plan. The team heard that there have been several plans for the downtown. What now needs to happen is development of a downtown action plan with timelines and definition of roles and responsibilities. This action plan needs to be developed by all the major stakeholders in the downtown and the stakeholders need to buy in • to the plan. A working group made up of the major land owners can guide this process."(ULI draft document,Page 10.) The ULI team's suggestion appears to support the following item in the City Council Policy Statement on the Future Economic Development of Downtown: "The City Council recognizes that many decisions affecting the fate of downtown must be made by the private sector.There is much City government can and should do to encourage a healthy downtown. And yet it must be remembered that the City,through the tools available to it,is a catalyst and coordinator,not a wealth-creator in and of itself." The ULI team suggested that developing a retail strategy for downtown should take six to 12 months. While that appears to fall outside the timeline of a decision on petition No. 400-03-20,it probably is in the public interest for City government to attempt to bring all parties involved in the downtown's future to develop a cooperative action plan suggested by the ULI team. The City Council may wish to consider the following long-range issues: First,until the Gateway development much of the City's policy thrust was to solidify the Central Business District's southern boundary.For example,the following paragraph from the 1988 R/UDAT study reads: The northern tier of downtown blocks adjacent to the Temple(Square)grounds should not be overdeveloped at the expense of the larger downtown area to the south.If a large area of downtown continues to deteriorate,the sheltered`island'of the Temple grounds and its protective blocks will suffer from the deteriorated context of the larger downtown area.The whole CBD must be considered as a single entity,with the various parts working together. . A.direct new large-scale commercial retail development into the north/south corridor along Main Street rather than allowing continued expansion of the major retailers to the east along South Temple and 100 South with resultant adverse residential and transportation impacts.(R/UDAT study, Page 47.) The R/UDAT study can be viewed as a blueprint to an effort to ensure the vitality of the Central Business District against the eastward creep of commercial and retail business by refocusing that kind of development to the south. While the downtown's southern edge has been reinforced by the Scott M.Matheson Courthouse and the Grand America hotel,as recently as the 2000 Thomas Consultants study noted that the Little America hotel,the City&County Building,and the Frank E.Moss Courthouse"are the only anchors on the south end of the Main Street study area."The study also noted,"New Trax light-rail stations provide the opportunity for clusters of retail activity."(Thomas Consultants study,pages 3-11 and 3-13.) A new federal courthouse earmarked for construction in the near-to mid-term may help spur commercial development in the Central Business District's southern end. However,if the City Council considers limiting large-scale retail to certain areas, it may wish to consider including the block bordered by 400 South, State Street, 500 South,and West Temple as a location for that kind of retail.A light-rail station already exists there on Main Street about mid-block. Second,all three consultants remarked on the value of light rail as a link between Main Street and the Gateway.Yet, all the consultants recommended reinforcing downtown links and fostering infill development. The City Council may wish to consider the completion of the planned downtown light-rail loop that originally was part of the Airport to University line.Transportation systems define boundaries as well as move people.A • finished loop—either along 400 West and 400 South streets or along 400 West and 700 South streets—would provide a long-term definite boundary for infill development to follow. The latter route,coupled with meaningful transit-oriented residential development would provide a southern tier of residents who could use the downtown as their neighborhood and workplace.A completed loop also would provide four definite corners for • development to anchor,then spread. Finally,all the consultants observed that three of Salt Lake City's strengths were the size of its downtown workforce,the size of its residential neighborhoods in and near the downtown,and their potential to grow. Given those,and the apparent rapid pace of change in the retail industry,the City Council may wish to consider emphasizing policies that attract job-creating businesses to the downtown,encouraging housing, and marketing the downtown and surrounding neighborhoods as attractive places to live.Council staff once attended a forum on the City's future economic development that included remarks by the late-R.Thayne Robson.His presentation included the following epigram: "Retail never leads,it follows." • • ROSS C. "ROCKY"ANDERSON REDEVELOPMENT AGENCY DAVID J. OKA CHIEF ADMINISTRATIVE OFFICER OF SALT LAKE CITY EXECUTIVE DIRECTOR • October 3, 2003 ITEM#: A-3 / C-1 RE: GATEWAY ASSOCIATES REIMBURSEMENT AGREEMENT PROJECT AREA: Central Business District/Depot District PREPARED BY: Valda E. Tarbet deda, y ANALYSIS AND ISSUES: Developer Improvements required within the Participation and Reimbursement Agreement. Phase I. In November, 1998 the Board of Directors approved the Participation and Reimbursement Agreement between the Agency and Gateway Associates which describes the improvements to be completed by Gateway Associates by December 31, 2002. At that time,the • Developer Improvements described in Exhibit"F"to the Agreement included: • 500 housing units of which 130 units were to be affordable • 360,000 square feet of office and health club space with structured and underground parking • 80,000 to 90,000 square feet of cultural facilities • 686,000 square feet of retail, entertainment, and restaurant improvements with structured parking • a public plaza • right of way improvements along 100 South, 200 South, 400 West • Construction of the Rio Grande Street extension from 200 South to 50 North • burial of transmission and distribution lines between 400 and 500 West • Restoration of the historic Union Pacific Depot • Construction of a temporary North Temple frontage road In addition to the construction of facilities, Gateway Associates was also required to provide easements through the development. Attached is a copy of the site plan which depicts these easements. • 451 SOUTH STATE, ROOM 416, SALT LAKE CITY, UTAH 841 1 1 TELEPHONE: 801-535-7240 FAX: 801-535-7245 it 6.' nE. co P«cn Board Memo October 2,2003 • • Page 2 Gateway Associates completed all of the improvements except: • 114,443 of the required 360,000 square feet of office/health club improvements, though the structure for the 120,000 square feet of office space was completed. • 120 of the 500 housing units. The Fifth Amendment to the Participation and Reimbursement Agreement adopted in November 2002 permitted Gateway Associates additional time to complete these final improvements. Both projects are currently under construction. Phase II. The Participation Agreement also anticipated construction of additional improvements between the northern edge of the Union Pacific Depot and the North Temple viaduct. These Phase II improvements included: • 89,000 to 139,000 square feet of retail space with structured or underground parking • buildings with uses other than retail, entertainment or restaurant with structured or underground parking • construction of a permanent North Temple frontage road between 400 and 500 West connecting to Rio Grande Street 1111 • a 290,000 square foot hotel with structured or underground parking Attached is a site plan showing the location of the Phase I and Phase II improvements. Relocated User Reduction. The right of Gateway Associates to receive the tax increment reimbursement from retail development is subject to a reduction based on the concept of the Relocated User. Initial Agreement. There are two different requirements of the relocated user reduction. The definition included in the original Participation Agreement is as follows: "Relocated to Project"means that business "X"opened a business operation in the Project on or prior to December 31, 2004 and,within two (2)years from opening such business in the Project(but in all events prior to 2007)closes one or more of its similar business operations operating under the same name or franchise in the Main Street Corridor or Trolley Square. The reduction assumes that the businesses do two things: 1)opens a stores in The Gateway and 2) closes a similar store in either the Main Street Corridor or Trolley Square. Gateway is not responsible for stores which go out of business in either location. It is also possible for Gateway to have stores which are located in the other two locations so long as the businesses do not close • or substantially curtail their business activities. Board Memo • October 2,2003 Page 3 The reduction is assessed for the portion of the tax year during which the relocated user occupied the Gateway store and closed a Main Street Corridor or Trolley Square store. The following is the reduction which was calculated for the 2002 property tax year. During 2002, it was determined that four retailers had moved or curtailed their operations in the Main Street Corridor or Trolley Square since opening at The Gateway. The retailers occupied 11,706 square feet with a property tax of$42,500. Since The Gateway receives 37.5%of the property tax increment,the$699,367.50 reimbursement was reduced by$15,937.50 required by Section 5.3(m)(i)of the Reimbursement.. Third Amendment. The Third Amendment,in addition to setting the 45,000 square foot retail square footage limit, established another level of reduction which only applies to the Greater Main Street Area(North Temple to 600 South;200 East to West Temple). This requirement states that if more than 10%of the retail spaces either in square footage or number of retailers are Relocated Users an additional reduction is made. Retail businesses must have been open during the period beginning on February 1, 1999 and ending four years after the date of issuance of the first certification of occupancy for all or any portion of the retail portion of the project and close or substantially curtail their business in the Greater Main Street Area. 111 For tax year 2002 it was determined that this reduction did not apply since the relocated users occupied only 11,706 square feet,or 2%of the square footage, and four,or 3%, of the 124 spaces. Therefore, Gateway was not subject to an additional reduction under Section 5.3(m)(ii). Estimated 2005 Retail Reduction Associated with Nordstrom Move. Following are the formulas to calculate the reduction for tax year 2005. Section 5.3(m)(i)Reduction: No reduction would be required since Nordstrom would not open prior to December 31,2004. Section 5.3(m)(ii)Reduction Estimated Gateway Share 2005 Increment $1,112,883 Relocated Users as % of Square Footage 54% %of Tax Increment Attributed to Retail 58.5% Monthly Reduction $29,050 In other words for each month Nordstrom occupied space within Gateway prior to November 2, 2005, there would be an approximate$29,050 reduction in the reimbursement. If the assessed value or tax rate changes,the reduction will also change. Board Memo October 2,2003 • Page 4 Changes to RDA Agreement The terms of the agreement that would need to be changed if the City Council/Board decides to permit large anchor retailers to move to The Gateway are as follows: 1. 45,000 Retail Restriction. The Third Amendment to the Participation and Reimbursement Agreement passed in July, 2000 restricts the size of retail spaces utilized by a single retail facility to 45,000 square feet or less (with the exception of Galyan's Trading Company). Both the proposed anchor retail and value retail exceed the 45,000 square foot restriction. 2. Developer Improvements. The Fourth Amendment to the Participation and Reimbursement Agreement executed in January, 2001 altered the Gateway Site Plan which shows the Phase I and Phase II developments(Exhibit Attached). It permitted construction of office and a small amount of retail space along 400 West to be changed to Phase I improvements and the construction of the hotel on 500 West to fall into Phase II. A portion of the site proposed for the construction of the anchor retail and value retail is the hotel site. The Agency would have to agree to permit retail construction on the site. Gateway Associates has not requested a change in the Relocated Retail User Reduction formula or funds from the Agency to assist in the construction of the proposed Nordstrom/Target. ATTACHMENTS: 1) Site Plan showing Easements • 2) Site Plan showing Project Phasing • di • -_ ,,= SALT LAKE• 1 500 NEST MEET (1115313 31411•511XUCTURELjj NE A N A�500 f� °\ WEST STREET r Lek I ' Gait Lake City Gateway // �' ' \ r ) r OAS TEICT CGATEWAY ASSOCIATES,LTD. 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The Institute maintains a membership representing a broad spectrum of interests and sponsors a wide variety of educational programs and forums to encourage an open exchange of ideas and sharing of experience. ULI initiates research that anticipates emerging land use trends and issues and proposes creative solutions based on this research; provides advisory services; and publishes a wide variety of materials to disseminate information on land use and development. Established in 1936, the Institute today has some 17,000 members and associates from 50 countries, representing the entire spectrum of the land use and development disciplines. Professionals represented include developers, builders, property owners, investors, architects, public officials, planners, real estate brokers, appraisers, attorneys, engineers, financiers, academicians, students, and librarians. ULI relies heavily on the experience of its members. It is through member involvement and information resources that ULI has been able to set standards of excellence in development practice. The Institute has long been recognized as one of America's most respected and widely quoted sources of objective information on urban planning, growth, and development. This Advisory Services panel report is intended to further the objectives of the i Institute and to make authoritative information generally available to those seeking knowledge in the field of urban land use. Richard M.Rosan President ULI—the Urban Land Institute 1025 Thomas Jefferson Street,N.W. Suite 500 West Washington,D.C.20007 • ULI Report—DRAFT—Subject to technical editing Page 1 Salt Lake City, Utah September16- 18, 2003 ABOUT THE ADVISORY SERVICES PROGRAM • The goal of ULI's Advisory Services Program is to bring the finest expertise in the real estate field to bear on complex land use planning and development projects, programs, and policies. Since 1947, this program has assembled well over 200 ULI- member teams to help sponsors find creative, practical solutions for such issues as downtown redevelopment, land management strategies, evaluation of development potential, growth management, community revitalization, brownfields redevelopment, military base reuse, provision of low-cost and affordable housing, and asset management strategies, among other matters. A wide variety of public, private, and nonprofit organizations have contracted for ULI's Advisory Services. Each panel team is composed of highly qualified professionals who volunteer their time to ULI. They are chosen for their knowledge of the topic of the panel and screened to ensure their objectivity. ULI panel teams are interdisciplinary and are developed based on the specific scope of the assignment. ULI teams provide a holistic look at development problems. Because the sponsoring entities are responsible for significant preparation before the panel's visit, including sending extensive briefing materials to each member and arranging for the panel to meet with key local community members and stakeholders in the project under consideration, participants in ULI's panel assignments are able to make accurate assessments of a sponsor's issues and to provide recommendations in a • compressed amount of time. A key strength of the program is ULI's unique ability to draw upon the knowledge and expertise of its members, including land developers and owners, public officials, academics, representatives of financial institutions, and others. In fulfillment of the mission of the Urban Land Institute, this Advisory Services report is intended to provide objective advice that will promote the responsible use of land to enhance our environment. • ULI Report—DRAFT—Subject to technical editing Page 2 Salt Lake City, Utah September16-18, 2003 THE PANEL • Michael Beyard Senior Resident Fellow ULI/Martin Bucksbaum Chair for Retail and Entertainment ULI—The Urban Land Institute Washington, DC Maureen McAvey Senior Resident Fellow Klingbeil Family Chair for Urban Development ULI—The Urban Land Institute Washington, DC ULI STAFF Mary Beth Corrigan Vice President, Advisory Services ULI—The Urban Land Institute Washington, DC • III ULI Report—DRAFT—Subject to technical editing Page 3 Salt Lake City, Utah September16- 18, 2003 ACKNOWLEDGEMENTS • The panel would like to thank the Salt Lake City staff, the city council, the mayor, and the retail owners in Salt Lake City who took the time to share their vision and insights regarding retail in downtown Salt Lake City. In particular, Russell Weeks, Cindy Gust-Jenson, Alison Weyher, Louis Zunguze, Valda Tarbet, and Joel Paterson, were key in their organization of the panel and the materials needed for ULI to do its work. • ULI Report—DRAFT—Subject to technical editing Page 4 Salt Lake City, Utah September16- 18, 2003 • INTRODUCTION 0 In September 2003, the Salt Lake City city council asked ULI to provide objective J input on the issues it was facing with its downtown retail. Currently in