Grewe may be named preferred developer for Watson Plaza redevelopment
An ordinance selecting G.J. Grewe Inc. as the preferred developer for the proposed redevelopment of the Watson Plaza shopping center was scheduled to be considered this week by the Crestwood Board of Aldermen.
The Board of Aldermen was scheduled to meet Tuesday night — after the Call went to press.
After hearing a redevelopment proposal from Gary Grewe of G.J. Grewe Inc., the principal property owner of Watson Plaza, aldermen voted in January to authorize staff to issue a request for proposals to redevelop the shopping center.
G.J. Grewe Inc. was the only company to respond to the request for proposals by the Feb. 20 deadline.
Watson Plaza is adjacent to the city's Watson/Sappington Road Redevelopment Area where a Kohl's Department Store opened last fall. The only piece of property not owned by G.J. Grewe in the shopping center is the former Service Merchandise site. Service Merchandise filed for bankruptcy in 1999 and the rights to the Crestwood site are owned by Developers Diversified Realty, a real estate investment trust based in Cleveland, Ohio. However, G.J. Grewe currently is "under contract to acquire the former Service Merchandise property,'' City Administrator Don Greer wrote in a memorandum to Acting Mayor Richard Breeding and the Board of Aldermen.
In its plan, G.J. Grewe Inc. is proposing a PETCO and a new Walgreens on the site of the vacant Tippin's restaurant as well as retaining the shopping center's existing tenants.
The city and G.J. Grewe have been involved in a legal dispute over the condemnation of a cross-access easement between Watson Plaza and the site of the new Kohl's. The company's proposal includes a unified cross access with the Kohl's site.
The cost of the proposal is estimated at $11,226,305, excluding funding generated by a Transportation Development District that would be used to pay for improvements to Watson Road that would enhance the flow of traffic.
Besides TDD funds to offset transportation-related expenses, G.J. Grewe Inc. is seeking $2 million in tax-increment financing to facilitate land-acquisition costs. In a TIF district, tax receipts for school districts, fire districts and other taxing entities are frozen at existing levels for the length of the TIF — up to 23 years. As land within the TIF district increases in value, the incremental tax revenue — 100 percent of property taxes and 50 percent of sales and utility taxes — is used to retire the TIF obligation.
But Greer, in his memo, expressed concerns about the amount of TIF assistance requested by G.J. Grewe.
"Due to the fact that Grewe has not identified a tenant for the Service Merchandise property, it is impractical at this time to conduct any type of cost-benefit analysis with regard to the scope of proposed TIF assistance,'' the city administrator wrote. "Clearly, without a major sales-tax-producing tenant occupying the Service Merchandise space, this amount of TIF assistance is unsupportable at this time.
"However, the proposal does address the following issues which are of interest to the city: the consolidation of property with a local known entity; establishment of a unified development with Kohl's; and the facilitation of the retention and expansion of Walgreens at the site. Additionally, PETCO is a unique retailer, which will not directly compete with any existing Crestwood business,'' Greer wrote.
Gary Grewe is aware of the city's concerns about the lack of a tenant for the former Service Merchandise property, according to Greer.
"There is a willingness to structure any TIF assistance so that the developer assumes the risk to secure a tenant that will support the proposed TIF package,'' Greer's memo stated. "Mr. Grewe has additionally agreed to facilitate the settlement of the cross-access issue with Kohl's and to immediately allow the property under their control to be included in the TDD equation for the cross access.
"At staff's request, Mr. Grewe has agreed to consider alternative/supplemental funding mechanisms to TIF. Finally, as the preferred developer, Mr. Grewe has agreed to front the city's planning and legal costs associated with any redevelopment project,'' Greer wrote.
The ordinance selecting G.J. Grewe Inc. as the preferred developer for the proposed redevelopment of Watson Plaza also includes a preliminary funding agreement in which the company would provide $50,000 for legal, planning and consulting services involved in the redevelopment process.
"While it is clear that all of the pieces of Grewe's plan are not yet in place, the presentation does provide a solid foundation to build upon,'' Greer's memo stated. "The city will experience no out-of-pocket expenses to move forward and several key issues have been addressed in this submittal that were not present in the previous response.
"Grewe has site control, proposes a unified development with Kohl's and is willing to put the cross-access issue to rest. Staff will continue to work with Grewe to consider alternative/supplemental financing mechanisms and to obtain an anchor tenant,'' the memo stated.
G.J. Grewe was the only company to respond to the city's original RFP for Watson Plaza that was issued in Decem-ber 2002. The proposal's estimated cost of $12,527,025 included a request for $2.5 million in tax-increment financing assistance.
In June, the board voted to reopen for 60 days the request for proposals process to redevelop Watson Plaza after representatives of DDR told aldermen they had not received the request for proposals and asked that the process be reopened so DDR could submit a proposal.
In September, the Board of Aldermen voted to establish a moratorium on aggressive redevelopment, ending consideration of G.J. Grewe's redevelopment proposal for Watson Plaza. But the moratorium, which still is in effect, does not preclude a property owner from approaching city officials with a redevelopment proposal.
A July 2002 technical memorandum prepared for the city by the city's planning consultant, John Brancaglione of Peckham, Guyton, Albers & Viets Inc., states that Watson Plaza, designated Redevelopment Project Area 1, would meet the criteria for designation as a TIF district.
"The center has become an economic liability given its outdated physical layout, excessive vacancies and declining contribution to the tax revenues of the city and ad valorem tax jurisdictions,'' the memo stated, also noting, "In addition, our findings reveal that there are significant costs involved with the acquisition of property and the subsequent demolition of structures in RPA 1 ...''