October 03, 2012 - The owners of Crestwood Court are requesting nearly $27 million in economic assistance for its proposed $102 million redevelopment of the shopping center at Watson and Sappington roads.
Centrum Properties, which owns Crestwood Court along with Angelo, Gordon & Co., submitted the only response to the city's request for proposals to redevelop the mall.
Vic Pildes, of Centrum Properties, briefly discussed the redevelopment plans for the mall during a Board of Aldermen meeting last week.
Pildes and Sol Barket, of Centrum Properties, were scheduled to discuss the latest information about the mall's redevelopment and answer questions during a town-hall meeting sponsored by Mayor Jeff Schlink Tuesday — after the Call went to press.
Centrum Properties and Angelo, Gordon & Co. purchased Crestwood Court from the Westfield Group in 2008, and the proposed redevelopment of the shopping center has been on hold due to the economy.
During a Board of Aldermen meeting in June, Barket unveiled preliminary plans to redevelop the mall into a unique open-air entertainment and retail venue called the District at Crestwood.
As proposed, the nearly 50-acre shopping center site at Watson and Sappington roads would be developed in two phases.
The first phase would encompass roughly 30 acres and would include the demolition of most of the shopping center's existing structures with the exception of the former Macy's building, which could house a grocery store, health club and entertainment spaces.
Including the three-story former Macy's building, the first phase of the project would feature about 317,000 square feet of space.
As proposed, the District at Crestwood will include a roughly 52,000-square-foot cinema, a 24,000-square-foot upscale bowling concept and a roughly 20,000-square-foot Toby Keith's I Love This Bar & Grill with a concert stage. In addition, the redeveloped mall will feature a variety of restaurants, outdoor dining areas and a 25,000-square-foot main plaza.
Of the proposed redevelopment, Pildes told the Board of Aldermen Sept. 25, "… We're getting great feedback from the marketplace on it … There's a market study in our proposal done by a company called SiteWorks … It indicates that the trade area for the development has the spending potential, the demographics, the size, the density to support a development like this.
"And, in fact, a development like this, which I would call an urban entertainment center type of program, is the best development we feel that's suited for this location and will be the most productive one — both from an economic standpoint and also from the standpoint of being an asset to the community …"
Pildes noted information about Centrum's financial feasibility and its request for public subsidies is included in its proposal to the city. As proposed, economic assistance for the first phase — including tax-increment financing, or TIF; a 1-percent sales tax from a transportation development district, or TDD; and 1-percent sales tax from a community improvement district, or CID — would total roughly $26.6 million.
"… Our proposal includes the sales tax and real-estate tax increment that's supportable and supported by the market study. So the research indicates that there is realistically spending potential in this market to support those kinds of incremental revenues," Pildes said.
"Secondly, I want to mention that our combination of TIF and TDD and CID and the underwriting we've proposed in our proposal entails, first of all, 56 percent, or a little more than half of the incremental revenue, is from TIF. In other words, the increased sales and property tax resulting from the development, nearly half, or 44 percent, are the additional TDD and CID sales-tax applications that we are imposing on ourselves … to help fund the development.
"So fully, almost half of the incremental revenue that we would use … (as) economic assistance for the development is generated from new sales taxes that are not collected today," he added.
The Centrum representative also discussed the amount of TIF assistance being requested and cited the city's economic development policy.
"… I wanted to bring up one other point, which was the city's economic development policy discusses some of these issues and one of the important points in there was that it was desirable not to fund more than 15 percent of the project from TIF," Pildes said. "If you look at our proposal, we're funding less than 15 percent of the total project costs from TIF. The project budget is $102 million. We're proposing $27 million of economic assistance and 50 percent of that $27 million comes from TIF, or about $13 million to $14 million on a hundred-million-dollar project.
"So substantial amounts of the funding, the most substantial amounts of the funding for the project are coming from our equity and from additional sales taxes," he said, citing the additional sales taxes for the TDD and CID.
That additional 2-percent sales tax will be generated by the redevelopment project, Pildes said.
He noted the mall property currently is assessed at an $11 million "market value."
"That market value reflects, we believe, the value of the land without additional value for the buildings," Pildes said. "And the reason for that is that the buildings are functionally and physically obsolete. No one purchasing the property today would purchase the property and underwrite the reuse of those buildings …"
"… The redevelopment will have a great effect on the real estate taxes collected from the property because the assessed value today is nearly the value of the land …," he said.
The second phase of the redevelopment is expected to have commercial uses, specifically big-box retail, but other uses may be proposed based on future market conditions, according to Centrum's proposal.
As proposed, Centrum would seek roughly another $15.3 million in economic assistance — including TIF, TDD and CID — for the second phase of the redevelopment.
"… We're proceeding in phases on this project because we're not able to lease the entire project at this point. We don't want to lose the opportunity to develop phase one," Pildes said. "There are several prospects for phase one, many of them new to the market, and we're relatively sure they'll land elsewhere in St. Louis if we don't offer them an opportunity ..."
Regarding the second phase, he said, "… There would be negotiation as to the trigger mechanisms for the TIF for phase two. That would include us coming to back to you with a site plan for phase two that would be subject to review …"