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NED, Fusco plan upscale project for New Haven

By Maura K. Ammenheuser

New Haven, Conn., leaders believe their city is thriving, with strong local businesses, quick access to two interstate highways and Yale University as an economic centerpiece.

The developers of New Haven's Galleria at Long Wharf see it as a way to link downtown with the waterfront.

But a large swath between New Haven's downtown and its harbor on Long Island Sound remains an industrial zone, underused and, well, fairly ugly. So city officials are devising an aggressive redevelopment for the area.

Enter New England Development (NED), of Newton, Mass., and Fusco Corp., of New Haven. Together they plan the New Haven Galleria at Long Wharf, often referred to locally as the Long Wharf mall, a 1.3 million-square-foot, $432 million upscale regional center. Long Wharf is a predominantly industrial area sandwiched between New Haven's downtown -- with its picturesque town green, churches and Yale -- and Interstate 95 and New Haven's harbor, an active extension of the Sound.

The developers and city leaders describe the Galleria as the future linchpin of New Haven's efforts to build social, business and travel links between downtown and the water's edge.

The project "brings New Haven back to the waterfront. The water was the front door to the city," said Sal Brancati Jr., New Haven's director of economic development.

Lynn Fusco, a partner with Fusco Corp., referred questions about the project to NED.

Nordstrom, Macy's, Filene's, and Lord & Taylor have already committed to the project, and more anchors may be added later, said William McCabe, general partner with NED. He expects the mall to include about 150 specialty stores, draw 1 million visitors annually and reach sales of roughly $400 per square foot. It's scheduled to open in the fall of 2001. The center is not included in NED's sale of 14 existing regional centers to Indianapolis-based Simon Property Group, announced in February.

The mall is part of a larger urban redevelopment plan that includes converting some vacant downtown office space into residential units, building a marina on the harbor and opening a museum and a replica of the historic slave ship Amistad there, Brancati said. The federal government plans improvements to I-95 and I-91, which intersect within sight of the Galleria property. And the city will provide four trolleys to run between downtown, the Galleria and possibly farther south of the mall to the waterfront, Brancati said.

New Haven civic and business leaders are already raving about the project.

"For the future of the region, we need a centrally located upscale mall," said Matthew Nemerson, president of the Greater New Haven Chamber of Commerce.

While several of the suburban cities ringing New Haven have smaller malls, there isn't one within New Haven, he said. The city's sole Macy's left downtown about six years ago, Nemerson said, and with Connecticut's relatively wealthy population, "there's a lot of pent-up demand" for upscale retail.

The Galleria will provide 3,000 permanent new jobs and pump $5 million in new property taxes into the city of New Haven's coffers, Brancati said. The mall will also help steer visitors to downtown by promoting local events, he said.

Not always easy

NED and Fusco officials have obstacles to clear before construction on the Galleria can begin, however. At press time, the two firms were still awaiting formal approvals from several city and state agencies, including the state's official nod on $28 million in state bonds.

They must also work around the Pirelli Tire building, a nearly 40-year-old structure local officials consider historic for its unusual architecture; the bulk of the concrete edifice sits atop stanchions boosting it several levels above its base. And the Galleria's developers must also construct a new post office to replace one it will raze on the mall site.

But Fusco and NED face another, perhaps thornier challenge: a competing shopping center developer.

Westfield America, Los Angeles, operates three malls in the New Haven area, in Milford, Meriden and Trumbull. Westfield is trying to block the Galleria project, lobbying against it at public meetings and filing a lawsuit against several government boards.

The company's primary charge: It's unfair for Fusco and NED to receive $93 million in public money for their project, which Westfield contends will hurt business at its own malls and other shopping areas around New Haven.

The Galleria is expected to receive $60 million in state funding, including $28 million in sales tax increment financing, state-issued bonds to be repaid with the additional sales tax the mall is projected to yield, Brancati explained. The rest of the state money comes from $32 million in highway and urban allocations Connecticut gives to New Haven; the city agreed to use this money for infrastructure and construction costs of the mall, Brancati said. That brings the total amount of direct public financing to about $93 million.

The Galleria will also benefit from $25 million in bonds the city expects to issue for parking garages and other downtown area improvements, he said. Finally, the federal government will provide $8.8 million toward the cost of replacing the post office, with NED paying an additional $20 million for that construction, Brancati said.

McCabe and New Haven officials downplay Westfield's objections, focusing instead on the benefits they say the Galleria will bring to the area.

"We're not going to have an adverse impact on their business," McCabe said, because the Galleria will be a more upscale project. Anchor stores at the center will include Nordstrom, Macy's, Filene's Basement, and Lord & Taylor.

