Boulder?s strategy stopped Centennial mall project

EDITOR’S NOTE: As The Boulder County Business Report celebrates its 20th anniversary in 2001, each issue will take a look back at major business events of the past 20 years. Each of these stories will be reprinted in a special Business Report 20th Anniversary issue in November.By Nancy Nachman-Hunt

Business Report Correspondent

LOUISVILLE ? One of the great things about hindsight is that it puts the present in such fascinating context.

There may be few better examples of how it does so than retelling, almost 20 years later, the failed attempt by the now prospering city of Louisville to build what was then called the Centennial Valley Fashion Mall.

The proposed center’s demise was considered by local media the top business story in Boulder County in 1982. For those who believe in chaos theory, it also was the fluttering butterfly wings that 18 years later resulted in a 1.5 million-square-foot high-end regional mall just one interchange south ? that being Broomfield’s dazzling FlatIron Crossing.

With much fanfare on Louisville’s part, plans for Centennial Valley Fashion Mall were announced in 1979. It was to be a 925-square-foot shopping center developed through a joint venture between Homart Development Co., a unit of Sears that developed shopping centers nationally, and Jacobs-Kahan, a commercial real estate developer out of Chicago. Sears was to be one primary anchor tenant. Another was yet to be announced.

The news exploded like a bomb in the city council chambers of Louisville’s powerful neighbor to the north, Boulder. What happened after the dust cleared? Several who were there described it as full on economic warfare between the two cities.

Frank Gray, then Boulder’s planning director and now director of planning and community development for the city of Lakewood, remembers it well. Boulder’s claim to retail fame, Crossroads shopping center, had not been redeveloped since its opening in the mid-1960s and was limping along with anchor tenants J.C. Penney and Montgomery Ward. “The city manager and the mayor came into my office and said ?What are we going to do? It’s going to be announced that there’s going to be a shopping center over the top of the hill.'”

Louisville proceeded to annex, despite court challenges, about 1,300 acres surrounding the U.S. 36/Louisville interchange and zone it for both the shopping center and residential development. Revenue-starved Louisville expected the fashion mall to contribute some $2.5 million a year in sales taxes by the center’s build-out in 1990. That’s per the city’s 2 percent sales tax at the time.

Meanwhile, Homart and Jacobs-Kahan searched for a second anchor tenant. “The key piece was what was then known as May D&F (now Foley’s),” says Don Shonkwiler,

Homart development director from the mid-1980s until 1996.

May D&F, as well as Sears, had been searching for a place to put stores in the northwest metro area for some time. It was the only significant population region in the country that Sears, in particular, did not have a presence. Homart, Shonkwiler says, believed it had leverage with May D&F because it also had plans for a regional shopping center south of Denver near the present day Park Meadows in which it could place another May D&F store.

What Homart didn’t have, however, was an existing shopping center. Boulder did. It also had, with lightning speed, created the Boulder Urban Renewal Authority, or BURA, which in six weeks managed to sell about $30 million worth of bonds to help pay for the $54 million renovation and expansion of Crossroads. That was enough to lure May D&F.

In July 1982, Homart and Jacobs-Kahan announced they were withdrawing from the project because they couldn’t get a commitment from another major department store.

In hindsight, the irony in this story abounds.

David Stahl, Homart’s development director in 1982, says while Sears’ Homart division was courting May D&F, Sears’ auto insurance company, AllState, was purchasing Boulder’s redevelopment bonds. Stahl also notes that during his tenure in the 1970s as Louisville’s city manager, the current U.S. 36/ 96th Street interchange, where FlatIron Crossing now resides, was in Louisville’s five-year development plan. “When I was city manager, I was negotiating to get that land for Louisville,” he says. Stahl now is a partner in Horizon Homes of Erie.

Shonkwiler adds that while May D&F may have put the kibosh on the Centennial Valley Fashion Mall, it ultimately may have done the same to Crossroads. Its 1990s descendant, Foley’s, refused to allow Dillards department store to become a co-anchor at the shopping center, thus contributing to the current state of affairs at Crossroads.

But what Louisville lost in Centennial Valley Fashion Mall, it has gained in Centennial Valley. Homart’s revised mixed-use plan for the annexation will contain about 3.9 million square feet of retail and commercial R&D space at build-out. In 1999, Centennial Valley contributed $5.3 million in sales tax to Louisville’s coffers. That’s per the city’s current 3.375 percent sales tax.

And while Homart didn’t win its shopping center, it didn’t lose either. Its partner, Jacobs-Kahan, went bankrupt in 1983. Homart bought the property at bankruptcy court for $9.5 million. After slowly but surely selling off parcels to commercial and retail tenants, Homart sold the last 160 acres of Centennial Valley it owned to Denver-based Koelbel & Co. in December 1995 for $6.25 million, according to Norm Blum, who brokered the sale while he was with CB Commercial. Blum currently is a broker with Grubb & Ellis in Denver.

Homart now is an entity of Sears in name only and holds no real estate. According to Shonkwiler, it wrote down its Centennial Valley investment to zero and whatever money it got from the parcel sales was essentially profit.

Now, as to FlatIron Crossing: If Centennial Valley Fashion Mall had come to pass, would FlatIron Crossing be a reality today? Blum says that in real estate, timing is everything. The early 1980s saw the national economy in a nosedive toward recession. Unemployment in Boulder County was running near 6 percent, and inflation was near 8 percent.

“The fact that Centennial Valley didn’t get the tenants tells the story. If they’d tried it 10 years later, they might have succeeded,” Blum says. “Even mediocre ideas work great in a great market.”