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VIRGINIA’s SHORT PUMP FACES FINANCING CHALLENGES

By Donna Mitchell

It might be symbolic that the developers of Short Pump Town Center in Richmond, Va. — which took its name from a tale of travelers who had some water pumping setbacks to deal with while settling into the area — have had to contend with a few issues of their own in trying to make a fall 2002 opening.

The open-air shopping center has undergone a lot of changes since the initial groundbreaking, which was delayed from spring 1999 to fall 2000 due to a complete redesign, and the owners have had to deal with competition for anchor stores from a project being planned nearby. But the most daunting challenge is that the Supreme Court of Virginia could bar a bond offering that is key to financing the project.

As Short Pump Town Center’s developers — Forest City Enterprises of Cleveland and Pruitt Associates of Richmond, Va. — work toward a September 2002 opening, they are also appealing to the Supreme Court of Virginia over the bond issue. The outcome, if negative, could undermine efforts to help fund the project. In addition, the issue has heightened competition between Forest City and Taubman Centers, which owns the nearby Regency Square regional mall, about 15 miles away. At issue is the developers’ plan to team up with Henrico County officials to issue $22 million of special assessment bonds, and use the proceeds to finance part of the mall’s construction. Last February, Circuit Court Judge Randall G. Johnson said in a written opinion that the bond plan was illegal, because it appeared that the Short Pump Town Center Community Development Authority (CDA), which was created to issue municipal bonds to investors, was attempting to use public money to pay for Short Pump Town Center’s infrastructure. That would meet the demands of a private developer, and not of Henrico County, he said. Henrico County’s Board of Supervisors immediately appealed Judge Johnson’s decision.

The court agreed to take up the appeal in mid-April, and is expected to hear arguments in early fall. A decision might be handed down before year-end, said John Foote, special counsel for the Short Pump Town Center CDA, although that is uncertain. According to the plan, Henrico County will reimburse the mall’s developers for the amount of taxes they would have paid over the next five years — $22 million. That reimbursement should help give the mall owners sufficient funds to repay the bonds, said Keenan Rice, division manager of the Mid-Atlantic office of MuniFinancial, a public finance consulting firm, which is involved with the deal.

Supporters of the bond offering insist that the debt will not be the county’s responsibility, and that the ultimate repayment of those notes falls to the mall owners. And the large plaza area — the targeted use of the special assessment bond revenue — is meant to be accessible and used by the general public, and not exclusively for Forest City.

Officials from Taubman Centers, Bloomfield Hills, Mich., oppose the bond proposal. The REIT owns Regency Square and plans to build The Park at Stony Point, an open-air fashion center in South Richmond. Steven Kieras, Taubman’s vice president of development, steadfastly denied that his company’s objection sprang from competition with Forest City. More exactly, he said, Henrico County officials acted inconsistently when they decided to support the Short Pump Town Center CDA. "We had gone to the county earlier to see if they could provide us with any financial assistance to make improvements to Regency Square. We were told, ’No,’" Kieras said. "The next thing you know, they would use our tax dollars and other businesses’ tax dollars to help subsidize a development through the CDA mechanism."

To further complicate matters, one of the center’s prime anchors — Nordstrom — has delayed a store opening at the site by a year. Henrico County’s assistance depends on Nordstrom’s commitment to the project — as well as that of the three other anchors.

The challenges don’t seem to rattle Forest City, which teamed up with Pruitt Associates in 1996. At the time, the family-run company, which develops commercial real estate in the Richmond area, wanted to capitalize on 147 acres of land that it owned. "We believe it’s the best location in Richmond for a shopping center. The demographics are excellent," said Douglas Lund, Forest City’s senior vice president for the East Coast, referring to Richmond’s affluent populace. Once completed, Short Pump Town Center will be an open-air mall with more than 1.1 million square feet of retail space on two levels. Lord & Taylor, Hecht’s, Dillard’s and Nordstrom will anchor the project, which will also feature about 350,000 square feet of upscale retailers and restaurants. While Forest City has not announced leasing agreements from retailers yet, the center’s management hopes to include tenants such as Crate & Barrel, Restoration Hardware and sporting goods retailer Galyan’s Trading Company.

The center is named after the Short Pump area of Virginia, which lies between Interstate Highway 64 and Goochland County. A smaller part of the existing area used to be the Short Pump village, and Henrico County, where the shopping center will be located, partially borders the site of the former village.

The center will include a replica of the fabled short pump. According to one version of the story, 19th century travelers who eventually settled in the area were trying to pump water. But they found that the canopy above the pump structure was so low that it restricted the handle’s movement, and did not allow effective water pumping. So they broke off a piece of the handle, making it shorter.

The idea is to create a refined, downtown shopping environment. Lund said the center’s designers carefully researched the character of Alexandria and Richmond to come up with the Short Pump Town Center look.

Short Pump Town Center has been designed as an open-air center with four anchors: Lord & Taylor, Hecht's, Dillard's and, eventually, Nordstrom.

"It will be a wonderful plaza, like a town square. The facades are patterned after the locale," Lund said. The open-air mall is expected to be comprised of three major buildings that create a series of walkways when placed together. The building designs will include canopies and colonnades, which serve two purposes: They give the center an open-air feeling and allow pedestrians to traverse the center from end to end while sheltered from inclement weather. And Forest City hopes the design will make shoppers feel like they are in an urban area.

Atlanta-based architectural firm Thompson Ventulett Stainback & Associates took cues from Richmond’s mercantile past to create such an evolved look. "Many buildings are on the historic register, and this gives us a great variation of architectural styles to fit the mercantile needs," said Nelson Brackin, Short Pump’s project architect (Shopping Centers Today, Design Trends supplement, April 2001).

"It will be a pedestrian center. There will be a mall anchor at each end, with two other anchors between the major anchors," said Lund. He added that the center will open up to a plaza at the back end — to be funded by the bond offering — with more retail space.

Developers cancelled plans for a 22-screen movie theater, because a large Regal Cinemas already exists next door to the site. Instead, the 117,000 square feet of space will be leased to specialty retailers, said Lund.

Meanwhile, developers found that they had to beat out Stony Point to attract the high-quality anchors like Nordstrom. Dillard’s, which will anchor Short Pump, recently agreed to anchor Stony Point too.

Despite all of the setbacks, supporters of the Short Pump Town Center project say that it will be completed, especially because Henrico County officials want to see the bond offering go through. Foote said that if the bond issue fails, Pruitt Associates and Forest City Enterprises will simply come up with another way to raise the funds. "They [county officials] want to see the project in Henrico," he said.

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