downtown Salt Lake City, there are two main retail "nodes" —The Crossroads Plaza and Z.C.M.I. Center(both referred to in this report as the malls) and the Gateway. The malls have been in downtown Salt Lake City for more than 20 years and have served as the main retail center for downtown. The malls are now under one ownership, PRI, Inc., and are slated to undergo major redevelopment because they are old and, in some opinions, obsolete. The anchors for the malls are Nordstrom, Meier and Frank, and Mervyns. The Gateway is a recent redevelopment project—the site of an old Union Pacific depot. It was envisioned as a retail entertainment destination in the downtown and has been relatively successful. There is also a residential component to the Gateway project. Three years after the master plan for Gateway was approved, city officials, through the Salt Lake City Redevelopment Agency, made a decision that no retail anchor in excess of 45,000 square feet would be allowed in the project. The reasons were two-fold. The first was to keep the nature of Gateway as an entertainment destination with smaller specialty stores. The second was so that it would complement, not compete, with the downtown malls. There is another smaller retail node in downtown Salt Lake City—Trolley Square. This is a shopping and dining center with stores such as Harolds, Talbots, Banana Republic, and Ann Taylor. While not walking distance to downtown, it is within the downtown area. 1111 Nordstrom's lease at Crossroads Mall ends in 2005. While it has been in negotiations with the previous mall owners and the new mall owners, it has decided not to remain at the mall when its lease it up. Nordstrom has expressed interest in Gateway— approximately 4.5 blocks from its current location. (It should be noted that Salt Lake City blocks are approximately 660 feet long.). Representatives for Nordstrom have told the Salt Lake City council members and others that if they cannot move to Gateway, they will leave downtown all together. Consultants to the owners of the malls have indicated that it is their belief that if Nordstrom is allowed to go to Gateway, they will not be able to get another anchor for the malls because of a perceived split in the retail in the downtown. They also believe it is better to let Nordstrom leave the downtown than to allow the store to relocate to Gateway. The owners of Gateway have asked the city council to lift the 45,000 square foot limit for retail in their project. The city council held a fact finding session, of which this ULI team was a part, to help educate itself on the best retail decision for downtown Salt Lake City. This report summarizes the ULI team's findings and recommendations on this topic. • ULI Report—DRAFT—Subject to technical editing Page 5 Salt Lake City, Utah September16-18, 2003 ULI's Assignment • ULI was asked to focus on the issues related to downtown retail: the feasibility of having Nordstrom move to Gateway and still have a viable mall development downtown. The team was also asked to evaluate the perceived "bifurcation" of downtown retail. The team looked at the distribution of downtown retail and evaluated different retail scenarios. The ULI Process Prior to coming to Salt Lake City, the ULI team reviewed briefing materials prepared by the city staff. These materials gave the history of the two sites (the malls and the Gateway project), provided some demographic and market information, and outlined the city's expectations of ULI. The team spent approximately two days in Salt Lake City meeting with staff and elected officials, touring the downtown, and meeting with the owner of the malls and the owners of Gateway. They shared their findings and observations with the city council, staff, and public. The team also participated in the city's fact finding session for this issue. The following is a summary of the team's findings and observations. • • ULI Report—DRAFT—Subject to technical editing Page 6 Salt Lake City, Utah September16-18, 2003 THE CONTEXT • The team spent some time evaluating the retail in the context of the downtown. Downtown Assets When the team arrived in Salt Lake City, it was impressed by what it found —a vibrant downtown with several assets that many downtowns across the country would like to have. • 60,000 employees from a variety of businesses. • 5 million tourists annually who come to Temple Square and for other attractions. • The beautiful Temple Square complex that helps define downtown Salt Lake City. • A clean and safe environment that welcomes people to walk around and enjoy the downtown. • Existing retail in the downtown. • A growing residential base. • A convention center and professional sports arena. • • Infrastructure investments including light rail and a new library. Issues The team identified several issues related to retail in the downtown. Perceived Issues The perceived issues are those that the city has been focusing on when trying to make a decision about its retail strategy for the downtown. These were identified as: • The 45,000 square foot cap on retail development at Gateway. • Restrictions on Gateway department stores (big box is ok; fashion retailers are not). • Impact of Nordstrom leaving the Crossroads and potentially the city. • ULI Report—DRAFT—Subject to technical editing Page 7 Salt Lake City, Utah September16-18, 2003 Real Issues • As the ULI team saw it, the following are the"real issues" that the city should be focusing on. The city should: • Work to strengthen the downtown as a whole and build on the momentum generated by the 2002 Olympic games. • Define the changing role of the downtown districts and determine appropriate roles for each district. • Define what it means by"big box" and determine the types of retailers the city wants in its downtown. • Understand that retail is now moving east/west in the city, not north/south as it had done historically. For example, the panel was impressed by the activity that appears to be growing along 200 South from Gateway towards Main Street. The team believes that this trend will continue over time. • Understand that there is uncertainty in the retail market and make its decisions on what it believes is best for Salt Lake City. Also, nothing happens overnight and retail districts and downtowns evolve. Prior to the malls being built, Main Street retail looked totally different and some people even • commented that the malls "killed" the traditional Main Street retail. Salt Lake City is entering the next stage of this evolution. The Team's Observations The ULI team believes that everyone has the same general goals for the downtown. These include the following. • Successful retail in the downtown that meets the needs to workers, residents, and visitors. • A vibrant employment and residential core. • A positive relationship among stakeholders—public and private. It was also evident that Gateway and the malls depend on each other. The success of one will lead to the success of the other and there should be efforts to make them complementary. This is because the team believes that there are not two downtown retail areas but one downtown with different districts. This needs to be built upon. • ULI Report—DRAFT—Subject to technical editing Page 8 Salt Lake City, Utah September16- 18, 2003 National Retail Trends To understand what is possible and feasible in downtown Salt Lake City, it is • important to understand national retail trends. The United States is in the process of reinventing retail. The old malls are becoming obsolete and the consumer is always looking for something new and different. Because of this, the retail lifecycle is shortening. The older smaller malls are declining and being replaced by "fortress malls" —large regional centers and lifestyle centers where people can get things for their homes. Urban retail destinations are becoming more popular because people like to go "downtown" to shop and then maybe go out to eat and see a movie. In addition, there is a trend towards street front retail where people can walk along and window shop, sit out at a café when the weather is nice, and enjoy a leisurely shopping experience. There is also a decline in the department store in the traditional sense. The power centers such as Target and Wal-Mart are the stores of choice for appliance, tools, etc. What were traditionally department stores are becoming fashion retailers. There is also a rise in restaurants in the urban areas. With more and more households with both adults working, eating out is happening more often. More mixed use developments—retail, commercial, residential —are being developed around the country. People are wanting to have amenities where they live or work and have the choice to live, work, and shop all in the same area. • There is also a movement towards non-retail anchors. Health clubs, libraries, and movie theaters are among the types of uses that can also anchor a retail/mixed use district. This has all led to a change is traditional retailing. There are two basic types of retail: value and high end. With value retail people are looking for convenience and quality at a good price. With high-end retail, the consumer wants specialty items, amenities, service, and a pleasant experience. Salt Lake City Market Realities The team identified what it believes to be some market realities in downtown. • The one thing that always drives retail—no matter where it is—is the fact that the customer is king or queen. They are not typically loyal to a site and will go where they want. • Retail in downtown is already "tri-furcated" among Gateway, Trolley Square, and the malls and there is competition in the suburbs. III ULI Report—DRAFT—Subject to technical editing Page 9 Salt Lake City, Utah September16- 18, 2003 • Gateway and Trolley Square are moving forward with relative success given • the age of the projects. There are still growing pains but these seem to be fixing themselves. • There is an abundance of retail-zoned land in Salt Lake City. • Nordstrom is most likely not staying at Crossroads. While the team did not talk to representatives of Nordstrom directly, it heard from several sources that even under new ownership, they are not interested in staying at the malls. The question then becomes does the city let Nordstrom leave the downtown, which would send a bad message to other major retailers or should the city allow the change in the Gateway master plan to allow Nordstrom to stay in town,thus providing the downtown mall the opportunity to reposition itself. What Is Needed to Address the Realities The ULI team feels that what is most needed is a win-win situation. The following are suggested elements for creating this situation. • A STRATEGY for downtown retail —not a plan. The team heard that there have been several plans for the downtown. What now needs to happen is development of a downtown action plan with timelines and definition of roles and responsibilities. This action plan needs to be developed by all the major • stakeholders in the downtown and the stakeholders need to buy in to the plan. A working group made up of the major land owners can guide this process. • Revision of the downtown master plan to include the repositioning of the malls. Times change and as discussed earlier in this report,the face of retail is changing. The downtown master plan(including the Gateway plan) needs to be revisited to see how it should be amended to address the changes in the retail industry. • Protection of historic buildings. The team saw several beautiful older buildings in the downtown that provide character and should be preserved and incorporated into any future downtown development. • Creation of defined retail districts. While there is one downtown and therefore the need for one downtown strategy, the success of the strategy will be dependent on the recognition that there are two or three retail districts. These need to be promoted and actions taken to link them. If walking is an issue, better ways to use mass transit to connect the districts need to be developed. • Street front retail along Main Street, in the team's opinion, will be what brings Main Street back. The days of trying to pull people in off the street to an • enclosed mall are over and the malls need to be returned to the street. ULI Report—DRAFT—Subject to technical editing Page 10 Salt Lake City, Utah September16- 18, 2003 OBSERVATIONS: THE MALLS AND GATEWAY III The team made several observations about the Gateway project and the downtown malls. These observations are offered to help the city think about how to position these two districts in the downtown The Malls The team saw great potential at the mall sites and believes that a clear vision is emerging. The following are the team's observations and context. • There is most likely a market for a mixed-use development on the site— residential, downsized retail, commercial. The team heard that there is increased market for residential in the downtown and this is an appropriate location. • There is a need for anchors and activity generators. This does not necessarily need to be a big fashion store but can be a museum, health facility, theater, etc. • The customers for this site will most likely be employees from the office, tourists and convention visitors, and LDS church-related visitors. It can become the place to go for a business lunch with co-workers and clients, shop for business attire, and take care of convenience shopping. • • This site also serves as the anchor for the rest of the Main Street retail and commercial development. Restaurants and clubs, outdoor cafes, one-of-a- kind stores tied to local culture, health clubs and spas, art galleries, cultural activities, banking and financial services along with some traditional retail are all potential uses for this site, in the team's opinion. Gateway The following is the context for the Gateway project • It has younger customers because of the stores that are there. The"hip" trendy stores are located at Gateway and that is the demographic that tends to shop there. It is also attractive to tourists. • Because there is a residential base, there will be the need for more residential serving retail, or convenience retail—dry cleaning, coffee shop, packing and shipping, nail salons, etc. • There is a need to increase daytime uses. Currently residents and tourists go there but this tends to be on the weekend and when there are special events or programs. Small office, such as medical offices, would attract more daytime III ULI Report—DRAFT—Subject to technical editing Page 11 Salt Lake City, Utah September16-18, 2003 users. The intent is not to compete with the downtown Class A office space . but to generate traffic. ■ There is a need for anchor tenants in the Gateway project. The market will define what those tenants will be. ■ There is a market for food and convenience stores at Gateway. There is no real grocery store in the downtown and this would be an appropriate location. i • ULI Report—DRAFT—Subject to technical editing Page 12 Salt Lake City, Utah September16- 18, 2003 ACTION ITEMS • The team developed the following suggested action items for addressing the downtown retail issues. • Begin thinking of downtown as one area and not two separate retail areas. It should be marketed as one area and promoted as one area. • Take 6 to 12 months to develop a retail strategy for the entire downtown. This includes assembling all the major stakeholders to participate in the process. Conduct some visioning sessions to make sure that there is sufficient input into the strategy. Part of this strategy needs to include design guidelines for ground floor retail • Lift the 45,000 square foot"ban" at Gateway and allow the market to do its thing. This will allow Nordstrom to make a sound business decision. If the owners of the malls are able to negotiate a better deal with Nordstrom, that is fine. If they prefer to go to Gateway, they should be allowed to. • There is a need for some zoning changes. A redefinition of"department store" is needed to allow the market to influence where certain uses locate. There is also a need to limit retail mandated land in the city. Right now Nordstrom could go to several other areas in the city because it is already zoned as retail. This is not recommended—it should stay where it will serve as • an anchor to already existing retail. • Consider density bonuses for downtown core—both residential and retail. This has the potential to attract high quality developers to the downtown and provide incentives for good mixed-use projects. • ULI Report—DRAFT—Subject to technical editing Page 13 Salt Lake City, Utah September16-18, 2003 CONCLUSION For the reasons mentioned earlier in this report, the team was impressed by what it found in Salt Lake City. Many cities of comparable size—and larger—would like to have many of the assets found in Salt Lake City. The team believes that the opportunity to capitilalize on these assets is very achievable but it will take everyone working together to realize one vision for downtown Salt Lake City to attain the vision. • ULI Report—DRAFT—Subject to technical editing Page 14 Salt Lake City, Utah September16-18, 2003 ABOUT THE PANEL Michael Beyard Washington, DC Michael Beyard is an urban planner and economist with more than twenty years' experience in the related fields of real estate development, land use planning, and economic development. His experience is focused in both the United States and Europe on commercial and retail development, shopping centers, e-commerce, location-based entertainment, and downtown revitalization. At the Urban Land Institute, Beyard is Senior Resident Fellow for Retail and Entertainment Development. He is the author/project director of numerous books including Developing Urban Entertainment Centers, Shopping Center Development Handbook,Dollars & Cents of Shopping Centers series, Value by Design, Developing Power Centers,Downtown Development Handbook, The Retailing Revolution, Ten Principles for Reinventing Suburban Strips, and Business and Industrial Park Development Handbook. He created and directs ULI's International Conference on Urban Entertainment Development