Macerich wants to buy property

BOULDER – The Macerich Co., owner of Crossroads Mall, is trying to purchase property it presently leases on the mall’s southern end to enable it to proceed with a mixed-use redevelopment plan there.

To see how the city could assist with the redevelopment, Boulder City Manager Ron Secrist and City Attorney Joseph de Raismes flew to Santa Monica, Calif., to meet with Macerich officials on Thursday, May 11.

“We had a very productive and frank discussion about the Crossroads redevelopment plan.” Secrist told The Business Report Monday. “Much of our discussion centered around Macerich’s attempts to acquire property on the south end, and we also had discussions surrounding their plan for a mixed-use redevelopment.”

Macerich’s focus now, Secrist added, “is movement on the land acquisition.” Secrist also said the city also now would help Macerich to negotiate with the land owners. No price for the land was released.

The Boulder County Assessor lists the land owners of the south end of Crossroads as the Charlotte Ball Seymour Children’s Trust (50 percent), the Seymour Ball Trust for Alexander Williamson Seymour (25 percent) and Seymour Ball Trust for Lee Seymour (25 percent). The majority of the land not owned by Macerich, 1,212,709 square feet, is owned by the Charlotte Ball Seymour Children’s Trust. Macerich and the Boulder Urban Renewal Authority (BURA) own 1,001,444 square feet of land and buildings at Crossroads. And the May Co. and Sears Roebuck and Co. also own land and buildings.

Boulder City Council member Rich Lopez pointed out that hotels or developers of housing typically do not want to build on leased land. “If Macerich builds a hotel and conference center, it will have to buy the land,” Lopez said.

“If the city purchased or condemned the shopping center land, it would also have to condemn buildings, because the land is not vacant, and there are 50 years left on lease. It would be very expensive,” Lopez said.

“Land use is a complex balancing act,” he said. “Boulder is definitely losing sales tax revenue because the south end of Crossroads is just sitting there without any businesses.”

In an interview with The Business Report on the day following the meeting, Macerich Vice President John Genovese refused to discuss details. As the city attorney, de Raismes said “I am under a confidentiality agreement,” and he could not comment.

Genovese only would say that Macerich still plans to demolish the buildings on the southern portion of Crossroads, and it is deciding on a mixed-use development plan for the area, which takes time. Right now, Genovese said, his firm is focusing on the renovation of the north end or two-story mall anchored by Foley’s, and that should be completed by November 2000.

Boulder city council members, with many now insisting that Macerich is stalling on its promise to redevelop the mall’s south end, speculated that the possibility of moving Denver’s Currigan Convention Center to the Crossroads site could have been on the table.

But Secrist said Currigan was not discussed at the Macerich meeting. “They are aware of it, but their focus is more on the land situation,” Secrist said.

On Monday, Boulder sent a letter of interest to the city of Denver proposing three possible uses for Currigan:

* A facility for recreational and cultural activities at new city park on Valmont Road.

* A transportation facility at 33rd and Pearl for possible passenger rail service.

* Part of the redevelopment of the Crossroads mall. The letter described Crossroads Mall in “a state of suspended redevelopment.”

“All of these scenarios emphasize community and civic uses consistent with the quality spirit of Currigan Hall,” the letter said.

Boulder City Council member Dan Corson had proposed that Boulder take a look at moving Currigan to the Crossroads site or another city property. Denver, expanding its own newer convention center, has offered to put $700,000 toward moving Currigan, which can be dismantled and moved elsewhere.

A preliminary cost estimate by the city, which includes deconstructing and moving Currigan as well as new work on the shell, estimated it would cost $15.8 million.

Before he left to meet Genovese last week, Secrist said he hoped to clarify what steps Macerich had taken on the redevelopment of the mall’s south end and to ask what roles the city could play, including a possible partnership between the city and Macerich.

Genovese denied ongoing rumors that Crossroads has been unable to lure new tenants to the mall because of competition from the new FlatIron Crossing regional mall, which will open in Broomfield in August. He did confirm that the previously announced deal with Century Theaters to build a 16-screen complex at Crossroads remains in place. “The only thing left to discuss is the location,” Genovese said.

Boulder City Council member Françoise Poinsatte said the discussion has been whether to build the theater complex anchor at the south end redevelopment at 28th and Arapahoe or to build it on a north parking lot, next to Foley’s. Century Theaters could not be reached to discuss its plans, but its Web site does list Crossroads Mall as the site of a new 16-screen stadium theater opening in winter 2001.

Still, other council members remain doubtful about Macerich’s ability to bring new retailers to Boulder.

