Panel backs Dillard’s on store value

LONGMONT – A decision that values the Dillard’s department store at $6.3 million paves the way for an $80 million redevelopment at Twin Peaks Mall.

At the same time, the price decision is a bittersweet victory for Dillard’s Inc. (NYSE: DDS), said Chris Johnson, vice president for real estate for the department store chain. The $6.3 million price tag is the same as a Dillard’s Inc. (NYSE: DDS) appraisal for the property, and more than $3 million more than the $3.03 million price tag a Longmont Urban Renewal Authority appraiser put on the property, Johnson said.

“While (this) decision is welcome vindication, we are saddened that this means definite closure of our Longmont location after 16 great years of service,” Dillard’s said in a press statement.

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Dillard’s is interested in staying in Northern Colorado and “hates to see the (Longmont) store go,” Johnson said. While no time frame has been announced for the store’s closure, Dillard’s will try to relocate employees there to other nearby stores. The company operates eight department stores in Colorado, including locations in Broomfield and Loveland.

The city of Longmont does not make public comments about items in litigation, Longmont spokesman Rigo Leal said in a written response to requests for comment.

A three-person board composed of Boulder attorneys William Gray and J. Marcus Painter and local real estate broker B. Scot Smith decided on the store’s value after a three-day, quasi-judicial court hearing that ended Dec. 13. The preliminary value is expected to be followed by a jury trial in April to determine the actual price the Longmont Urban Renewal Authority, or LURA, must pay for the store.

LURA is taking the Dillard’s store by the power of eminent domain to help facilitate the redevelopment of the ailing mall. Dillard’s, which owns its store and the seven acres on which it sits and has been an unwilling seller, holds a reciprocal easement agreement that gives it veto power over any redevelopment at the site.

Within 10 days of the preliminary price being set, LURA will deposit the set amount in escrow with the court until the jury trial in April. If the jury price comes in higher, LURA will have to pay the difference then. If the jury price comes in lower, LURA will get a refund. In the meantime, Dillard’s can withdraw up to 75 percent of the $3.03 million that LURA has argued the property is worth.

In past negotiations, city officials had offered Dillard’s $3.6 million for the building. At the time, Dillard’s officials countered the offer with a $5 million price.

The Boulder County Assessor’s Office valued the Dillard’s Twin Peaks store at about $2.9 million for tax purposes this year, less than half the amount decided by the commissioners.

A Dillard’s appraiser valued the property based on the “income approach,” or what it would be worth based on what price per square foot it could lease for to a tenant, the company said in a press statement after the ruling. Longmont’s appraiser compared the open and operating store with vacant shell buildings as much as 30 years older, the press statement said.

“It is clear from the amount of the award that the commissioners fully understood and accepted our valuation position,” the statement said.

Twin Peaks Mall owner NewMark Merrill Mountain States LLC plans to pay for Dillard’s Inc.’s Longmont store and get reimbursed by city officials later, officials said in September. Allen Ginsborg, a NewMark Merrill Mountain States representative, was not immediately available to discuss details of the arrangement before the Boulder County Business Report’s deadline.

City officials have pledged $27.5 million in a planned municipal-bond financing scheme toward infrastructure costs for the redevelopment project. “Eligible costs” include things such as demolition and public improvements, as governed by state law, Ginsborg has said in the past. He said he expects to pay a total of about $35 million in infrastructure costs in the redevelopment project.

A funding mechanism called “tax increment financing” is expected to be used to pay back the municipal bonds. Such funds come from the increased property and sales tax revenues generated from a redevelopment project.

The Twin Peaks redevelopment, dubbed The Village at the Peaks, is slated to be anchored by a Whole Foods Market, a Sam’s Club store and a Regal Cinema 12-screen movie theater.