and its technology and retail real estate forum. He also created ULI on the Future, ULI's annual publication devoted to emerging land use and development trends and issues, and the Entertainment Zone. In his role as Senior Resident Fellow, Beyard is also a featured speaker in the United States, Europe, and South America on retail, entertainment, and downtown • development issues, and he is a widely quoted expert in national and international media including the New York Times, Wall Street Journal, CNN, CBS News, Los Angeles Times, Washington Post, and Chicago Tribune as well as American and European planning and real estate journals. Prior to his current position, Beyard was Vice President of Strategic Development and responsible for the Institute's research, data collection, books, and conferences in the commercial development field as well as its new strategic initiatives. He created ULI's program in the retail entertainment field including international conferences, books, Urban Land magazine supplements, and strategic partnerships with other organizations. In addition, he is the past director of ULI's advisory work in Central Europe under the auspices of the United States Agency for International Development (USAID), and the coordinator of program activities for ULI-Europe. Before coming to ULI, Beyard was a senior consultant in the fields of urban planning and real estate development. He spent 10 years at Booz Allen&Hamilton, Planning Research Corporation, and Gladstone Associates advising both public and private clients on market analysis, feasibility, and development planning. Beyard has been honored with membership in Lambda Alpha, the International Land Economics Honorary Society and was an appointed member of the Mayor's Interactive Downtown Task Force in Washington, D.C. Beyard travels widely and to date has visited for business or adventure more than 50 countries in Europe, South America, • ULI Report—DRAFT—Subject to technical editing Page 15 Salt Lake City, Utah September16-18, 2003 Africa, Australia, and Asia including two trips overland across the Himalayas and a 411 successful ascent of Mt. Kilimanjaro. He holds a B.A. in International Economics with honors from Rutgers College and a Masters in Urban Planning and Development from Cornell University where he was elected to Phi Kappa Phi. Maureen McAvey Washington, DC Maureen McAvey is the Senior Resident Fellow for urban development at the Urban Land Institute in Washington, DC. The Institute is the premier research and education organization within the real estate and land use industry. She has over 25 years of experience in real estate development, consulting, and the creation of public/private financial structures. She was Director, Business Development for Federal Realty Investment Trust(FRIT), a NYSE traded owner and manager of retail developments and mixed-use developments. In that capacity she assisted in the establishment of public/private financial structure of a mixed-use retail/housing development in Arlington County, VA. She also completed a similar public/private partnership with the City of San Antonio to further FRIT's Houston Street mixed-use project there. As part of the San Antonio project, tax increment financing, Urban Development Action Grant funds and an Economic Development Administration grant assisted in the funding of necessary public improvements. • McAvey served as the Director of Development for the City of St. Louis, a cabinet level position to the Mayor. In that capacity, she was also Executive Director of the St. Louis Development Corporation, leading seven development-related boards and commissions. Major accomplishments included construction of a new neighborhood commercial center, anchored by a 60,000+ sq.ft., 24 hour grocery; a privately financed $1 million master plan for the revitalization of the Downtown area; negotiation of development agreements to secure a new 1,000 room Convention Headquarters Hotel; and a Neighborhood Planning effort. Prior to St. Louis, McAvey led the real estate consulting practices in Boston for Deloitte&Touche, and for Coopers& Lybrand. While in the "Big Six" firms, McAvey directed the due diligence efforts for over$12 billion in securitization projects for major banking and financial institutions. Her clients included institutional developers, major corporations, utilities, colleges and universities. Consulting efforts ran the gamut of new financings, restructuring, troubled projects, strategic planning, and mergers and acquisitions. As a private developer, McAvey directed the West Coast operations of a national development firm where she served as project manager for a$40 million rehabilitation of a national historic landmark hotel with office and retail components. She also directed the master planning effort for a 70 acre, million square foot university-related research park, including the architectural, legal, and organizational components of development McAvey holds two master's degrees: one from the University of Minnesota, and one from the • Kennedy School of Government, Harvard University. She has done extensive course ULI Report—DRAFT—Subject to technical editing Page 16 Salt Lake City, Utah September16- 18, 2003 work at Harvard Business School in commercial lending, investment management, finance and real estate development. McAvey was a Member of the Board of Trustees, Urban Land Institute, 1995-2001. She chaired the Regionalism Forum for two years, exploring issues of smart growth, multi jurisdictional boundaries and planning efforts, and shared revenue/fiscal disparities alternatives. She led an international panel to Cracow, Poland, assisting the city in creating its economic development plan and strategy. She is a frequent guest lecturer at major universities and a frequent national speaker. • • ULI Report—DRAFT—Subject to technical editing Page 17 Salt Lake City, Utah September16-18, 2003 r Vpli4Li w►VWvi, V I J J\ U B\I RDA re : NoRos r oI PUBLIC COMMENT TALLY 9-May-03 ID# Date Individuals Name Business Name Allow move Conditional Do not allow Address City/State 1 5/5/2003 Brian S. Stringham, Jr. Utah Woolen Mills XX 59 W. So Temple Salt Lake City, UT 2 5/5/2003 Doug & Louis Smith XX Gooding, ID 3 5/5/2003 Kate Reddy XX 136 So Main Salt Lake City, UT 4 5/5/2003 Claudine Cable Parry Anderson &Gardiner XX 50 E So Temple Salt Lake City, UT 5 5/5/2003 Tracy Martin Huish Chemicals XX 15 W So Temple Salt Lake City, UT 6 5/6/2003 Cheryl Stapley XX 48 W 300 S Salt Lake City, UT 7 5/6/2003 Steve Bogden Prime Commercial XX 8 5/6/2003 Rob D.Van PVE, Inc. XX 90 So 400 West Salt Lake City, UT 9 5/6/2003 Mary Ann Hatch XX 2061 Laird Drive Salt Lake City, UT 10 5/6/2003 Karen Jones XX Park City, UT 11 5/6/2003 Ruth Lowe XX 12 4/29/2003 Vicky Booth XX 3215 E 3900 So Salt Lake City, UT 13 4/29/2003 Debroah Bayle Nielsen United Way XX 175 S W Temple Salt Lake City, UT 14 5/6/2003 Richard Dye CB Richard Ellis XX Salt Lake City, UT 15 5/1/2003 David Spafford XX 2750 Creek Crossing Holladay, UT 16 4/29/2003 Steve Brown XX 17 4/30/2003 Marion Cummings Cummings Chocolates XX Liberty Park&Gateway Salt Lake City, UT 18 4/30/2003 Kathryn C. Carter XX 19 5/6/2003 Katharine Garf XX 20 5/3/2003 Benjamine J. Mendoza XX 180 P Street Salt Lake City, UT 21 5/3/2003 Andrea Stavrakakis XX 2269 Green Street Salt Lake City, UT 22 5/3/2003 Tom Markus XX 48 W 300 S Salt Lake City, UT 23 5/6/2003 Rebecca Bergeson XX 24 5/8/2003 Denise Wilde XX 2214 W 6050 S Roy, UT 25 5/8/2003 Peter M. Corroon SL Vest Pocket Coalition XX 859 E 900 S Salt Lake City, UT 26 5/6/2003 James Ack XX 27 5/5/2003 Jonathan M. Jepsen XX 1051 Oak Hills Way Salt Lake City, UT 28 5/7/2003 Cherilyn Megill Gateway XX 90 S 400 W Salt Lake City, UT 29 5/8/2003 M. Kibbie XX 30 5/6/2003 Robert E. Crandall Crandall Building XX 50 W 1st S Salt Lake City, UT 31 5/6/2003 Phillip W. Johnston Anchor Financial Services XX 10 W Broadway Salt Lake City, UT • • • s, 32 5/7/2003 Daniel Davis XX 33 5/7/2003 Steve Lundgren Salt Lake Marriot Downtown XX Salt Lake City, UT 34 5/7/2003 Chris Corroon The Parc at Gateway XX 14 S 400 W Salt Lake City, UT 35 5/8/2003 Bruce Bingham Hamilton Partners XX 10 Exchange Place Salt Lake City, UT 36 5/8/2003 Rob Dahle Boston Store Bldg XX 262-264 S Main Salt Lake City, UT 37 5/8/2003 David S. Wright Downtown Merchants XX Salt Lake City, UT 38 5/8/2003 Franklin L. Hunt HJ &Associates, LLC XX Crossroad Mall Salt Lake City, UT 39 5/8/2003 Catherine I. King Rainbows of the West XX Crossroad Mall Salt Lake City, UT 40 5/8/2003 Willamarie Hueslkamp XX 159 W Broadway Salt Lake City, UT 41 5/9/2003 Michael Silver Fleming's Prime Steakhouse XX 20 S 400 W Salt Lake City, UT 42 5/9/2003 Greg Gruber XX 43 5/7/2003 Mr. Howell (*vbl) Howell's Photo XX *vbl Verbal comment • III Ill • PUBLIC COMMENT TALLY 15-May-03 ID# Date Individuals Name Business Name Allow move Conditional Do not allow Address City/State A 5/10/2003 Sally Small XX Avenues Salt Lake City, UT B 5/9/2003 Helen Kueffner XX C 5/6/2003 John Langeland XX 171 E 3rd Avenue Salt Lake City, UT D 5/12/2003 Wesley McDougal XX 2060 Princeton Dr. Salt Lake City, UT E 5/11/2003 Main Street Owners see list XX Salt Lake City, UT F 5/10/2003 Ray&Clara Fritz XX 5643 Cora Way Taylorsville, UT G 5/8/2003 David S.Wright Downtown Merchants XX #9 Exchange Place Salt Lake City, UT H 5/7/2003 William H. Nelson IHC XX 36 S State Street Salt Lake City, UT I 5/5/2003 Kent H. Murdock OC Tanner XX 1930 S State Street Salt Lake City, UT J 5/12/2003 Ashly Hutcheon XX K 5/5/2003 Jeff Bennion XX Salt Lake City, UT L 5/13/2003 Jerry M. Place Western Nut XX 434 S 300W Salt Lake City, UT M 5/13/2003 Debbie Hardy XX N 5/13/2003 Knute W. Peterson PVE, Inc. XX 90 S 400 W Salt Lake City, UT 0 5/13/2003 John Lamborn XX 764 E 800 S Salt Lake City, UT P 5/13/2003 Bob Haedt Great Garb XX 1510 S 500 E Salt Lake City, UT Q 5/12/2003 Stephen&Elizabeth Guss XX R 5/9/2003 Jeff Jensen Landmark Title XX 675 E 2100 S Salt Lake City, UT S 5/14/2003 David Dean Tabula Rasa/Cabin Fever XX Salt Lake City, UT T 5/15/2003 Twinkle Chisholm Lucky Dog Communications XX Salt Lake City, UT U 5/15/2003 Cheri Andrus("vbl) XX Park City, UT V 5/15/2003 Skip Stephenson Poag&McEwen Lifestyle XX 6410 Poplar Avenue Memphis, TN W 5/14/2003 James Webster XX 938 Military Dr Salt Lake City, UT X 5/14/2003 Rebecca Cooley XX 2596 Rowland Dr Salt Lake City, UT Y 5/15/2003 Keith Raffle Questar Corp XX Salt Lake City, UT Z 5/22/2003 Frank D. Dolce Crimson Club XX AA 5/22/2003 Verbal (no name given) XX BB 5/23/2003 Betsy Burton The King's English XX Salt Lake City, UT CC 5/31/2003 Natalie Sherling Sur La Table XX Salt Lake City, UT OD 5/29/2003 Roger Boyer Gateway Associates XX 90 S 400 W Salt Lake City, UT EE 6/12/2003 Hal Massey XX FF 6/12/2003 Donna Smart XX "vbl Verbal comment • III III OCT .. 7 2003 • October 7,2003 HAND DELIVERED Council Member Carlton Christensen Salt Lake City 451 South State Street,Room 306 Salt Lake City,Utah 84111 Dear Council Member Christensen: The potential for Nordstrom to leave downtown Salt Lake is an issue of significant and enduring concern to the future health of the city and to retailing in the entire state of Utah. As commercial real estate brokers, developers, lenders, architects, tenants and others associated with the industry, we have joined forces with a united voice for the first time too strongly urge you to undertake any measure necessary to ensure Nordstrom is able to continue as a valuable asset to the downtown area. IIIt would be difficult to overstate Nordstrom's importance in the retail macrocosm. Members of our group represent ninety percent of the retailers located in Utah, and are active in highly regarded organizations such as ICSC,NAIOP and CCIM in which we regularly interact with decision makers who shape the face of retailing across the country. As seasoned veterans of the industry, we fully understand the disastrous ramifications the loss of a tenant of Nordstrom's stature can have on a city's business climate. Utah has long been a hard sell for upscale retailers. The state has a national reputation as a haven for discounters. Attracting higher quality tenants remains an ongoing and consistent challenge. Statistically, more than seventy percent of soft goods retailers follow Nordstrom's lead and actively seek to locate near their stores. Conversely, when Nordstrom's leaves an area, others are sure to follow. If you refuse to allow Nordstrom to locate in the location that they determine to be in their best interest, they may vacate their existing store and permanently leave the Salt Lake market. If Nordstrom leaves the market, many existing tenants will follow Nordstrom's lead and it will make it even more difficult to attract new retail tenants to this market that currently do not operate stores in Salt Lake City. Without question, the loss of Nordstrom in this market will have an immediate trickle down effect on other retail tenants,national high-end businesses and restaurants. Our objective is to keep Nordstrom downtown. We encourage Nordstrom to consider all options, including the new opportunities available on Main Street. We strongly support the independent studies which have recommended Nordstrom be allowed to move unencumbered and • Council Member Carlton Christensen III October 7, 2003 Page 2 of 3 determine which location will be in their best business interest. We are in no way affiliated with The Boyer Company or The Gateway and do not advocate one particular downtown site over another. However, since Nordstrom has publicly stated, in earnest and serious statements, that it will exit Salt Lake City if not allowed to rebuild downtown, we believe it should be allowed to do so. The loss of Nordstrom will have an exponential multiplier effect on other businesses, both now and in the future, if they are allowed to leave Salt Lake City. Zoning laws should be kept flexible. They are subject to change and adaptation in order to better reflect the circumstances, needs and opportunities present in a community. In the larger world of retailing, a decision to allow Nordstrom to move to another block would be consistent with city policy, as the company is viewed among those involved in the industry as a fashion retailer, not a department store. As Salt Lake City continues to face fiscal challenges, it is also crucial to consider the potential loss of tax revenue generated by Nordstrom's downtown store. Nordstrom has a broad reputation for loyalty among its many customers, and we will undoubtedly see valuable tax revenues make the short journey to Murray City and Fashion Place Mall if the downtown location closes. Keep in mind also the host of other cities across the country which are eagerly attempting to lure Nordstrom, offering a multitude of incentives. If we earn a reputation as the city that refused • Nordstrom's reasonable request to relocate, it will surely become more difficult to attract quality retailers to Utah. While stressing the independent nature of our group, we also believe Salt Lake has a vested interest in promoting the long term viability of The Gateway. The city committed to its development and has a responsibility to promote its success. Being inflexible to change could conceivably lead to the creation of a$300 million white elephant in the west downtown area. Salt Lake City has nothing to gain from a potential loss of business at The Gateway,which has successfully drawn many upscale retailers to Utah for the first time. We do not view this as an issue pitting Crossroads Plaza against The Gateway, but rather as one which affects downtown Salt Lake City, and indeed Utah as a whole. The prospect of Nordstrom leaving Salt Lake is a lose/lose proposition in which the city loses, the citizens lose and other retailers lose. It is not to be taken lightly. If Nordstrom leaves Salt Lake City, they will never come back to town. Additionally, the City leaders and officials will send a loud and clear message to Nordstrom and the retailing world that "this is not the place." We have gathered signatures from concerned individuals who work in, around and behind the scenes to promote and support the retail industry in Utah. We unite with one voice to heartily support a vote in favor of allowing Nordstrom to self determine which location is in , 0 Council Member Carlton Christensen October 7, 2003 Page 3 of 3 their best interest. We urge Mayor Anderson and the City Council members to continue to build on the great Olympic message that we delivered to the world just 19 months ago that "the world is welcome here." If you have any questions or would like any additional information, please give me a call at 322-2000. Respectfully submitted, r ,,,ne4,74_,_:::.,_, Bill Martin On behalf of Concerned Business and Community Leaders cc: Blake Nordstrom H. David Burton • • ., The Nordstrom 0 ExitAt what cost? ■ And who pays? We are members of the International Council of Shopping While we take no position on where Nordstrom is located in Centers(ICSC),the National Association of Industrial and Office downtown,we are clear on one thing:Nordstrom mut remain Parks(NAIOP)and Certified Commercial Investment Member In Salt lake City.We believe that this is not only a decision (CCIM). We represent shopping center owners, developers, about the future of Salt Lake City's downtown, but also the managers,investors,lenders,retailers,the public sector and other retail environment in the whole state of Utah. professionals.Naturally,we have followed with great interest the debate in Salt Lake City about the future of the downtown Nordstrom store. It is clear to us that Nordstrom will leave Salt Lake City if it does not get a new store. lM am lake City Cowl asked three Independent eosin abut `taro u',tio.'ta :a.b isi •es8 the passibility M Nordstrom leaving the City Here's what they salt "Allo+u.]30 :-...•- yiill sty' :.. ...... .. aiad hope :aYigy:-:: ... ..::.::..:..:. ... : . :::>:: geniol R-01.3.-. sll4t`t']- t utie 6tltgiUb$ Ind. : ._Develappy of t t�cr :. ... ..<, .: he Star edpN';d keep the?oIe JusP-- ° t+ozu as::. .Alt„ . .