“I think the owner can’t find tenants to move in,´ said council member Tom Eldridge. Apparently, Eldridge surmised, no one wants to go first. A movie theater won’t go if it’s the only store; restaurants won’t go unless retail is already there.

“If I owned the property (the south end of Crossroads Mall), I would be very uneasy. The first thing I would do is demolish it so I didn’t have to pay property taxes,” Eldridge said.

Redeveloping Crossroads, nearly everyone agrees, is not just a matter of building something and ‘they’ will come.

“The problem is not a lack of building space — the problem is no tenants,” Eldridge said. “Even if Currigan Hall was moved to Boulder, you would have an empty building. There are no tenants willing to come now. Personally, I think FlatIron Crossing will dominate the market. I’m glad I have long-term leases for the retail space I own at 28th and Pearl.”

Poinsatte said Boulder does not want to be in the real estate business, but it does want the Crossroads development to be done well and for the long term.

“It is the perfect opportunity for mixed-use development and more integrated land use such as retail, office space, housing and recreation. If rail comes to fruition, we could have a station there,” she said.

“I don’t think their (Macerich) efforts have been much on tenant signing since they decided not to pursue phase one of the development,” Secrist said. “I don’t think it takes a rocket scientist to figure out that they certainly have come to the conclusion that retail alone in this changing economic environment is not the best use of the facility. I think they know they have to have the mixed uses to support the retail.”

The council’s goals for the Boulder Valley Regional Center (BVRC), of which Crossroads is a part, are to create more pedestrian space and less conventional suburban mall models, according to Poinsatte. The boundaries of BVRC are Pearl Street, Boulder Creek, 33rd Avenue and Folsom Street.

A new hotel and conference center also have been mentioned for the redevelopment of the southern portion of Crossroads. The Boulder Chamber of Commerce, with the city of Boulder and the Boulder Urban Renewal Authority contributing, has commissioned a $40,000 feasibility study from Conventions, Sports & Leisure, a Minneapolis-based consulting firm, to determine if a convention center or conference center and hotel would be viable in Boulder.

“… if the two could be married then Crossroads would be a distinct possibility,´ said Brad Power, executive director of BURA, in a recent Business Report interview.

Boulder’s revenue/sales tax division reported that overall, the city’s sales tax revenue actually has been increasing in recent years.

Tom Hagerty, deputy finance director, said 1998 sales tax revenue rose 3.42 percent from 1997 and then increased 10.37 in 1999 from 1998. That equates to $76.8 million from sales tax in 1999, up from $69.6 million in 1998 and $64.4 million in 1997. Figures show an 11.5 percent change in sales tax revenue thus far in 2000.

Hagerty said Boulder’s retail sales continued to grow for two reasons: CompUSA was new, and motor vehicle purchases experienced 18 percent growth. “People in Boulder are still buying large automobiles,” he said. In addition, the city’s reserve for its general fund has increased from $2.3 million in 1990 to $7.1 million in 1999.

City Council member Corson said the Crossroads situation is unfortunate, because it is a choice spot in town, and nothing is happening.

“The Community Consortium expressed its wishes and wants it to happen,” Corson said. Macerich proposed a mixed-use redevelopment that would be used all of the time on the south end of Crossroads, but there needs to be more talking to determine what makes a mixed-use center work, he said.

“People come to Boulder for its uniqueness. The city was just named a distinctive destination by the National Trust for Historic Preservation, one of only 12 cities in America to receive the designation,” Corson said. The redevelopment at Crossroads should build on that and not try to recreate what is happening down the road at FlatIron Crossing.

According to Corson, the height concession, which the city made for a hotel to be built at the south end of Crossroads, and the possibility of moving Denver’s Currigan Convention Center to Boulder for meeting space, both fit in with the concept that Boulder is different. “The city’s role is to set the stage, make things happen and invest its money,” Corson said. “A good example is Denver — it set the stage to make Larimer Square and LoDo happen. We need to do that.”

Council member Spense Havlick said moving Denver’s Currigan Hall to Boulder is a serious proposal. The engineers and architects who designed and constructed Currigan are still in the metropolitan area and available to consult with Boulder or Macerich.

Retail analysts said Crossroads is a classic example of a mall not being allowed to refresh its anchors. Dillard’s and Nordstrom were desperately looking for space, but Foley’s, the existing anchor, had the right to pre-approve new anchor stores coming in. It said no.

Analysts said if Crossroads had been allowed to redevelop, FlatIron Crossing wouldn’t exist. But because it will be the new regional retail center, Crossroads can’t support a center that is 100 percent retail anymore. It needs a lifestyle center or an entertainment center or both, according to one retail analyst.

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