THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Tuesday, June 11, 1996 TAG: 9606110299
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY ALEX MARSHALL, STAFF WRITER
DATELINE: NORFOLK LENGTH: 65 lines
The Norfolk Redevelopment and Housing Authority, which owns the 17-acre site where the MacArthur Center mall will be built, Monday approved final lease agreements and a planned $33 million private loan for the project.
The NRHA will lease land to both The Taubman Co., the developer, and Nordstrom, the luxury department store that will help anchor the $300 million mall. The authority will borrow $33 million from a possible consortium headed by Crestar Bank to build a department store for Nordstrom.
The actual agreements with Taubman and Nordstrom break into five parts, none of which were actually completed or signed Monday. But the NRHA commission gave David Rice, executive director of the NRHA, authority to proceed with the project and to sign the agreements when they are finalized.
The commission is not scheduled to take any other public votes on the agreements, Rice said. Frank Crenshaw, the attorney for the NRHA, said he expects the lease with Taubman to be signed this week and the others in coming weeks.
The principal agreements authorize the NRHA to:
Lease land to Taubman MacArthur Associates Limited Partnership to build the mall. Taubman MacArthur is a partnership formed for this project by The Taubman Co. and Alex Conroy. Conroy is a Connecticut-based developer who became a minority partner after he failed to gain financing on his own for the mall project. The lease is expected to run for 50 years, with 10-year renewal options that could extend it to as long as 100 years, Crenshaw said.
Lease land to Nordstrom for the luxury department store. Usually department stores lease from the mall developer, but the city established a relationship with Nordstrom before a developer was found for the project, officials said, and the separate lease agreement with NRHA continues that relationship.
The lease agreement will commit the chain to the project for 20 to 25 years, Crenshaw said, but it has an escape clause. If one of the other department stores at the mall closes, or half the stores become vacant, then Nordstrom could convert the store to another use. Nordstrom has also agreed not to open another of its department stores within 50 miles of the downtown Norfolk location.
Borrow $33 million from Crestar Bank to build the Nordstrom store. No other banks were named in the resolution, although Crestar may take on other banks as partners in the loan. The NRHA is expected to make payments on the loan through both lease and tax payments by Nordstrom.
The city had initially sought to borrow the money with federal loan guarantees backed by Housing and Urban Development block grants. But HUD wanted Nordstrom to guarantee that 51 percent of the workers at the store would be hired from low- and moderate-income applicants.
Nordstrom agreed only to make 51 percent of those jobs available to such job seekers. The city instead decided to seek private money for the store.
The city expects to borrow the money at about an 8.3 percent interest rate.
As collateral, the NRHA will put up Scope, Chrysler Hall, Waterside convention center and the Nordstrom store itself. ILLUSTRATION: GRAPHIC
Principle agreements
authorize the Norfolk
Redevelopment and
Housing Authority to:
Lease land to Taubman MacArthur Associates Limited Partnership to
build the mall
Lease land to Nordstrom for the luxury department store
Borrow $33 million from Crestar Bank to build Nordstrom store
KEYWORDS: MACARTHUR CENTER LEASE by CNB