• the.: r'eQ::-vowed. Part • 1f�'� hke • to: 0.0 a eitp halt::: °f COIf n $'s : ani -P... e :of:...::,..: ..,;.;beer. - . .. `:: . . phi "w. are-going:t,it:`1iaks>8:::>ohoicb:::abvuti-: < ...":. et'sitgr(4:. ..NordsGzaom�v)iiati: :i4oiit>1Tl:Yie:Lp tirav�r ... __tbe: poli.. - .?.ublk to d4?N'i1:fo ai5d w.::... :.: ere-r -we.. .:.. not;lose.:Nordstrom. WXei�sfoie;'tve sb�6i31t�='::.;. . ... `: ` attid A„_Wilcox:. . : iot Vice»es aaia;:ECO zr1io:: - >f nee c i A$soaiatts We encourage Nordstrom to consider all options, including If Nordstrom leaves Salt Lake City completely,everyone loses. opportunities on Main Street.It is a business decision that they The consumer.The community.The taxpayer.Other businesses. have every right to make. Everybody. If Nordstrom Ieaves...we all lose! • We believe Nordstrom should be allowed to locate where they want in downtown Salt Lake City. Brett Palmer Frederick Barth Mark Lundgren Kevin S.Gam Danny C Bridea Stine Richard Coles William K.Martin Marlon Hill Kent Chard John R.Thackeray Russell Harris Steve Bowler Ed Johnson Tim Simonsen Floyd Hatch Zach Beautify Christopher Gentzkow Barbara Johnson Swart Thain Duaine Rasmussen Rich Robins Vic Galanis McKay Price John Gust Geoffrey S.Kaessner RoberGreg Shields Don Bleak Jim Caddis Mayor Tom Dolan Taylor Cooper T DeBryIII Dama Barbour Corbin Dangerfield Howard Holt John Hickey Teresa Browning Thad W.Seligman Gary K.Mangum Bob Robinson Michel M.Lawson Fred Babcock Rob Moore Mayor Nancy Workman Donald Schroeder Jon-Eric Greene Bill Nelson Chris Monson Steve Bogden Tai Biesinger Rick Newton Bill D'Evelyn Paid for by co,"emcd brines and community leaders. OCT .. 7 2003 C am" . c V Caring gmp!oyees, }—amides. . riencls, Customers, Neighbors October 6, 2003 Dear Council Member: We are the united employees of Nordstrom in Downtown Salt Lake City.Much has been said, written, and it seems at times,shouted about the decision you face with regard to our store and its proposed move to The Gateway.We do not wish to add unnecessarily to the "noise"surrounding this issue, or to pressure you unduly.We understand the difficulty of the decision you face, and your challenge in sorting through the many voices and opinions. None of us claims to be an urban planning expert or an economist. We are not trained in zoning issues.We are simply your neighbors—we are people who"work hard and play by the rules,"yet we find ourselves faced with possibly losing our careers and livelihoods for reasons we have not caused and cannot control.As we appreciate your position,we hope that you will fully appreciate ours. As a group, we try very hard to do excellent work and provide excellent merchandise and service to our customers.But even our best efforts have become increasingly more difficult and less rewarding over the past several years.And while we have all struggled as individuals, our store's results have declined even more.The situation has become untenable for us and for our company. . Unfortunately, circumstances have rendered it impossible for us to be part of the future of Main Street. Time has run out. But we can still be an important part of the future success of Greater Downtown Salt Lake City, if we are permitted to relocate to The Gateway. Despite the controversy, we remain enthused and excited at the prospect of a new store, and the chance to continue serving this community in new and even better ways. By now you have heard all the arguments about this proposal,pro and con. Our purpose is simply to remind you that each of the 280"jobs"at our store represents an individual and a family.Nordstrom tries very hard to provide us with an environment in which we can succeed.Because of that environment, we buy homes,educate children,pay taxes, and otherwise contribute to our communities.It is our petition to you that we be allowed to continue doing so in Salt Lake City for many years to come. Thank you in advance for making us part of your consideration. We express our respect and thanks for the service each of you gives this City. Sincerely, The Employees of Nordstrom Salt Lake City • p --leie/itch, cyPir 0 Caring�mpIoyeec.�amiiiec.�riencic., „( 1,kA/ -i, pLy.L____ ________ ustomers, NeigI Lors 6.47/- accL aCip -DV\Cm V-NoNeic- ,'-----N () - � C�P-L 3 ,.t;./ aC_ra----It P c•LA-A--( V7P//a-,4•CA-- , . --e-- i*&-S C. , 1,--.. ` Hk(n,+• i,(=C (- Let -0( 1--a.-vvvic.,.( . / , P, .. .0---It'aLd 1}(a)//0- /- \ ..„- --s i, ' /•. 0100 . 4/1510 . 04 i / , / P , , h . 4l I .A ./( .d ' ' - ill1"17/C(16 - ' ( Hsike A ` , ..el,i / . eLL ,./(}0d2-0-L_ ac,es --ems .„,4,„ L(AP,,c2, , / ,_ ,6 \/1„,s,v1 riksc-,.._,_ 6/ , Caring F—amilieg,f—rienJs. Customers, Neiq�kor� lot U U / > u ' 4 Ofiff • Caving gmployeec, viends. Customem Neigkhov, agmi 66m/* / eo- iv)719 / " / 4 4/ vJj VV • LITTIT A . 470'leer- Ai k • I PAII4 • CCUIP -kA4A4),(,449thC -4W4,(4) 00 140 e* 41 • CMG, . rDAi A � Caving Qmp!oyeec.1ami!iec,friends, Customers, Neigk6orc _.,frucJ.,,,e,a_e dfri_._____ --- A.AnGQ_AP 6, S \ oJC/\ z- eii,(44A‘(4( ., � " �7 ,, 1 o . - u, rc1 ql- o-A ID/ - c_____. ii.di/ted YeSL ' : I ,,,, fra)%ic)„c WAN/ NUJ (____ • ' Lk- 6} 7/ - , . C. g'}-rie/fmh Caring�mp�oyees, c.�riencic. Customers, Neighbors c*,- -e/c4- n.. 6- 7, 6-4( PlWe4/1- 4e4L , pii/A7 - • • 1p ✓mac • 2, n41 00v) \i'1\ jectA4,40r-e__ • OCT 0 7 2113 • May Realty,Inc. October 7, 2003 BY HAND DELIVERY The Salt Lake City Council Salt Lake City and County Building 451 South State Street Room 304 Salt Lake City,Utah 84111 1111 Re: Petition 400-03-20 submitted by Gateway Associates,Ltd. Dear City Council Members: The May Department Stores Company("May") owns and operates a Meier&Frank depaitiuent store on Salt Lake City's Main Street. So does Nordstrom. Relying on your many assurances over the years that the City Council would develop and maintain the Central Business District as the City's primary retail core,May has invested heavily in its Main Street location. Now Nordstrom wants to move to the Gateway District, and the developer of Gateway wants to change the zoning to allow Nordstrom to do so. May believes that if Nordstrom moves,Main Street retail will wither and die, and May and other Main Street retailers will lose their investment. To prevent that dismal future,May respectfully submits this letter to support the current text of the City's Zoning Ordinance and the Gateway Development Master Plan,both of which expressly proscribe depaitinent stores in the Gateway District. 1. Introduction. In the late 90s,the Redevelopment Agency of Salt Lake City("RDA")determined that redevelopment could transform the "Gateway District" from a blighted industrial area to a vibrant mixed- SaltLake-211875.1 0035187-00001 • The Salt Lake City Council October 7,2003 Page 2 use neighborhood. But the RDA recognized that a redeveloped Gateway District featuring retail stores could conflict with your longstanding goal of preserving Main Street as the City's major retail center. To address that potential conflict,on August 11, 1998,the City Council adopted two planning documents governing the redevelopment of the Gateway District. The first, "Creating an Urban Neighborhood Plan,"provides a general vision and guiding principles for the Gateway District. The second, "The Gateway Specific Plan," offers more details implementing the City Council's general vision. These two planning documents constitute the master plan for the Gateway District (collectively,the"Master Plan"). The Gateway Specific Plan at 6, attached hereto as Exhibit A. The Master Plan reflected a vision for the Gateway District that included retail components,but with specific limitations. Among those limitations is that retail activity in the Gateway District should be "supportive"in nature. For good reason,you planned to redevelop the Gateway District so as to "strengthen Main Street • as the primary retail core,with the Gateway District as a secondary retail area having a different appeal and character." The Gateway Specific Plan at 29. In other words,you required development that"does not compete with the downtown area." Opinion letter by Salt Lake City Attorney Ed Rutan at 1, dated April 13,2003,attached as Exhibit B. By accepting that plan,including its limitations,Gateway Associates,Ltd. ("Boyer"), as the redeveloper of a blighted area,would receive a subsidy in the form of a tax increment for undertaking the redevelopment. To further ensure that the Gateway District's redevelopment would not undermine Main Street retail,the City Council adopted a zoning ordinance to establish a land use scheme in the Gateway District that"implement[s] the objectives of the adopted Gateway[] Master Plan through district regulations that encourage the development of urban neighborhoods containing supportive retail." SLCC § 21A.31.010 (emphasis added). To that end,the Zoning Ordinance classifies various land uses within the Gateway District as either permissible, conditional or,by default,impermissible. Since the Zoning Ordinance does not classify a "depai tiiient store" as either a permissible or conditional use of land, depai t,iient stores are not permitted within the Gateway District. SLCC §21A.62.040. After the adoption of the Gateway Master Plan and the Zoning Ordinance, rumors circulated in • 2000 that"Boyer was'wooing'Nordstrom," a depai t,iient store embodying precisely the sort of large- scale retail you had prohibited in the Gateway District. Guest Column by Salt Lake City Councilman III The Salt Lake City Council October 7,2003 Page 3 David Buhler, Salt Lake Tribune,July 28,2002,attached as Exhibit C. To tighten the existing redevelopment conditions,Mayor Anderson proposed an additional restriction limiting retail stores in the Gateway District to 45,000 square feet. This restriction,which Boyer agreed to, appears in the Third Amendment to the Participation Agreement("Third Amendment"),and expressly states that the 45,000 square foot limitation applies irrespective of any modifications to the Zoning Ordinance that might permit larger retail stores in the Gateway District. Third Amendment, attached as Exhibit D. As Mayor Anderson observed shortly after executing the Third Amendment, "The Gateway project was built with public dollars and the understanding that[Boyer] would not be bringing Nordstrom or anyone like Nordstrom to that project," adding that"[w]e all have to live with our agreements." Anderson is Steadfast that Nordstrom Stay Put, Salt Lake Tribune,December 1, 2000 at Dl. Now,in Petition 400-03-20(the "Petition"),Boyer is asking for a complete reversal of one of the • key conditions on which redevelopment of the Gateway District was originally premised. To do so would unfairly change the ground rules in the middle of the development process, and would effectively punish those who,in reliance on the Council's policies and declarations,have continued to invest in Main Street through challenging economic times. Adopting the changes advanced in the Petition would not be in Salt Lake City's best interest and,in the end,would devastate Main Street retail. 2. Fairness and a commitment to "live up to .. .our agreements." The Third Amendment was an explicit reminder that Boyer could receive a subsidy for redeveloping the Gateway District only by committing that there would be no large-scale retail in the Gateway District. Relying on your commitment to the primacy of retail activity on Main Street,many businesses have continued to invest in Main Street despite difficult economic times. From the installation of TRAX,to the protracted I-15 construction,to the disruptive Olympic preparations,to the current uncertainty surrounding Nordstrom's continued presence at Crossroads Plaza,most Main Street retailers, despite receiving no subsidies,have chosen to weather the storm because of the City Council's repeated assurances that Main Street would remain the City's "primary retail core." May has invested$20 million to renovate its Meier&Frank department store in the ZCMI Center. May simply would not have made this investment in Main Street had the City Council not • repeatedly reaffirmed its commitment to the Central Business District. Changing the zoning to allow Nordstrom to move to the Gateway District would represent a wholesale repudiation of that commitment. • The Salt Lake City Council October 7,2003 Page 4 As Mayor Anderson put it, "Gateway came about because of the commitment of millions in public money. . . It was a condition of receiving that public money that there would not be a department store in there. We need to live up to our promises and written agreements." Nordstrom Insists It Must Move: Retailer gives strong message to mayor;Nordstrom Seeks City's Support for Move to Gateway, Salt Lake Tribune,November 21,2002 at El. 3. The change sought by Boyer would effectively erase 20 years of urban planning and over$100 million in public investment. The Gateway Master Plan,the Zoning Ordinance,the Third Amendment and every pertinent Salt Lake City planning document exhibit a common theme: the primacy of Main Street retail, and the secondary, supportive status of retail development within the Gateway District. Since the Zoning Ordinance,including any amendments thereto,must"be consistent with the purposes, goals, objectives II and policies of the adopted[Gateway Master Plan],"Boyer's desired amendments to the Zoning Ordinance would necessarily require fundamental amendments to all the relevant planning documents as well. SLCC §21A.02.040. The City Council should not overlook the magnitude and adverse consequences of this proposed change. As a starting point,you have characterized the City Council's policy towards downtown development in this way: "Main Street is the core of our downtown commercial,tourist and convention activity. To encourage the relocation of retail or other commercial businesses or other key'anchors'away from Main Street will undermine these activities to the long-term detriment of downtown." Salt Lake City Council Policy Statement on The Future Economic Development of Downtown at 2,January 2003. And, as Mayor Anderson has cautioned, "subsidizing large retail developments outside of the central business district before our downtown area is revitalized. . . will finish off the destruction of the downtown area." Questionnaire Probes Candidates on S.L. Issues: Potential mayors define platforms, The Salt Lake Tribune, October 29, 1999 at C4. Amending the Zoning Ordinance to permit large-scale department stores in the Gateway District means abandoning"over twenty years of planning and effort, and well over$100 million in public investments in just the past ten years." Text of letter to Blake Nordstrom, President of Nordstrom, Inc., • from the City Council,March 27,2002. A policy reversal of these proportions would only make sense if irrefutable evidence compelled such a drastic action. Is the proposed zoning change so beneficial to Salt • The Salt Lake City Council October 7,2003 Page 5 Lake City as to justify the reversal of 20 years of planning and public investment of over$100 million? The clear answer is "no." 4. Bifurcating Salt Lake City's retail district would be a disastrous decision. Over the past 20 years, one City policy has remained constant because of its enduring merit: having one large-scale retail district is good for business. The reason for a single large-scale retail district is the synergy of clustering large-scale retailers to generate the increased traffic created by proximity. Seattle and Portland, for example, currently enjoy downtown retail success because of the"critical mass and synergy of retail development"present in their downtowns. Position Paper: Salt Lake City,Utah Central Business District Retail(the"Carlson Study"),October 2003, at 3, attached as Exhibit E. This success is no accident: Seattle and Portland have carefully tailored their zoning and master plans to avoid any fragmentation of their retail core. Now these two mid-sized metropolitan areas are reaping the • benefits of their prescient planning. May's experience with downtown retail throughout the country validates the wisdom of this strategy. The inflow of shoppers, from across and beyond a metropolitan area,is the most critical factor in a downtown retailer's success. As alternate destinations to downtown retailers spring up, they intercept shoppers who otherwise would go downtown. This explains why few downtown districts remain strong. The once dominant downtown Minneapolis retail district has been replaced by Mall of America, which serves the entire upper Midwest. Downtown Denver department stores have been replaced by a combination of regional destinations including Cherry Creek and Park Meadows. Carlson Study at 2, attached as Exhibit E. In Utah,the downtown Ogden City Mall has given way to Newgate Mall. In each case,newer shopping centers outside of downtown have captured the more distant downtown shoppers. As downtowns lost their focus as fashion destinations,the traditional department stores departed. The Salt Lake City Planning Division warned the City Council of this danger in an October 1998 memorandum: "The benefit of not allowing department stores as a permitted or conditional use is that department stores often attract other retailers to locate in near proximity because of the inherent attraction of department stores. Allowing department stores in the Gateway District would probably draw some merchants from the core of the CBD and could be detrimental to downtown." Memorandum from Salt • Lake City Planning Division to City Council Members re Responses to City Council Issues Raised during Briefing Sessions Regarding Gateway District Zoning, October 28, 1998, at 3. • The Salt Lake City Council October 7, 2003 Page 6 In reality, a market the size of Salt Lake City can not support two large-scale retail shopping districts. Rather than create synergy,they would inevitably cannibalize each other. The City, then, is faced with a choice. Will it maintain its commitment to downtown retail or will it abandon downtown for the Gateway? It can not have it both ways. This economic reality can not be dismissed,as some suggest, by invoking"win-win" platitudes. In this connection,May urges you to carefully read the Carlson Study attached as Exhibit E,and the portions addressing the conclusions of the Urban Land Institute and Economic Research Associates in particular. For Salt Lake City,the exclusive clustering of major depat tuuent stores at the ZCMI Center and Crossroads Plaza is essential to preserving the City's downtown retail core. May's experience in shopping centers where Nordstrom is also an anchor reflects the synergy that the two depat talent stores create. Since 1984,in western states when Nordstrom entered a shopping center where a May store was already an anchor,Nordstrom has increased May's sales by 12%on average by the end of the first year. By contrast,a Nordstrom move to the Gateway would lead to major fallout of specialty stores that depend on • Nordstrom as an anchor, and lead to a significant decrease in the downtown Meier and Frank's sales. May cannot think of even one example of a successful situation with a single downtown department store in a city the size of Salt Lake City. The harsh reality is this: amending the Zoning Ordinance to allow Nordstrom to relocate to the Gateway would inevitably terminate May's presence on Main Street. With planned enhancements to the ZCMI Center and the Crossroads Plaza, the future of downtown retail can be bright. Supported by the City's continuing commitment, the downtown malls will attract a critical mass of large-scale retailers. May hopes that Nordstrom will choose to be part of that future. If it does not, other high-end fashion retailers will take its place. But if the City permits a Nordstrom move to the Gateway, the prospects of attracting another major player to downtown to compete against the Gateway would be dim. If Nordstrom moves to the Gateway,retail will erode and eventually collapse in downtown Salt Lake City. Other businesses are more likely to move to outlying locations, downtown residential housing will be less attractive,and most importantly,customers living throughout the region and State will take their retail business elsewhere when visiting downtown Salt Lake City. The absence of fashion depaxtinent stores will also impact thousands of out-of-town visitors to the historic monuments at Temple Square. It will be over for leading depaitiiient and specialty stores on Main Street. 