"Sometimes there is clearly an attraction to the newest game in town," McCabe continued, but if Westfield's malls are healthy, he said, they'll ultimately see an increase in sales thanks to the critical mass the Galleria can provide.

Westfield officials, however, maintain the Galleria will "do nothing but take business from everybody else and divide a market that's overretailed," said Richard Green, Westfield president, adding that "they're using tax dollars to do it."

Westfield hasn't determined exactly how much business it stands to lose to the Galleria, said Ron Cohen, the company's New Haven-based lawyer. But Westfield has invested more than $500 million in the area, "and hasn't received one penny of tax," Green said.

"It's not a question of how much it's going to hurt Westfield," Cohen said. "It's a question of how much it'll hurt every retailer in New Haven County."

In January, Westfield's Connecticut Post Limited Partnership, which owns the Connecticut Post Mall in Milford, filed suit against the city, a regional planning commission and a 15-city coalition of local governments, accusing those groups of failing to consider environmental and traffic issues, among others, when they granted an early round of approvals for the Galleria project. The lawsuit also claims the Galleria will aggravate traffic around its site and create a barrier between downtown and the waterfront, instead of linking them. Westfield wants a judge to invalidate the project's approvals.

By mid-March neither the city nor the other defendants had formally responded to the suit, but Brancati said the Galleria has the blessings of the state's environmental department. WILL CHECK THIS IN MIDMARCH

Galleria proponents observe that Westfield is on the other side of a similar situation in the Midwest. McCabe noted that Westfield wants to use $29 million in public financing for a redevelopment of West County Center, in Des Peres, Mo., near St. Louis. Ironically, Westfield is being sued there by a competing mall owner, WHO? who says using the public money is illegal. A judge is expected to rule on that matter in June.

Westfield President Green says the situations are different, however. Other developers in the St. Louis area have benefited from public subsidies, he said, so Westfield isn't getting a boost denied to its competitors. And Missouri's tax-increment financing laws are structured differently, Green said. There, public money is given to companies improving "blighted" properties, as Westfield deems West County.

Cohen is optimistic about Westfield's lawsuit in New Haven.

"We expect that the marketplace will make a rational economic judgment about whether it makes sense to put a mall there [at Long Wharf]," Cohen said.

Neither the city nor McCabe are particularly worried.

"This is good for the city of New Haven, which is good for the region," Brancati said.

"Nuisance lawsuits" could slow down progress on the Galleria, McCabe said, but he still expects to break ground this summer. "I don't think we have a flaw that'll prevent the project from moving ahead."

Center to include 'retail academy'

When the New Haven Galleria at Long Wharf opens, probably in the fall of 2001, it will include all the typical features of a regional mall: anchors, boutiques, a food court, parking.

But the developers are throwing an unusual amenity into the deal: a "retail academy."

It is meant to be a training ground for people who want to work for the stores and management at the planned 1.3 million-square-foot, $432 million mall just outside New Haven, Conn.'s downtown.

"We'll work with the city to create an academy to train people from the city of New Haven," said William McCabe, general partner at New England Development (NED), Newton, Mass. His company is developing the Galleria jointly with locally based Fusco Corp. They hope to break ground on the mall this summer.

McCabe's company hasn't done this at its other centers, he said, though it has held job fairs.

New Haven leaders are eager about the building of an upscale mall in what's now an industrial area between downtown and Long Island Sound, and asked developers who proposed projects to include job training.

"It is unique. We think it's important," said Sal Brancati Jr., New Haven's director of economic development.

Despite the tight labor market, employers can't accept just anyone for hiring, Brancati said. Some applicants need basic job skills, training that could involve remedial math, telephone etiquette or personal appearance, among other things. And a regional mall needs employees on many levels, McCabe said.

"Retail runs from entry-level positions to CEOs," he said, adding that many top retail executives got their start in the business as entry-level workers.

Brancati said he hopes 35% of the mall's approximately 3,000 employees will be New Haven residents. People going through the retail academy may end up working at the mall or in downtown retail jobs, he said.

NED will pay to create space for the "academy," Brancati said, and the city's Workforce Development Board will conduct and fund classes.

Neither he nor McCabe could say whether the academy will be a permanent addition to the Galleria, but if the city can't provide enough people to send for training, NED has no obligation to continue it, Brancati said.

The program doesn't have a budget yet, McCabe and Brancati said.

But "whatever the cost is, I think it comes back to us," McCabe said, in the form of increased efficiency and customer service at the mall's shops.

-- Maura K. Ammenheuser