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Shopping Centers Today -> August 2001
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SHORT PUMP FACES FURTHER DELAYS
By Gregory J. Gilligan
The powers that be at Short Pump Town Center retail and entertainment project in Richmond, Va., were so confident that it would proceed on schedule that they pinpointed a specific opening date.
Last December, during the groundbreaking ceremony, the president of Forest City Enterprises’ commercial group and other company officials gave Sept. 27, 2002 as the opening date.
But now that date has been moved back at least six months.
The uncertainty of a court ruling — now under appeal — that prohibits issuing public bonds to pay for road and utility improvements at the planned shopping center has forced Forest City to delay the opening day (Shopping Centers Today, July 2001).
The developers now envision the 1.2 million-square-foot center opening a few weeks before Easter 2003, which falls on April 20 that year. Forest City announced the delay in June, but didn’t give a specific opening date at that time.
News of the postponement also comes four months after Nordstrom said it would put off opening its store at Short Pump by a year, until the fall of 2003.
“None of this has caused us to reconsider this project at all,” said Bruce Ratner, president of Forest City Enterprises’ commercial group.
In fact, Forest City is vigorously moving ahead with its $236 million shopping center located on the western edge of the Richmond metropolitan area. Two weeks after telling about the project’s delay, the Cleveland-based company announced the first of the small tenants to join Nordstrom, Lord &Taylor, Hecht’s and Dillard’s.
The initial tenant list includes Bebe, Water Water Everywhere, Marmi Shoes, Abercrombie & Fitch, Abercrombie Kids, Ann Taylor and Cache. There should be about 115 other stores and restaurants at the center. By this fall, Forest City expects to have leases signed for more than 50% of the space with commitments for 25% more, Ratner said.
“By announcing some tenants and getting more details about the project, those are signs that the momentum has really picked up despite the delay,” said C. Lee Warfield III, senior vice president at commercial real estate company Insignia Thalhimer in Richmond.
Even so, the Short Pump project still has a court ruling hanging over its head.
And Forest City, along with Thomas E. Pruitt, the local developer, warned that the project in its current form might be in jeopardy if the Virginia Supreme Court does not overturn a lower court’s decision on the bonds.
The delay centers on a ruling made by a judge in February that prohibits a Community Development Authority created by county supervisors to legally sell $22 million in bonds to pay for improvements at the center. The developers had planned to use the money to extend water and sewer lines to the property, add a left-turn lane and a traffic signal, and build entrance roads.
Under the financing plan, the developers would pay back the bonds plus interest through a special tax assessment. If the taxes the project generates exceed a certain amount annually, the developers would be eligible to receive a performance-based rebate of about $30 million, or equal to what was paid to retire the bonds.
The judge’s decision is on appeal to the Virginia Supreme Court. A hearing is set for this fall, probably next month, with a decision expected later in the fall.
But Forest City said it could not start construction until the legal issue is resolved. Construction should have begun by May or early June to be ready for the original opening date. Land clearing began in December.
“This court case is the only thing preventing us from building this shopping center,” said David LaRue, COO of Forest City Enterprises’ commercial group.
The delay does have some advantages, LaRue said.
The new opening date matches up closer to when Nordstrom plans to open its store at Short Pump in the fall of 2003. Rather than a year difference, now the time between the center’s opening and Nordstrom’s is six months.
Some retailers may welcome the delay, said Warfield. That’s because some mall-based tenants, because of a slowing economy, have cut back on their expansion plans and have already filled many of their slots for next year. The extra time could produce a better center, but it also could hurt the project, he said.
“More time gives time for something negative to happen.”
But if the state’s high court does not rule in Forest City’s favor, LaRue said, “we would not go forward with the project in this current form.”
Gregory J. Gilligan covers the retail industry for The Richmond Times Dispatch.
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