411 • The Salt Lake City Council October 7,2003 Page 7 5. Conclusion. In summary,permitting large-scale retail in the Gateway District would effectively reverse 20 years of city planning and over$100 million in public investment,would severely undermine the City's present and future credibility by undercutting its commitment to Main Street retail, and would ultimately be a flawed business decision. For these reasons,May urges you to adopt the Planning Commission's recommendation and leave the Zoning Ordinance and the Gateway Master Plan in their current form. May also requests that in so doing you make a definitive statement reiterating the City Council's commitment to Main Street as Salt Lake City's primary retail district. Confidence is a scarce commodity during economic downturns, and a firm restatement of the Council's desire to preserve Main Street retail could do much to forestall future retail closures. May appreciates your willingness to consider May's perspective on this issue. i Very truly yours, Vince Como Vice President May Realty, Inc. Enclosures cc: Ron Dolan, Esq. John Allen,Esq. David J.Jordan,Esq. S i IDALISON WEYI-IER S. ELT rA) a' ,,,'C ffi0,1��P J 1 €WY �Z.ws ds �,e:_... .r•-4.e.��...—.w-_,; ROSS C. "ROCKY" ANDERSON DIRECTOR COMMUNITY AND ECONOMIC DEVELOPMENT MAYOR MEMORANDUM TO: Rocky Fluhart, Chief Administrative Officer Oct ber 6, 2003 FROM: Alison A. Weyher RE: What Has Changed in the GMU Since the Zoning was Adopted in 1998 At our briefing on September 16, 2003, the Administration indicated that there have been significant changes over the past five years when the GMU zone was adopted, which warrant changing the GMU Zoning to permit department stores. The significant changes include: II1. Hotels in the CBD 1998 v. 2002. One of the requirements for the Boyer Gateway development was the construction of a major hotel. A parcel was identified on the master plan and an agreement was reached with Marriott to construct a 300 room Renaissance Hotel. That hotel is no longer viable because of the following changing market conditions. Between 1999 and 2001, four new hotels were built downtown: Hotel Monaco, Courtyard by Marriott, Marriott City Centre and the Grand America. These new facilities added 1,480 rooms to the existing 4219 rooms, increasing the available rooms in the Downtown area by 35%. According to the Rocky Mountain Lodging Report (RMLR), lodging occupancy rates in Downtown and East Salt Lake City dropped by 6.1%between 1998 and 2002. This drop is due to an increase in supply, not a decrease in demand. When available room nights are taken into consideration, there was a 16.7% increase in occupied room nights between 1998 and 2002. 2. Light Rail. In Spring 1996, the Major Investment Study/Draft Environmental Impact Study (MIS/DEIS) for the West/East (Airport to University) Light Rail Line was initiated. The final alignment (as approved in the EIS) showed the line running on South Temple, to 400 West, then over the North Temple Viaduct, providing additional patrons to the Gateway development. In September 1999, the project was shortened to the University line because of federal construction budget constraints. 0 451 SOUTH STATE STREET, ROOM 404, SALT LAKE CITY. UTAH 841 1 1 TELEPHONE: 801-538.6230 FAX: 801-535-6005 d7_1 3. City Restrictions to RDA Agreement. In 2000, Mayor Anderson and the Boyer Company agreed that no store at the Gateway could be larger than 45,000 square feet, with • the exception of Galyans. This change significantly altered the potential tenants at the development. When the Boyer Company agreed to the 45,000 square foot maximum size restriction in 2000, they did so with the belief that specialty tenants such as Crate & Barrel would fit within these requirements. Since that time stores have increased their size and, according to their web pages, Toys R Us, Bed Bath & Beyond and Crate & Barrel average 45,000 square feet, plus receiving/stock space. Thus they are too large to fit into the development. 4. Changing Retail Trends. The following trends in retail shopping centers were identified at the Fall 2002 Urban Land Institute meeting: • Most traditional mall department stores are no longer full-service as they have scaled back their merchandise to only apparel, cosmetics, shoes and some household items. Further,mall department stores represent a shrinking part of the retail industry having lost sales to mass merchandise and specialty retail stores. • Wal-Mart is expected to double sales in five years. However, they do not sell everything. As a result, other retailers, such as big box "category killers" and service businesses can co-exist and be very successful next to a Wal-Mart. One potential obstacle facing Wal-Mart is their ability to succeed in urban areas —its growth may be hindered as it faces higher wages, more competition and scarce land. • • Approximately 7-12 percent of US malls are considered economically obsolete. Many of these malls were created at a time when most households had only one income and there was more leisure time for shopping. • Many retailers have left the mall for open-air shopping centers. Retailer margins are very slim and they have difficulty paying$20 per square foot (requiring sales of $400-$500 per square foot) as a result of common costs of utilities and security, • Few traditional malls are currently being constructed in the US. Open-air centers are now preferred, taking more retail dollars away from existing malls. Two types of centers exist: pedestrian-friendly leisure time/lifestyle centers (e.g. The Gateway) and convenience/value retail strip centers (Sugarhouse Center). • Free-standing retail is growing, with only 20% of new retail stores being built in shopping centers. Most of these new stores are built next to or across the street from a Wal-Mart or other large store. Shopping center developers are concerned that this trend will erode their market share. • • 5. Discount Stores and Wholesale Clubs Gain over Department Stores. According to the Bank of Tokyo-Mitsubishi Index, as of August 2003: • Department stores have posted a 3.9 percent decrease in sales at stores open at least a year, known as same-store sales. Same-store sales are considered the best indicator of a retailer's health. • Discount stores,however, have registered a 2.3 percent gain, while apparel chains had an increase of 2.9 percent, according to the Bank of Tokyo-Mitsubishi Index. Wholesale clubs posted a same-store sales increase of 4.7 percent. • The May Company's same-store sales were down 7.1 percent so far this year, the worst performer in the department-store sector. According to an August 2, 2003 AP article, declining department store sales are a result of discount chains such as Wal-Mart and Target wooing customers with compelling merchandise to boost sales even during the economic downturn. Kurt Barnard,president of Barnard's Retail Consulting Group, said department stores used to compete with other department stores. But "today, department stores battle it out with warehouse clubs, discount stores and most everybody else, on price." 410 The same article states that analysts applaud May Department Stores decision to drastically cut its underperforming Lord&Taylor stores, closing branches in markets, such as Denver and Atlanta, and returning to its focus on Northeastern and Midwestern markets. The company is cutting 32 stores in 15 states and two other stores under different names. It will still have 54 Lord &Taylor stores in 11 states and the District of Columbia. 6. Change in Definition of Department Store. In 1998 the City's definition of"department store"was much more narrowly interpreted. In fact, as the attached correspondence indicates, the Boyer Company was negotiating with Saks to locate in the Gateway. • UNIVERSITY to AIRPORT WEST-EAST CORRIDOR FINAL ENVIRONMENTAL IMPACT STATEMENT • REVIEW DRAFT October 1998 Prepared by: Wasatch Front Regional Council • Utah Transit Authority Parsons Transportation Group mi- . • D_ " ' i i . .LEGEND: _ _ _..._ /'�• N/S LRT ALIGNMENT ...-.- "' PROPOSED W/E LRT ALIGNMENT I _.. _.....L.._.. ••_.._-._,,�, N/S STATIONS .j • PROPOSED W/E STATIONS gil7 1 - ,—�FEIS STUDY CORRIDOR - I• . • �••—MIS/DEIS STUDY CORRIDOR _ WADI • O • I I ... . .._ - . PARK AND RIDE LOT o { •s . _. _ . . , . \ - NOT TO SCALE 11 0 Salt Lake International II�' 11111 Airport ii N I, ' O a iis � — _.•_.•_.. .. .. .. .. ..� o L I id fr. I. '-"' '. : ti'Salt Lake II/ li -... ''' . -''' i __. :. .City,CBD- il ,.! Fai h State I_pazk University • North Temple r • r r, Maintenance 4 ' i , Facility -' i 1 " South Templet tY ,- F. , , , ' r �'. jIl 1 80 _ ,.r'l, i 6�' / 2005 • i \ / 300 S outh } 400 S Campus . • • 500 S V __ _. I _ ` Foothil Blvd. I .._..._..� Future •..- _�. 600S .: ._ Drive III \ • LRT Stations i I I , � Future \ • I I This is is the I LRT i.•_......, I o t o o 0 0 l., Pace .., ti� _ State P n i SunnysldeAve:... a Ion oogle- w w w w w - 0 ri 1 • c E i West-East LRT Alignment'illio ' I �L.�( ® CC trgimimiNnomwEiliimmi WASATCH FRONT REGIONAL COUNCIL = Including 8 ■ O • ,?'3`i PAR.°Oa iAA1N�ORTATfON OiIOIA 420 West 1500 South,Suite 200 """'"TM"'C°"P'" Bountiful,Utah 8401ite 200 •°.0.W.,SOUTH JORDAN <�;,^a w1 Proposed Station Locations W Vi Figure 4.1-1 SEP-29-2003 MON 09:45 AM THE BOYER COMPANY FAX NO, 8013667176 P, 02 , I The Boyer March 11, 1999 Company Mr.Eric Faires Senior Vice President Chief Real Estate Counsel Saks Incorporated 5810 Shelby Oaks Drive Memphis,TN 38134 Re: The Gateway Salt Lake City,Utah Dear Eric: • In accordance with my voicemail to you, enclosed is a brochure on our mixed use project in Salt Lake City,planned to open just prior to the 2002 Winter Olympic Games here. This will be a city-making project that will add entertainment and specialty retailing to an already robust urban center. The development will be Salt Lake City's premier mixed-use site and gathering place in the downtown area within walking distance of 50,000 office workers. Built on three outdoor blocks surrounding Salt Lake's historic Union Pacific Depot,the 2.4 million square foot development will be anchored by a 14-screen Edwards cinema; 2 office towers totaling 500,000 square feet;The Children's Museum of Utah in 50,000 square feet; a 300-room Renaissance Hotel by Marriott, and 700 residential units to be built by Prowswood(a Boston Financial company). The Salt Lake market is growing at a rate of 2.3% per year,more than double the national average. Nearly 50%of Utah's 2 million residents live within 15 miles of the city with an average household income of$60,452.The market has been recognized by Fortune magazine as"...one of the top 10 U.S. cities for business..."and by Time magazine among the top five "hottest places" for job growth. The city offers major downtown attractions including Temple Square,the Salt Palace Convention Center,Delta Center and other cultural theaters which host over 9 million visitors annually. In addition,The Gateway is located within walking distance of 50,000 office workers and a light rail system with a station adjacent to the property will serve 15,000 riders daily when it opens in 1999. • 127 South 500 East, Suite 100 . Salt Lake City, Utah 84102-1906 VItt r� �t°?1 ACCREDITED ,4(801) 521.4781 MANAGEMENT FAX(801) 521-4793 ORGANIZATION. " SEP-29-2003 MON 09:46 AN THE BOYER COMPANY FAX NO, 8013667176 P. 03 • rI look forward to speaking with you, Eric. Cordially, Skip Step on sq Enclosure VLE t SEP-29-2003 MON 09:46 AN THE BOYER COMPANY FAX N0, 8013667176 P. 05 e AI The BOyer August 5, 1999 Company Mr.Eric Fakes Senior Vice President Chief Real Estate Counsel SAKS INCORPORATED 5810 Shelby Oaks Drive Memphis,TN 38134 Dear Eric: In our last communication you asked that we delay until August before talking further about the Salt Lake City opportunity for Saks Fifth Avenue. As the calendar has just turned,I • wanted to ask if I could bring our Gateway presentation to your office. I've enclosed a recent study favorably comparing our trade area to those of other prominent retail centers in the country. I will call you to arrange a time convenient for the visit. With all good wishes, Cordia Skiplphenson tm boo: Roger Boyer Scott Vcrhaaren Steve Ostler Beth Bradford Lew Swain Carian Wills&Associates g;luserNsam\skip\gateway\saks2 127 South 500 East, Suite 100 `�a6 Salt Lake City, Utah 84102-1906 ACCREDITED (801)521-4781 MANAGEMENT FAX(801) 521-4793 ORGANIZATION01 • St, Power-house retail giants Nordstrom and Target are joining F' the already potent retail mix at Irvine Spectrum Center. Giving Orange County's affluent residents and visitors even more reasons i ;,' " „ to do their power-shopping right here.With more than 100 popular " st � x Y stores, restaurants and entertainment venues — and counting — fil } Irvine Spectrum Center continues to draw from the nation's -' ._..�. " most powerful demographics. Unique attractions like a 108-foot Giant Wheel and antique-styled Carousel charm and lure I shoppers back. Dynamic retail selection, enchanting ambience, IJ O R D S T R O M and now Nordstrom and Target added to the mix— all powerful reasons for you to the line-upat Irvine Spectrum Center too. 0 join pTARGET Contact The Irvine Company today. �� THE IRVINE COMPANY S� RETAIL PROPERTIES MadisonMarquetteRetailServices ShopThelrvineCompany.com Joel Mayer or Glenn Rosen / 310 44 .7500 FASHION OLAND ' IRVINE SPECTRUM CENTER THE MARKET PLACE Alton' square Alton & Technology Bayside Center The Bluffs Campus Plaza 0;1E---i tq;ill. 411 Brave new ft Lifestyle centers look good, but are they earning their keep? BY DEBRA HAZEL Lifestyle centers are the hot new thing in the shopping center industry,promising their customers upscale retail and fine dining in a convenient,open-air layout.But as their numbers and size have grown,so have questions about the format.What is a lifestyle center?Are they successful?Are too many being built? What should actually be one of the easiest questions to answer—just what constitutes a lifestyle center—becomes y i more difficult as more such centers are built and the format evolves. The earliest of these projects—such as The Shops at Saddle Creek,Germantown,Tenn.,which opened in 1987 i 1 —were anchorless and had a strip center layout,with well under 200,000 square feet of gross leasable area. 1- Instead of having department stores to draw shoppers,they relied on"the finest of national specialty shops and restaurants,"said Terry McEwen,president of Memphis,Tenn.—based Poag&McEwen,which devel- oped Shops at Saddle Creek.(The company says it not only invented lifestyle centers,but coined the term,too.) But later projects, such as The Summit Birmingham g (Ala.),which opened in 1997,have grown to regional fi Cousins Pro erties' `yt mall size 80Q000 square feet—and sometimes '• ,'• - p E ems; include department store anchors.Nordstrom, *44r - The Avenue Parisian and Saks Fifth Avenue are �. % l . . s Peachtree City. tl .... among the stores that have moved s -i 4 tlltt h- e;t ( tt,,tilll cS N { y E ' I I .. , -' r ' I� lll4+++++i+ iF Y ,' fn.�t 1"1���51i f, $ tY • tl oft,.� liaikV albs '. PE_T Bills ES lr,. ik ..-. - ailiat.: . ::':,i,A. _ -.+'� �..r e... 0 - ill Y1 "�. . V• . __ ' ArA,,,,:;_:,,,,,,_. i „,.(.,.....,.i•i:„..,..,.......- . ,..,,,,,,,,:,,,,,,,....,...,-,.....-. .,,,,,,A,,,,,,,....i t, ,,,,,,::-..,...,,, ,,,,,,,,,:, �h': 1� 1 �0 i i s + ) lam.. l 1 ,,In 2003 ..