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CITY TO THE RESCUE

Oxnard intervenes to replace a blighted retail gateway to its community

By Donna Mitchell

Officials say the new power center will generate about $2.1 million a year in sales tax, versus the old mall’s $750,000.

Many a story about a public-private alliance casts the retail property in the leading role as catalyst for development in the rest of the city. But in Oxnard, Calif., it was The Esplanade, an aging regional mall, that needed rescuing.

From its location just south of the Ventura Freeway, the mall’s site serves as a beacon for the city of Oxnard. But this beacon was growing dim, and the municipal powers-that-be couldn’t abide a declining, secondary mall serving as an introduction to an otherwise thriving community. Sitting 65 miles northwest of downtown Los Angeles, Oxnard is the largest coastal community between L.A. and San Jose, and it enjoys a reputation as a vital, business-friendly place.

“The mall was built in 1969, so we’re talking about an aging structure,” said Brian Pendleton, Oxnard’s redevelopment services manager.

Things grew darker still for Esplanade when the nearby Pacific View Mall, Ventura, underwent renovations and coaxed away its two anchors, Sears and Robinsons-May, in 1999. At the same time, the former TrizecHahn (now Trizec Properties) developed The Oaks Shopping Center, Thousand Oaks, Calif., anchoring it with J.C. Penney, Macy’s and Robinsons-May. Both developments, within five miles of Esplanade, robbed the center of its status as the area’s primary shopping destination.

“The mall in Ventura was truly enough for this market,” said David Rush, a first vice president at real estate services firm CB Richard Ellis, from his Ventura office. “That made Esplanade a secondary mall. I think we are finding in many markets today that there is a ‘de-malling’ of secondary malls, and that was the case here.”

It was time for a change anyway, noted Jain A. Wager, CLS, a partner at M&H Realty Partners, San Francisco. A new interchange was being added to the Ventura Freeway, and the old Esplanade site had become the most blighted in its immediate area.

Though it continued to generate up to $750,000 in sales taxes yearly for Oxnard, Pendleton said, officials knew that it was just a matter of time before traffic at the anchorless center would begin to flag.

Acting as the Community Development Commission (CDC), the City Council placed the Esplanade site into a newly formed “redevelopment project area” in 1998. Oxnard officials had created several such areas within its borders, which allow the city’s CDC to enter into agreements with developers using tax revenue incentive programs. The 2,229-acre portion that contains Esplanade is called Historic Enhancement and Revitalization of Oxnard, or HERO.

Then M&H Realty Partners bought the 650,000-square-foot mall in December 1999 from a group of San Francisco-based individuals who owned the mall under the partnership Esplanade LLC.

The new owners drew up plans to completely revamp the site, signing an agreement with the CDC that outlined the project’s scope, tenant mix and architectural design, according to Oxnard officials. The city agreed to give M&H Realty a property tax rebate on Esplanade equal to $3.7 million over 20 years. The developer then razed the single-level center and its empty, two-level anchor spaces and replaced it with Esplanade Shopping Center, a 500,000-square-foot power center.

M&H Realty decided to play up the freeway visibility with store signs and individual shop fronts on the back of the center. Thus the buildings look similar on both sides, making it equally appealing to shoppers out front and drivers on the freeway behind. M&H Realty also added a few playful touches, such as several dolphin sculptures that invite children to climb all over them.

Esplanade Shopping Center opened last October with The Home Depot as its largest tenant, plus anchors that include Cost Plus World Market, Nordstrom Rack (an off-price version of the fashion anchor) and T.J. Maxx. The first phase features small-shop tenants, including Casual Male and Starbucks, that partially encircle a large parking lot. The second phase is under way — Staples and Circuit City should be open for the Christmas shopping season, and United California Bank is scheduled to open in February 2003.

Both sides of the center have been made attractive so that it appeals equally to shoppers entering the front and drivers on the freeway behind.

By the spring Esplanade Shopping Center will feature more than 40 tenants and is expected to generate some $42.8 million in sales tax revenue over 20 years, or about $2.1 million a year. Pendleton said Oxnard also expects the project to increase in value by about $35 million, resulting in about $350,000 in increased property taxes annually. Thus, city officials say, the revitalized shopping center is already returning the favor as far as public investment in the project is concerned.

But it isn’t only taxes that Esplanade Shopping Center is pulling in. “The Esplanade has raised the bar for retail in the region,” said Pendleton. Bed Bath & Beyond, Borders, Cost Plus, Nordstrom Rack and other tenants are making their west Ventura County debuts at the center.

Now, new developments want to be near the Esplanade, and existing ones are spiffing themselves up. A local partnership of Expo Developments, Oxnard; and Keller Construction, Los Angeles, plans a 700-acre, mixed-use development on the north side of the Ventura Freeway. Called Riverpark, the project will include retail, office and hotel space, and as many as 2,900 residential units. Target is upgrading a store to the south of Esplanade Shopping Center, and several strip center owners are considering renovating and re-leasing their centers.

“Their expectations grow. The better you get, the better people want to be,” said Pendleton.

Public and private officials say they are gratified by the action they took to revitalize this retail location.

“Considering the circumstances, it was the right thing to do,” M&H Realty’s Wager said. Though the property’s days as a mall locale had passed, the support of the city, a commitment from Home Depot and strong tenant interest all converged to save the site as a valuable retail location.

“It was about providing shopping services to the community,” Pendleton said, “and making sure that a prominent asset was restored to its prior health.”

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