• ._ • • at ..,,,, sr = s i a S#,i1 E!Y, i f s. v 4111, s 0" , 4 [ #, �� 3� —t11 �b ' Poag&McEwen—DDR's Deer Park(Ill.)Town Center. [Growth's Park Place,Tucson,Ariz. into lifestyle centers. much sense. Easton, maybe, is a hyl "We'll go to either place,"said Brian Martin, lifestyle center and a mall." director of real estate at Saks Fifth Avenue,refer- The number of these projects has in ring to malls and lifestyle centers. doubled since 1997,and there are now t And not only the size,but also the design of according to ICSC's Research Deparni lifestyle centers has changed. table,page 47). t a ) "Poag&McEwen had developed a traditional And there are more on the way,fuelet + k strip center look,with covered canopies all the way measure by the resurgence of such brat Cz7 through and great tenants,"said Everett Hatcher, cialty retailers as Chico's, Pottery Barn k founder and managing principal of Birmingham- and Williams-Sonoma,which are now al a3" based architect firm Crawford McWilliams mainstays of such centers. S �y Hatcher,which designed the Summit Birmingham But,definitions aside,how well do life: and other lifestyle centers."We were trying to do ters work?While malls tout their higher fM" a •3���� .. s something more villagehke, where retailers had counts,lifestyle center pride themselves more of an identity."The buildings housing the er sales productivity. stores are more varied in height,for instance,giv- "We found that while our fox traffic w ing the impression of a settlement built over time. good,our sales are higher,"McEwen said The format has evolved to the point where the McEwen's centers past average sales of betty 61bot8 "lifestyle"moniker could describe some open-air prof- and$500 per square foot,healthy by any • ects usually considered malls, including Taubman The Summit Bmmingham boasts sales of n Centers'Stony Point Fashion Park,Richmond,Va., $400 per square foot, while sales sit its due to open in September,says Courtney Lord,CLS, square-foot sister center in Louisville,Ky. Taubman's senior vice president of leasing. $300 per square foot.Regional stalls,on f lititt, "We have a beautiful,open-air center,then[we] hand,average$330 per square foot for rn •i f I i iadded Dillard's,Galyan's and Saks Fifth Avenue," tenants,according to ICSC's Research lkr 1t4 Ut? M A,. W 1,r L' said Lord."Why isn't my open-air,fully decorated Shoppers spend less time at lifestyle cer e '' 1`��M center a lifestyle center?" at malls(57 minutes versus 78 minutes,ace r I', (µ By the same token, there are those who a late-2002 ICSC research study),but the p i 7" ` rs '-�..: adamantly reject the lifestyle label for their proj- do spend there is more productive. Div NM' ' Ire ects.Some note that the 1.5 million-square-foot average sales—$79.80 per visit at lifestyl " Easton Town Center,Columbus,Ohio,has lifestyle including food and drink, similar to ncc 'N center elements.But don't call it a lifestyle center spent at malls—by the amount of time s within earshot of its developer,Yaromir Steiner. lifestyle center and multiplying that by Itif . ' "What I call a lifestyle center is a nonanchored shopper productivity totaled$84 spent pc + }r ae9 - strip center,but with mall tenants,"Steiner said. lifestyle centers,far ahead of the$57.70 per 7 :^ .,r':e"p' "So when I look at Easton,with its large depart- mall shoppers spent. operties'The Summit Birmingham. ment stores and a cinema, that doesn't make Financing used to be challenging,but h May 2003 ■ It STORY • 1 )pers say.In the early days,pri- is the anchors,after all,that spend all the accounts at TIAA-CREF."We look at kick- They're not the only ones Hies relied largely on banks. money on advertising.Anchors,of course, out clauses, co-tenancies, sales, expected about craziness.With fewer tha ld Cousins Properties, which also sign longer deals with malls and there- sales,average household income." regional malls set to open a ryle centers branded under the fore are considered to bring stability. TIAA-CREF, whose investment in United States over the next tw, one,self-finances its projects.) New York City—based TIAA-CREF,the lifestyle centers began with Mizner Park, cialty tenants are looking to t y there are only a few major large pension fund,is among the institu- Boca Raton,Ha., in the early 1990s,has format to feed their own growth :es investing in lifestyle centers. tions that invest in lifestyle centers. money in six lifestyle projects. and some say they fear this v he conventional wisdom in the "We tend to look at these as very similar "We're being very selective,trying not overbuilding. imunity has been that shopping to regional malls,"said Julie E Merkelson, to get caught up in the craziness that "There's definitely a risk,"sa anchors to attract customers.It director of new investments and national could potentially occur,"Merkelson said. D. Lebovitz, president of Cl- Tenn.—based CBL & Associ ernes,which builds both mall, munity centers,but so far no Iil ters. "One of the risks of the projects is that you don't have s checks and balances of region Net Funding.co l m 1 Malls need not only a hug land,but also agreement on t several anchors that a market e Even the lifestyle develop "�' selves are concerned that to e 400 IN ,TM III ri�5' Fri naI "WE'RE BEING VEl -rla r partici to r SELECTIVE,TRYING NC GET CAUGHT UP IN- l "'` CRAZINESS THAT COI = POTENTIALLY OCCUF tt a.c', 'a —Julie F.NI( €i ' ,z.. . °F` director of new invel Thomasville ?9a+--- Radisson Hotel � e TII =urniture Store Market Square Promenade at Agoura Hills - Galleria Oaks Bonita Bay Medical Plaza Ft.Lauderdale,FL San Antonio,TX Shopping Center Specialty Retail Agoura Hills,CA $2.775,000 $7 500,000 drive too much growth. 15•year rxea rate Austin,1x SO-year Seed rate Bonita Springs.FL $7,000,000 permanent $9,100,000 permanent $18,000,000 10.year fixed rate "They'll overbuild as long z to-year fixed rate 10-year seed rate permanent _ find this a profit center," se permanent . . .- _ Furgason,a senior vice presider - l;p erry management at Binning] Bayer Properties. t! t , �� " More developers are getting in $r mat,sometimes building in sin a' markets to fill retailer demand.E w such locations may satisfy retails - they may lack consumer dema Raymond Brunt,a former Gap ^ who now directs leasing for thrc 111111 rStanbery Development,Columb "Finding financing hasn't Is, tried a n , , i issue,"said Brunt "Finding sites I Stanbery's first projects,the 88,C ' ',S foot Shoppes at Union Hill,Den s t iii-k-i------ rLd The Shopper at Englisl Montgomeryville,Pa.,open this r e October,respectively. r But economics could p ech building and benefit existing life ters,according to one analyst. I "The ones already built are her said David Fick, a REIT a Baltimore-based Legg Masot Walker."But there will be fewer I forward,as the costs have turned much higher than anticipated,p; for those with other elements. NetFunding.com The e-marketplace for commercial real estate finance. Santana Row,"which includes hi www.netfunding.com 877.514.3885 And regional malls contim strong,he adds,as the weaker or Other pitfalls remain,howeve ay 2003 STORY • , issues. Critics say that architect Hatcher."When you get to a sit- whose first project,The Streets of Marlton But despite these concerns,t irmatted projects, which uation where you're doing themed streets Square,opened in 1999 in Marlton,N.J. ters continue to proliferate.A that are accessible only to that aren't streets, without parking you (Continental has since sold the center.) more will open over the n( legate the lifestyle format's wonder if it will work." And there are other compromises that years, according to ICSC's F ige:the ability to park close It is especially important for cars to get could come back to haunt the format, Department. And the forms as close to the stores as possible in colder Kass said. porters say there is good re; he huge successes of the climes, says David Kass, president of "There are people who are not building this. From some retailers' f er is that you can drive to Continental Retail Development. The the highest-quality architecture,"he said, view, lifestyle centers off( ant to shop,feel extremely firm is a subsidiary of Columbus, noting that this could dilute the high-end advantages. While Talbots' a great place to be," said Ohio—based Continental Real Estate Cos., appeal of these properties. square foot are about the saint its mall and nonmall uni unities happen in Mortgage Capital. Richard O'Connell,a senior, ident of real estate at the 1- Mass.—based apparel retailer, Deutsche Bank Mortgage Capital,L.L.C. cy costs are lower(see story, O'Connell declined to spec those sales figures are. CAM charges Work with the number one ranked twoBayer F lifestyle centers averag. team in real estate finance. square foot,versus$15 per s( or more at regional malls in ge company says. "We give good value for th Looking to score big in real estate?Turn to said Jeffrey Bayer,the firm's pre the a1 ranked Loan Contributor to traditional And consumers love Blest) CMBS Conduit Deals."We offer flexible pro- too,both for their convenienu attractiveness. grams tailored directly to our chests'needs. "I don't think it's a fad," Our growing list of innovative financings Marks,owner of Orlando,Fla. attests to the power of this responsive, estate consulting firm M Clifton Commons i chent-drven approach.Deutsche Bank. cohon,NJ PP Advisors."But you really have $35.000,000 The shortest route from goals to results. with what a community needs 183.276 SF Retail Sierra Vista Fixed Rate Taubman's Lord question Clovis,CA Refinance Top Loan Contributors to CMBS Conduit the projects will be able to fil November 2002 1511 Third Avenue p $24,000,000 New York,NY Deals for 2002" 580,926 SF Retail 4ia al cunan when leases at the newerr( Fixed Rate $20,000,000 Tre4 ISMi61 p Acquisition Carrots Creek 55,839 SF Retail 1.Deutsche Bank $1,665 to turn over, opining that December 2002 Landing Fixed RateMortgage Capital Smokes Pointe.WA AcquiSton goffered by landlords may $29,000,000 October 2002 2-GE Capital 1,449 Center I 3.Credit Suisse First Boston 1,394 attractive then. Multifamily-288 Units w Walmea Altoona Fixed Rate 4.Wachovia 1379 Lifestyle center develo Altoona,PA 5.Bank of America 1,362 } Retail $16,232,526 Refinance Islandia Shopping 219.900 SF Retail October 2002 Center 5.JPMorgan Chase 1,283 that's not a problem, at I Fixed Rate Islandia.NY 7 Prudential Mortgage 1,141 The• cite their ability to 2002 Acquisition $44,000,000 El.GMAC 776 } November 2002 364,568 SF Retail 9.Goldman Sachs 768 proof. Both the Summit I Fixed Rate 10.Bear Stearns 718 Refinance and the Shops at Saddle Street September 2002 " Northern Accounts/West Coast Accounts/ expanded twice, and the '0 National Accounts - leasing its fourth phase. Office / Pearl Court - 31 West 52nd Street loth Floor Talbots recently cotnplet 4 Apartments Newyork,NY 10019 2002 -. Port Hueneme CA 1 B8B-953-DBMC upgrade at the Summit I $23,200,000 Multifamily 3000nts Southern Accounts/Credit Tenant Lease while Gap doubled the size Fixed Rate The Carillon Building "fie', d 1 i' � Refinance 227 West Trade Street Suite 2060 there,even as it was slowin xQ ' * y4` September 2002 1-88B-4 NC 28202 Bayer reports. The format 1 BBB 34o-DBMC arver env lulu m.dhmortgaoecaprtel tom having to prove its value. Renaissance "Five years ago,when we f Richmond.VA $18,400,000 this,we had to convince per Mmutamiy-ats Units Fixed Rate format," said Joel Murphy, Refinance September 2002 the retail division of P Cousins Properties. "That The Parkway I/The almost to zero." ;4...;��-K Parkway 11 Communities, too, like s'3' Denver,CO 349,220,000 which blends in b Multifamily-460 Units Fixed Rate fortresslike malls.And lift AcquisIron — unlike regional mall: August 2002 Performance. Leading to results.' traffic problems, and n Medlock Crossing centers,whose often gem Shopping Center Duluth GA tore adds little to their co k '•, 322,000,000 159,163 SF Retail in are probably the only reta �r Fixed Rate actually increases the pr August 2002 ust on Aug Deutsche Bank of nearby homes. As Mark F.Fallon,direct( Cincinnati lifestyle center lank Mortgage Capital,L.L.C.is a wholly owned indirect subsidiary of Deutsche Bank AG. 'Source-Commercial Mortgage Alert,1/17/03 R. Anderson Real Estate never happens with a mall. ■May 2003 n ou GAY,SFPiEla6ER us,ZCC? 4 £ Instant Information '1, your fingertips! . C II TY . PA G E .=. CLICK ON THE "RECEN'T NEWS Your Information Source RELEASES" LINT y him itetter' www.c i.ywna.az.u mrna.az.us Published by the City of Yuma EVELQPMENT AGREEMENT APPROVE and Developer To Begin Work on Establishing Improvement Dish ly of 2003,while in financial arrangements for this Some individuals have asked interest rate established of negotiating the district must come before the about the interest rate being through the sale of city bonds, proved development Yuma City Council for approval, charged by the developer for and has the capability of paying for Yuma Palms just as with the current the city's share of the off site off any outstanding amounts It n g C e n t e r, development agreement. improvements,according to the owes early,without suffering a laP Ives of the city and Bob Mayhall, a principal development agreement, The penally. Deputy City issed the idea of partner of WDP has said that a g r e e men I, a p p r o v e d Administrator Bob Stull says y-i...:i. establishingan p -- �9a''" - WDP ,of to form an unanimously on September 17, that the city will likely get a low, '.nt district. This says that a year after the 4 percent to 5 percent interest tin municipal finance improvement district as soon as improvements are built,the city rate on the improvement district • - s TL Hocking a Possible. In this improvement will begin - district, WDP's share of the g paying an annual bonds versus the much higher - was simply to Yuma Palms Re oral 9.75 percent Interest rate until interest rate WDP would get le idea and review Shopping g the money the city owes is paid through private financing. _ 4'�q,_; nprovemenl districts PPi 9 Center will be the off. 'Thal is only if we don't g d and how theycollateral. The improvement "With the completion of this 4.. • have an improvement district," id did not involve district interest rate will be shopping center,and the stores - k.,• based on the bond rating of the says City Administrator Bob t iafions or plans g Wagner,Wagner explains that that are new to this community, 'uma Palms. city, according to City with an improvement district in we'll see our sales tax dollars • .5 Administrator Bob Wagner,and place,this arrangement will be staying here in Yuma, serving - ant districts were should be much lower than eliminated. WDP the people of Yuma, not the sated by statute and banking interest rates. partner Bob Site of the proposed Yuma Palms Shopping Cr Mayhall has explained that the communities of San Diego or n use in for nearly a Instead of WDP acquiring development agreement Phoenix," observes Public by members of the public over any member of the pu ypically, they are q 0 P 0 Affairs Manager James Stover. the past few months.Here's e would like to do us). petition of property private.higher-priced financing, includes such an interest rate brie/ look at some of the construct public the city would form an because WDP would be This project is the largest comments that were made: On the topic nl a its, and allow for improvement district, issuing advancing the money to build commercial project built in choices for the seers to construct low-interest bonds to pay for the off-site improvements, Yuma to dale and is expected On the open air stropping community local improvements the improvements, with the including the city's estimated 70 to he a catalyst for other center / enclosed mall Councilmember En dening the overall shopping center project held as percent share of the first 310 development,as well as.serve controversy' Sloop:"Over the last i The formation of collateral. The collateral will million, Because WDP's as a powerful engine driving Mayor Larry Nelson, citing a half, we were inhoc rict is regulated by include land, buildings, and investors require the company further economic development personal and properly rights, the possibility of havin,. it and is subject leasehold agreements. to have a minimum 12 percent in this region.Stover notes that noted that the city doesn't have that would brag in Baring process. If the incentive payments and rate of return on its fins new development shows the right to tell a developer that opportunities for shoppl the sales tax rebates don't investments, the 975 percent that Yuma is emerging as a they have to enclose their is what I think we me y Administrator Bob amount to the proposed city interest rate is an attempt to destination,and not a'pit-stop'- shopping center:'I don't have to the Yuma coin id that it should take sham of costs during the term recoup some of that. 'This will help the community to he right to tell this developer choices.Relail choices. ly 60 to 90 days to of the agreement.the city has attract industry and further now he has to build his mall.He also remarked that shi trial, and that the no further obligation. With an Improvement district g In place,the city pays only one benefit our economy,as well as nas come to this town,willing to shopping centers help existing companies recruit nvest$70 million dollars,and Phoenix and Scolisdab and retain employees,"he says. le has the right to Invest his to investigate the tel money,by our ordinances,how reviewed the parlor Crunch the Numbers TENANTS PREVIOUSLY hey stand,right now.The ughI landscaping, and the ANNOUNCED BY WDP: simply is not legally there." siructur es providr ?nd dollars,not percentages. What's the real picture? •Linens'n Things•Marshall's• On the topic of job shopping and parking. Best Buy • Olive Garden • °pm-tu/lies: pleased In be there and a lot of talk SINGLE FAMILY RESIDENTIAL Krispy Kreme•In-N-Out Burger Councilmember Ema Lea there were li e hrn tut the new water •Dillard's•Sani s Club Shoo ',We've shop and purchase thin CURRENT BILL 2004 2005 2006 2007 2008 p got several cannot Gm,in Yurna,I ses. Percentages opportunities to have new $46.80 $55,57 $66.2 $71.23 $73.08 '$75.15 HIGHLIGHTS 0 F these stores have the over three years" 'Increase per billing:$8.77 ,$10.63.,$5.03, $1,85 $2.07 DISCUSSIONS ON YUMA businesses In here that have olfet(these items)." inhrl but never been in Yuma before, don't always show •(billing everylwo months) PALMS BY CITY COUNCIL and they will be offering Jobs On the topic,of Yuma• rue. Obviously,no one really wants service. This came about Just weeks ago. after a because they're not taking andstalme in The motor to have to pay more,but these approximately 30 years ago,lengthy briefing by City away from another business Councilmember Bobby user rates pay for the ongoing when the water system was Admini slratoi Bob Wagner, and moving into a new location. (Addressing WDP parts maintenance and operation of, purchased by the City from comments by the public, and We on the council have been Chester)"I peisonnlly J our water system,ensuring that Arizona Wafer Company.In thediscussion by city council responding through this (hank you for belie we all have line safe. secure areas that were annexed, the m embers, the council process to many people in the Yuma I'm a native of water supply we need to city of Yuma was already the unanimously approved the community that want the and(here are a lot of preserve our qualify of He and wafer provider before development agreement opportunity to have choices. have waited a long tin meet the challenges of the annexation.Annexation has not between the City of Yuma and Council has been listening fora project like this to corm future. it's a system we all caused any new hookups to the benefit from, and It's a city system, If a residence is on WDP.The council look the time good number of years"(Shoop And it shows that w responsibility we all share. a well,it does not have to be in linen discussions to address also offered to review the arrived.We have move WHAT ABOUT hooked up to the city water some of the issues brought up development agreement with next level." I f u s carry ANNEXATION? system. And any connections • i'in our wallets— Another aspect That has been that are made to the system are Mars. What can a troubling for some people is the paid for by the person g p -nl expect to see in though) that annexation over requesting the connection. MORE O©E Conservation S p I as h e the next three the last several years has Because ibis area is already w� �•"l �r take a look al an caused these new demands on part of the water franchise area, bill figure and see our water system. Between the same growth that has been o• story is: 1990 and 1999, the city taking place across our region Stmpie, easy things you can do to conserve wt annexed large areas,primarily would have placed the same d chart shows a to the east,and south towards demands on the same Over the next six months,we mple of a typical tine Goldwater Range,There is pre-existing water system.And will provide you with 100 \ I•aid .. re that residence.As you the perception at this has that would have caused the different water conservation tips \\ •most substantial somehow encouraged or fed same need for higher rates. that will make a difference in :� ia nos( users will growth, and this in tan has the water pressure we S WHAT ABOUT MY RATES/ I6 ✓ill be$10 or less increased demands on our experience. Pick out several �',r, dod,That's onlyan water system, and because The public information office wX• Y has a flowchart that can allow tips that best suit your lifestyle. •i e less-each month. these new develepreents and staff to calculate what you can Don't worry If Ilre savings seemI his rate increase, their new water needs are now expect to pay in your bill based minimal. Every drop counts. are now paying "in the city." Y You can make a difference. City of YUMA on your consumption for line last - fr share — $200 The area that was annexed is billing period. Contact us at µ46. Make sure you know total of$1,800 for covered in part by what is 373-5021 or by email al where your master water • they build,Io pay called the Water Service Area, james.stover@ci.yuma.az.us shut-off valve is located. This ' • COVER Whose IifestyI & Which customers use them, why, and how much they spend BY MICHAEL BAKER Average time(in minutes)spent 2000 ICSC initiated a lifestyle center The average for all five centers was 18 at five lifestyle centers ... in response =n codes. (1CSC research has no 90 'gram to growing industry inter- comparable figure for malls.)Clearly, eh ew genre of outdoor center.The first goal of the centers create a sufficiently pleas- 7° a—on the surface modest,but in reality ant shopping experience to draw 6° shoppers from far and wide. 50 —was to define die term"lifestyle center" Sixty-five percent of respondents 48 — '^ ag a set of physical characteristics typical of rated lifestyle centers more highly ah , ri The second was to use this checklist of than regional malls on overall 20 atmosphere and shopping environ t0 ' 57 5 as, P t` t61 Pt y, i 57 4 ics to develop a representative list of the ment. In teens of price and mer- ° ICSC mglanal Five-turner Center Center tenter Center chandise mix and quality,however, eenterhenchmark average nselves.The results were published in the shoppers didn't perceive lifestyle .,and average expenditures )1-2002 issue of the ICSC Research centers as being superior to regional S140 ad in the April 2002 issue of SCT. malls.This is understandable in view of the fact that the tenant mix at 12° Lt Ford and dank re list of 30 centers was meant to be represen- lifestyle centers tends to be a subset too ne4:ieoir i xhaustive,several industry professionals con- of the upscale national chains found ao aw trerb - 674e0 ',:;a 's Research Department asking why this or that at regional centers. en . ; 11 'tat. eh r cot included.Accordingly,research staff went a hawing board and developed a more complete Convenience is king 40 I"e s"> y t s 1 d ice; udes nearly 60 centers.ICSC believes this is That said, convenience is still a z0 rue number of lifestyle centers currently oper- critical factor drawing shoppers to 0 e I r,-.' ?ii'j' ' r r '' 1 ]sited States.(By comparison,there are about these centers.Residents of the cen- ICSC regional Five-center CenterA Centers tenter Center0 rl malls and about 44,000 strip centers.) ters'core trade areas,which comprise center benchmark average Sc step was to learn the consumer perspective about 50 percent of the shoppers,visit nters. Last December ICSC completed a lifestyle centers more frequently(4.6 ing study involving exit surveys of 1,500 times in the past 30 days)than those in the rest of the Competition or coexistence? five centers across the United States,con- trade area(3.3 times)or who live outside(2.6 times).The The lifestyle center is not necessarily a dir :onsumer Research Corp., Minneapolis. It convenience factor supports the more purpose-driven petitor of regional malls;trips to the two type major industry-led effort to ascertain the nature of the lifestyle center shopping trip—74 percent ters are often complementary.The lifestyle :s and shopping behavior of lifestyle center' of the lifestyle center shoppers said they were at the cen- appreciated for its convenience,efficiency ar -he study also gathered information about ter to visit a particular store or stores,or to make a specif- ence, while the regional mall is patronize, ristics of lifestyle center trade areas and how is purchase,compared with 60 percent of mall shoppers. broader merchandise assortments and del w the lifestyle center shopping experience The convenience factor also extends beyond driving store offerings.According to the study,shopp r of nearby regional malls with similar mer- time.Sixty-five percent of shoppers rated lifestyle ten- ed the lifestyle center an average of 3.8 sntation. ters more highly than nearby regional malls with regard month,but also shopped their favorite regio ys were conducted in June and September to availability of parking directly near the stores they an average of 2.5 times. Only 19 percenl dl but 180 of the 1,500 interviews done in visit.But though lifestyle centers also got good marks for lifestyle shoppers said they had no favorite it the following centers:The Arboretum at convenience of getting from store to store,they were not mall or made no visits to a regional mall in Austin,Texas(opened 1985);Aspen Grove, regarded as superior to regional malls in this respect. ceding 30 days. 3lo. (opened 2001); The Avenue at East The lifestyle center appears to have establishe, ;tea, Ga. (opened 1999); Deer Park (Ill.) Shopping trip benchmarks a viable shopping center format, despite the r(opened 2000); and Huebner Oaks,San A number of the basic characteristics of the lifestyle shop- there are still very few of them in relation to the erred 1997). per's trip are similar to those of the ICSC regional center of regional malls and conventional strip center: benchmarks,including the number of trips,the number of the success of the five lifestyle centers in the IC fle center trade area stores at which purchases are made and total expenditures were the relatively affluent trading areas and r :onfirmed that lifestyle centers are located in (see char).There is one notable difference,however:As offering of upscale national specialty stores in ng areas and serve a well-heeled customer. noted above,lifestyle center shoppers are more purpose- serve them. ehold income for these shoppers was almost driven.The average trip duration for lifestyle centers is, Given that there are ultimately a limited nr :pared with$44,500 in the United States as a accordingly,much shorter than for malls,at 57 minutes vet- sites for these upscale centers,the concept ma even percent of lifestyle center shoppers had sus 78 minutes(see chart).Thus,given similar expenditure over time,with the appearance of middle-an ,comes above $75,000, compared with an levels,the lifestyle center trip seems to be a more efficient market variations on the original theme.In rl igure of 24 percent. one as measured by spending per shopper hour.Also,in ICSC's lifestyle center definition will need to br Inter trade areas are not only relatively afflu- keeping with lifestyle centers'shorter trip durations,food ed—perhaps sooner rather than later. also tend to be large.The trade area for one expenditures generally seem to be a less significant compo- cample,drew customers from 30 zip codes. nent of business than at regional malls. Michael Baker is ICSC's director of research. May 2003 IN LIFESTYLE CE , ERS IN THE U.S.* • Total.P' Total ned Name City,State GLA Stores ** Owner/Developer Eastwood Towne Center Lansing,Mich. 393,000 45 Jeffrey R.Anderson Real Estate Village of Rochester Hills Rochester Hills,Mich. 375,000 40 Robert B.Aikens The Grove Los Angeles 575,000 44 Caruso Affiliated Holdings Fountain Walk Novi,Mich. 737,134 13 Taubman Centers Geneva Commons Geneva,III. 418,673 61 Andersen Real Estate Aspen Grove Littleton,Colo. 243,900 50 Poag&McEwen The Summit'.ouisville Louisville,Ky. 367,500 58 Jeffrey R.Anderson Real Estate The Shoppes at Brinton Lakes Glen Mills,Pa. 153,000 14 Wynwood Development Old Mill District at River Bend Bend,Ore. 150,000 23 Price Legacy Corp./WIlliam Smith Jefferson Pointe Fort Wayne,N.J. 562,000 60 RED Development Deer Park Town Center Deer Park,III. 506,000 60 Poag&McEwen Rookwood Commons Norwood,Ohio 326,462 45 Jeffrey R.Anderson Real Estate Palladium at CityPlace West Palm Beach,Fla. 600,000 75 The Palladium Co. Centro Ybor Tampa,Fla. 213,899 25 Centro Ybor Partners SouthPointe Pavilions Lincoln,Neb. 500,000 42 RED Development Mt.Pleasant Towne Center Mt.Pleasant,S.C. 426,748 62 Konover Trust Southlake Town Square Southlake,Texas 201,000 70 Cooper&Stebbins The Avenue at East Cobb Marietta,Ga. 225,000 52 Cousins Properties The Shops at Sunset Place South Miami,Fla. 506,000 60 Simon Property Group The Avenue of the Peninsula Rolling Hills Estates,Calif. 374,000 60 Cousins Properties Premier Centre Mandeville,La. 275,026 22 Premier Centre Denver Pavilions Denver 350,000 40 Denver Pavilions Gardens on El Paseo Palm Desert,Calif. 200,000 50 Madison Marquette Realty Servk The Shops at Riverwoods Provo,Utah 192,000 35 The Shops at Riverwoods The Commons at Calabasas Calabasas,Calif. 198,388 35 Caruso Affiliated Holdings Alamo Quarry Marketplace San Antonio 585,000 60 CB Richard Ellis Huebner Oaks Shopping Center San Antonio 380,000 60 The RREEF Funds The Summit Birmingham Birmingham,Ala. 760,000 72 Bayer Properties Redmond Town Center Redmond,Wash. 569,000 100 The Macerich Co. University Village Seattle 400,000 93 U Village Imp Ltd.Partnership Town Center Plaza Leawood,Kan. 700,000 95 Poag&McEwen The Promenade at Westlake Thousand Oaks,Calif. 201,563 28 Caruso Affiliated Holdings Town Square Wheaton Wheaton,III. 179,000 75 Draper&Kramer Retail Property Mizner Park Boca Raton,Fla. 236,000 47 Teachers Insurance&Annuity As Reston Town Center Reston,Va. 250,000 50 Equity Office Trust Bradley Fair Shopping Center Wichita,Kan. 220,000 35 Laham Development Corp. CocoWalk Coconut Grove,Fla. 163,000 40 Steiner&Associates The Grove at Shrewsbury Shrewsbury,N.J. 145,000 40 Terranomics Development One Pacific Place Omaha,Neb. 90,000 25 L&B Realty Advisors Saddle Creek Germantown,Tenn. 143,000 45 Poag&McEwen Bayside Marketplace Miami,Fla. 227,000 128 The Rouse Co. University Park Village Fort Worth,Texas 174,000 37 Madison Marquette Realty Servic Preston Park Village Plano,Texas 268,747 53 Regency Centers Corp. Old Hyde Park Village Tampa,Fla. 248,000 60 Madison Marquette Realty Servic The Arboretum at Great Hills Austin,Texas 193,000 43 Simon Property Group Lincoln Square Arlington,Texas 450,000 70 Dunhill Management Bell Tower Shops Fort Myers,Fla. 340,182 56 Madison Marquette Realty Servic Town&Country Village Houston 420,000 37 Moody Rambin International Bay Terrace at Bayside Bayside,N.Y. 263,000 64 Cord Meyer Development Co. The Americana at Manhasset Manhasset,N.Y. 280,000 45 Castagna Realty Fig Garden Village Fresno,Calif. 213,772 54 Divco West Group Utica Square Tulsa,Okla. 384,081 62 Helmerich&Payne Properties Highland Pk.Village Shopping Ctr. Houston 250,000 62 Highland Village Holding Inwood Village Dallas 235,666 67 The RREEF Funds Shops at Cameron Village Raleigh,N.C. 600,000 100 York Properties Highland Park Village Dallas 235,000 24 Henry S.Miller Commercial Suburban Square Ardmore,Pa. 305,000 44 Amerishop Suburban Country Club Plaza Kansas City,Mo. 1,200,000 150 J.C.Nicols Co. able lists most of the lifestyle centers in existence in the United States today,but does not purport to be all-inclusive. count includes restaurants. d as of 2/25/03. Source:ICSC F Ud3' do 2 STORY • 1 III operators keep an eye on a new rival estyle centers loved by con- foot rent at the premier malls?" said Though lifestyle rents can be compara- and,in a few cases,wishing their convenience and by Raymond Brunt, a former Gap executive ble to those at malls,CAM charges are in one is ignoring it. their low costs,it is little won- who has crossed to the development side as the $6-per-square-foot range at lifestyle With traditional mall tenal ie see them as a threat to the leasing chief of Columbus, Ohio—based centers,which don't have gigantic roofs upscale apparel merchants al. lifestyle center builder Stanbery Devel- or climate-control systems to maintain. grow,but finding few new mall we eliminate $25-per-square- opment. "It was something we were con- Faced with such competition, mall ties,it's logical that they woul, aarges on top of$50-per-square- scantly looking to eliminate." builders are learning from it,imitating it other formats to expand into. "If you're going into new pro going into lifestyle centers,"e David Zoba,executive vice pr general counsel of Galyan's Tr: pany(SCT,April 2003).Of nine the sporting goods and apparel to open this year,Galyan's says 0_ three in malls,three in lifestyle +J.. , . / I three in other formats. �ii Talbots will open 97 store "r, i j lifestyle centers and urban stret tr a majority—60 percent—an lifestyle centers and urban stret C U L T U R E . . . r + says Richard O'Connell, Tail MAr°=°0''.'1 vice president of leasing. .. ..('''10 i. — �. "It's definite competition,"s _ � D. Lebovl[z, president of mal r r. ' CBL & Associates r_� ' (fir �,J- r J- 1 Js ' Chattanooga, Tenn. He poin Sik-b,', )Jam— malls are chasing some of the sr inhabiting lifestyle centers. "\ deals with Barnes&Noble,I .; Beyond, Linens 'n Things, 10, . , Creek, Williams-Sonoma. W a1'P want these stores in the mall." * 1. F Mall owners faced with the I lifestyle center's arrival in the m ,+ya,;e, P „) have been stung into action M Centers,for instance,extensive ,- "The cultural Beverly Center,Los Angeles, ., ,. landscape helps began on The Grove,a 575,00C i Caniso Affiliated Holdings lift I_I with a Nordstrom and a Paci _ define the heart megaplex less than a mile away CO*. Malls are becoming more a of any city...our their deals with retailers, in Dan Keegan Oshman Executive Director,San Jose Museum of Art retooling leases tax give four) AaE. 40 something Downtown has the best locations. EDUCATION. MFA-Southern Illinois University "There are certain situations' numerous wakes up," said lifestyle cents Under Dan's leadership,the Museum of Art continues to be a David Kass,president of Contir cultural anchor in the Downtown's evolving landscape. cultural venues Development.The firm is a Accompanied by the opera,ballet,repertory theatre and many Columbus, Ohio—based Conti Estate Cos.,which has six life other artistic venues.Downtown is the center for artistic and all within walking already built or under construct cultural expression. In addition to being an experienced educator five years ago,they weren't too and administrator,Dan is an accomplished artist who would like to distance." In the best tradition of"if y( see more galleries and art supply stores in Downtown San Jose. them,join them,"some mall de incorporating lifestyle center building so-called hybrid cer For Ivrormacto". Kelly Knee-40a-794.1039 have outdoor sections leading .. 1 .i^ � indoor segment(SCT,October M tf. 1. - "The lifestyle component is fp tg ,4 S ;- trying to do at a lot of our ccr , Iiil,co 1dio § ) streetscapes with access'from the mall and outside; said DOWNTOWN SAN JOSE Michaels,president and COC o vast see Fey"a�ae sneer I s��:e Ito I s�,Jo.:.cTnmr��a 9s11a Growth Properties.The comp PHONE 405.794.1000 I sonioseretail.com I Fax 40e.277'li' that with its redevelopment O1 Tucson,Ariz.General Growth consider developing a pure life May 2003 t STORY • ight circumstances,"he added. as shaken up by this new arr Stony Point Fashion Park, "WE DON'T SEE THEM REPLACING MALLS. sit , " shopping center scene as si Va.,has lifestyle elements,says have the industry believe. ,rd,CLS,the company's senior No LIFESTYLE CENTER IS OFFERING TO BE ALL "I don't make them more or nt of leasing. Some consider than strip centers or a Target, 'rty Group's Bowie(Md.)Town THINGS TO ALL PEOPLE." "The only thing that is not a t influenced by lifestyle projects, "h supermarket." sitecrure,open-air format and —Michael E.McCarty,CLS Fortress malls are particularh ryouc president,community center division,Simon Property Group ble,some say When Memphis," mall owners say they are not Poag&McEwen opened Deer Center, a lifestyle project n Chicago, Taubman's Woodfie nearby Schaumburg,Ill.,saw n sales,Lord said.And since Taub up its Beverly Center,he adds,t has little to fear from Caruso's C "[Caruso]has a mix of stores nice.We have a small theater, Bloomingdale's,"Lord said."WI GEReal Estate sting:We share some customer both sating the needs of our cu; Malls are protected somewh clauses, which prevent son retailers from locating additiot other centers too nearby. There is no mass exodus c Retail financing. Tailored to your needs. retailers from the malls to lifesi Talbots,for instance,one of pillars of the lifestyle format, ning malls. $ "Our direction is to addres a"k markets wherever they are,"s siryw E t " O'Connell. • r Lifestyle developers say that r ¢ ects are generally several mil nearest mall,and quite often a have stores at both centers. most mall managers say that th had to sweeten any deals to a lifestyle centers. a - "We have prided ourselves ships,not leverage,"said Rusr CEO of mall management Retail Properties,Chicago. Even those who have offe Our real estate professionals are committed to understanding your objectives, ments to retailers say it isn't a "That's nothing new,"said to help you quickly capture critical opportunities in retail real estate. As both a was doing that with Warne joint-venture acquisition partner and provider of flexible,innovative debt and Disney i O years ago.You alwar equity financing—with a multibillion dollar commitment to the market—we are nomicdeals for the r kind Witt variety of positioned to consistently deliver the precise retail financing solutions you need. malls exert a bigger draw than lifestyle centers,attracting sh a range of economic backgrou "We've put together a mere that speaks to market demogra have the best of both worlds, said."The short answer is that t GE Heal Estate brings over 30 years of commitment to the North American commercial out whether they hurt regional real estate market with the dedicated expertise of our more than 630 professionals, Some mall developers sa access to specialized financial services and unrivaled capital strength. staying away from the lifestytylo mat altogether. "We have not jumped into Local Expertise. Global Capital. fray,"said Michael E.McCart' ident of Simon Property Orin nity center division."Some c Joe Parsons Dan Smith Paul Simmons do$600 per square foot,but sr President Senior Vice President Managing Director www.gerealestate.com per square font.We don't see t Equity Debt Retail Equity Ventures 1 888 GE First ing malls.No lifestyle center i be all things to all people.You make an additional trip." May 2003 STORY 111 41 w Poag & McEwen hit upon a new format doubt considered the very Today Poag, chairman and CEO of the trailblazer for a format that has taken States. But after Kroger ne; a shopping center without Poag & McEwen, and McEwen, the off,for both Poag&McEwen and other drew from some planned deve e crazy,something akin to a Memphis,Tenn.-based company's presi- developers. Poag became much more w wings.Bur far from crazy,G. dent,can laugh about the travails of pio- With previous partner Sandy Thom- that format. and Terry McEwen are wide- neering this shopping center format. ason, Poag had been developing strip "We decided we didn't w having founded the contem- Saddle Creek, the lifestyle center they centers,primarily anchored by Kroger, dependent on anchors," P le center. launched outside Memphis in 1987,was throughout the Southeastern United "That thinking evolved into centers without anchors in ben In 1984 Poag and Thon proached McEwen, whose e NOW UNDER CONSTRUCTION-OPENS SPRING 2004 up to that point had been developers, including the Co., as Taubman Centers /11/t A T V f T T known.Dan and Sandy explained t a. me: peter tet ,;` retailingr ingat wayhhat would z 7'; ;- . . the upscale customer,"said Mc ar I jumped off the edge of the sl ^i+ ,, or swim." T177 twig *F 1I' i p And what a jump — at t w n FF v I I' r - _ department stores were kin ar '4 C -y unthinkable to many that a ce tarP.n'I r:,rr. ....x'Sr,-. t.: k My..,q, �•• — 't'It i5 1r"'`if}"t`!. '',a.:: f u 47'a function without them. •I' II I: W O (1 I) I. ;A N I) S "Certainly,of the three of us. �( �,( "WE DECIDED erl A/Jp l `•V"L11, gr11 4- N't7W 7 `A,4p Gt/ *v-Kit-✓tjinvi4, WE DIDN'T WANT TO BE DEPENDENT ON R '� 1 m ANCHORS." 7,34140 \ ` charmer "U. )F} Poag 1 II !. +" .'` ''� "4-- aware of how radical the idea said."We asked ourselves:Do •' _sP -.-•�� �� - \ go to malls? No. Do of „ � .� c " _ Absolutely not" � 3 { That got them to thinking; a • ,a � .- to make i shopping center t appeal to upper-income custo ;'ram f $� ) > }• rjfls � ' 1 that was convenient,safe and t a � yy t "'•�' / �• J to visit. �a' Because Poag & Thomas° .IIIA-�� �;. '..,t company was called,knew ho d strip centers,it seemed natun the new center open-air.They perfect site,in Germantown, A 34 acre/500,000 sf mixed-use(retail and office)urban village in the heart of The Woodlands- area near Memphis that sore Texas'#1 rated master-planned community.Aplace of discovery whereyou can shop, upscale retail. But persuadin; l } } Bork and investors to back an anch and play,meet friends and family and create lasting memories. cialty center was a challenge. Market Street-a place that has it all. Saddle Creek's plans called I en-quality design and more- s Joist venture Development of landscaping than is found in strip center,and the project, MadisonMaRpiette The Woodlands' - between$150 per square foot The Woodland>operating co..L.P. TRADEMARK`"' per square foot to build(comF Office: Iy7Kimco the more typical$70 per squs .sides&Loch Cook Michael Nay Damon Palermo & _Developers,Inc.g $80 per square foot). 00 9'2.599.2442 281719 6243 Ina.ketstreeo-d.ewoodlands.com Strip center lenders doul Saddle Creek would command Buy 2003 STORY • ' ged by mall landlords,while & Morgan, who was also involved in 0'J insisted they would not par- banking. Morgan (now deceased) asked DUI the inclusion of a depart- about the leasing coemminnents. There -y' ,chor in the tenant lineup. were none at the time. ' y es were right, of course, "Then he asked, Are your partners ,- conventional wisdom,"Poag good?'When I said yes,he ii 1 said,'OK.'And r e.V.a• ig we said made sense." we got our first construction loan" McEwen called Frank McEwen said. I artner at Shawnee Mission, With a population of just about I.million, • _ levelopment firm Dreiseszun Memphis was barely on the radar screen for - ` r t Deer Park Town Center,outside l national specialty tenants—unt persuaded Polo Ralph Lauren `t Ashley to take the risk. Wiry e • r` lward,the project scan l coming ` t Saddle Creek's 84,000-squaa P _k - ' phase opened in the spring of ... percent leased.Shortly afterwa 1 ' H 10,N,-,.. ....;.,.:.,..,.i.H.0 m..E.•:, ' . ter was 100 percent occupied,i in g list.So they built an exte i piece of land on the other sid ----'i''----:, we s uaefooES r'R A N.T S �uldn't walk to it, they had Poag recalled.Yet with Eddie a _ � Kids and Talhots, among Dili the second phase openeJ m l9 NT E R�TAI N M'E�I T I ktiV IoweJbyathirdphasetothe P Word of Saddle Creek's mcccs ex quickly.An Omaha NcI, clev, T 4 Poag and McEwen to deate i It' - l �.:.�, ,, ` 3, tion to an office project for a r I'} # • they offered to buy the develupr a + at-z "I didn't know crazy abc ' +u r , but I did the next crazy thin? t a v�' s 1 said with a laugh."When we g } saw a lot of faslvon sense,an ie � enough income to support wh �` That project became rl r>'`r square-foot One P act i PI a • � r9 r ptYF opened 100 percent leased in , " t ' At first Poag&McEwen 7 a „ 4 * r 1 projects specialty centers. : r �% i "But then everyone was c . nontraditional center a sped; f McEwen said."So we started �� �� ,' nonanchored specialty centc a mouthful." Realizing that the projects w T E R Ri c E the lifestyles of young urban they hit on the term"lifestyle 1 y� &McEwen even registered for right to use the term in a couple considered doing so nationally. and expense of protecting the O.% have been too much for such a 0•,^,A ny(there are still fewer than 5( re w. Poag&McEwen's pace of c sloL J� j i� i out theed in the early crunch19 that as t /L-i`U 1 n To Learn more about Central Indiana's only lifestyle center, out credit : • RETAIL - and its magnificent 520,000 square feet, call 866-848-6500. ping center growth around Visit us at the ICSC Spring Convention, booth P111. Unlike many in the industry ny opted to remain privately I Eying to keep afloat. "We had a strip center man leasing company,"McEwen s some third-party managemen age.I was a tenant rep fur Ch When the crunch passed, I May 2003 STORY Ite increasingly on the spe- Center Plaza, in Leawood,Kan., in 1996. comers to enjoy being[at the center],and line the way they are in strip cent s,selling off the company's This center included a Jacobson's depart- right now food is a part of that." Aspen Grove,Littleton,Colo d centers. Thomason left merit store anchor,and the project eventual- Deer Park Town Center,built in an afflu- DDR joint venture,opened in 1 id the industry, McEwen ly grew to nearly 700,000 square feet(a far ens suburb of Chicago, followed in 2001 with the most elabo- rartner, and the company cry from the size of One Pacific Place) Christmas 2000.It was a joint venture with rate architecture of all— name to Poag&McEwen "because the retailers kept saying yes," Developers Diversified Realty Corp.(DDR). maybe too elaborate, in hers to reflect the new part- McEwen said. There the company made restaurants an fact.The city required that focus. The center currently has 12 restaurants. even higher priority,clustering many around some buildings be 48 feet :saw a significant change,with "One thing you cannot do on the a courtyard. And stores were grouped high,which added a lot of of the next project, Town Internet is eat,"Poag said."We want cus- together too,rather than putting them in a expense, McEwen says, but not much more appeal. Ter ' "You can spend that money z-. creating more plazas fix adults to - ,, added Poag, "to create more i ' spaces to walk." s 9 % The company continues to .;1],......., , 4:; more lifestyle center opportuniti ,Afi.�" . areas with a well-educated pops P# ., certain number of househ] f, "^ incomes over$100,000,But ri ing and financing the centers is tN , gy;,t ier,finding virgin markets is mo ��.1 st -« 44., Locating such places is as mu .,;:., ."*`y,M-i the pants"as science,Poag said. people T � `.�, people like us out there,people .4 _ , to avoid the mall?Our instinct: i ' T�"' • ) '7r.. 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Call us today,and let us simplify your The Shops at Briargate is worldwide transactions. way, set to open in Colons 866.561.5047 Colo.,in August.Slated to of and 2005 are Centeno,Love Dos Lagos, Corona, Calif.; Z p M E g r Walk,East Windsor,Conn.;a a5 `vti he-named project in Saucun The company's plans call for t ��\, t- to four new centers a year in th With the success of Saddle First American the later centers(sales excel Title Insurance Company square foot on average),oldie have ventured into the form; NATIONAL COMMERCIAL SERVICES McEwen have even advised s 1 First American Way,Santa Ana,CA 92707 companies on how to develop 866.561.5047•www.Flrstam.corn to maintain the credibility of And there's nothing e helping the competition lik says."It's important for lifts to do well." May 2003 . STORY a Japer than malls to run, but don't say `chec iith such headaches as securi- expenses—of enclosed centers. tamed,down to the smallest broken lamp in Glickman, CEO of Urba Lining giant roofs,floors and Running a regional mall,after all,is not aside hall.Thousands of square feet of floor- Properties.The Chicago-based trol systems, mall owners unlike running a city. Climate control, ing has to be cleaned and maintained too, ages more than 60 properties t at lifestyle center operators water,utilities and other basic services must and round-the-clock security is a must. United States,adding up to of nvy.The open-air configura- be kept up. Snow and trash have to be "If you look at a center as the major lion square feet of space to mail yle centers seemingly obviates removed from parking lots,and landscaping central business district of a town,collec- have to he on your game and b. •operational burdens—and has to be tended.Lighting must be main- tively, it's a real challenge," said Ross None of this is cheap.The operating expense figure for regi, .V „xz,:• g` $15.06 per square foot, accon r L x t ate - 2002 edition of ICSC's Th, ' � ,x 0r(�(r Shopping Center Operations, RL �`�t '" Expense.Expenses at upscale n i v e- 'A k e �TEI �t while,are often in the$25 rang a'--�_ r of rents of$50 per square foot o --:- . ;�c,;A5 @` "" But lifestyle centers have t IpwGET TARGET BED BATH }j Jill. j DICKS 1 to . i * :.,. im ''N�`. a.. , ,, '10 two . -Gits ,„, ____ Join the & .,:., :` (fir,-�N ,1 ,:,. 01,1A9 j; UJE S( Brandywine Town Center in Wilmington,Delaware r -�� tl' r` ■Strong anchor tenants that include Target,Lowe's,Bed Bath r ,. -s � ...8 &Beyond,T.J.Maxx,Regal Cinema and others G 3 4,, -- ■Great location 4,1 ; *r i,.. > •No sales tax J . ; ■High barriers to entry No HVAC,but the conciei tional challenges too.Even L Now Available largely on maintaining th ■10,000—125,000 sq.ft. lifestyle centers must carefully exteriors to continue drawn shopper.This means keeping ing,fountains and even aim condition. As more of them For more information contact: built in northern regions, s toys Kenneth F.Bernstein,President and CEO becomes an added burden. Joel Braun,Senior Vice President,Chief Investment Officer neighborhood and ca,utmu Joseph Povinelli,Senior Vice President,Director of Leasing which generally employ part lifestyle centers require fnll-tir Still,without a huge mien, Parker Corporate Center lifestyle center CAM charges 1311 Mamaroneck Avenue than half those of an upscale * _,, White Plains,New York 10605 developersandtenantss,,y— also about one-third higher t ( —g 1.800.227..aca5570 parable-size community oenn �"��--- - ,." '=xz� www.aeadiarealty.eom comparably elegant amcnitier Ala.—based Bayei Properties about $6 per square toot a =` gr ACA D I A Birmingham and Summit L lifestyle centers,compared u REALTY TRUST per square toot at competing Like regional malls,most I ■ May 2003 ,- -, STORY • ' ite property manager and/or a president of property management. �� rector.But when it comes to A Cousins Properties power center may ' �� similarities end there. Bayer spend$10,000 to$15,000 yearly on land- 111 i , .It R ,r instance,employs a full-time scaping,while one of its lifestyle centers - I��� " -. • p J ittt •R — -I for the elaborate landscaping spends$30,000 to$35,000,according to a L' I I f lit Birmingham,which is built Joel Murphy,president of Cousins'retail � F j '�' R +E„ 1 t� .., ��!�. r j , '; fa hill. division, which develops the Atlanta- .t 1 „ ; '. t t- yam_ iu commit to this,you have to based company's Avenue lifestyle centers. " - --', 1 �i a (i �• 30 percent," said Curtis The exterior appearance plus therestau- I r 1i layer Properties' senior vice rant activity are essential to a lifestyle cen- _ .. . . . . Lifestyle centers spend!dent! landscaping and exterior mai ter's aura, says David Kass, Continental Retail Ohlom THE POTENTIAL sidiary of Columbus,, Ohio-h nental Real Estate Cos. Shoppers also have higher t of lifestyle centers when it a TO BECOME tomer amenities. At The Angeles(SCT,September 2( Affiliated Holdings has 12 fi members,including a full mar a doorman and a concierge.T BSOLUTELY ANYTHING scan a es because I founder and CEO of Sat Calif.-based Caruso Affiliate "What we're spending on they're spending on air-cons rF t s m � said,referring to the comp, •tt" s :" Center and Century City m: f S�k Some lifestyle centers go evt i;ai vidingentertainment for thcit Yy -- —_ Y"L ;;')v ♦ ® � "People want to he entP: � IIII • Jeffrey Bayer, president Properties. The firms Sur ballets,symphonies and sir _,�__ __... .. _. ...,,....... (� +. . s men,, and are also made •_ �i ...a....Y. nonprofit organizations for 9WAL*Mi -�-iGrand Openly� Not all lifestyle center op .../i, ik.H ION i MIN ,• they have to go that far,ho f.. McEwen centers and Co j focus less on entertainment. ®®rillial III "Experiential to me ---- ..- clowns in the parking = I I I. Murphy said."That's not t ' I ,_ -- _ - - _-;,.;t, have the occasional eve �---— _ r-__ . :.,.. . ."--•— . _ almost the antithesis of the One advantage of lifestyl '.n (.'t it comes to operations man their tenants tend to he nit executives say.While tem most malls are lucky to h turnout,the Summit Birn Wal-Mart and Sam's Club buildings are the perfect starting attracts about half its ter point for a successful retailer. gatherings."You start hat Our stores can become any type of business,either whole or relationship,"Furgason sai That goodwill might subdivided;leased o owned. offer existing ssupporte ,A,AL*MART from the flexibility of utilities and parking lots.And every location is supported -f by proven traffic patterns and thorough site analysis. arrangements, particula REALTY rants, said Trish Stevvi Looking for the ideal location?We've already developed .DIVISION or w.L.M...STORES.INC. the California Pizza k it for you.Contact our team today to find out more. Summit Birmingham.S For a complete listing of available properties, ence includes working I call 479-204-0503 or visit our website. rants at a variety of loca regional malls. BUILDINGS & LAND • W W W.W A L-M A R T R E A L T Y.C O M i S C T Hiring staff is easier said,because a project I has a greater cachet th mall.