THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: WEDNESDAY, June 1, 1994 TAG: 9406010501
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY TONY WHARTON AND CHRISTOPHER DINSMORE, STAFF WRITERS
DATELINE: 940601 LENGTH: NORFOLK
In the space of an afternoon, Macy's announced it will be the second anchor store, a developer inked the contract, and city officials approved much of the financing.
{REST} ``The center is a fait accompli,'' said Robert B. Smithwick, Norfolk's development director. ``This is now a done deal.''
``We see MacArthur Center as an extraordinary opportunity for Macy's in a market we feel is largely unreached,'' Myron E. Ullman III, chairman of R.H. Macy & Co., said in a conference call with Mayor Mason C. Andrews that opened a festive and busy City Council meeting.
Andrews hung a lei around Smithwick's neck, saying, ``At the Kentucky Derby they usually put a garland of roses around the winner's neck. I want to do the same for Bob.''
MacArthur Center is a $270 million, three-story mall to be built on City Hall Avenue across from the MacArthur Memorial. The main anchor, the one that made the project possible, is the Seattle-based Nordstrom chain. But the Macy's agreement also was critical.
Like Nordstrom, Macy's has signed a letter of intent to open a store in the mall. Such a document is not a contract and is not legally binding.
``We think the alignment between Nordstrom and Macy's will be verysimilar to our experience in Pentagon City, which has been a very successful store for us,'' Ullman said, referring to an upscale mall in Northern Virginia.
Shortly after talking to Ullman, the City Council held a public hearing and then approved: an application to the federal government for a $33 million loan; an agreement with the city housing authority to handle the building of the mall with the developer; and authorization for up to $97 million worth of bonds.
The city also publicly introduced its developer, Alexius C. Conroy of Greenwich, Conn. Conroy's involvement is important because he is privately financing the remaining $173 million of the project.
Conroy praised the city and said it had made his work easier. ``It's an unusual position for a developer to be in, to have the city taking the lead in a project,'' he said.
There was little criticism of the project in the public hearing. A parade of representatives from downtown organizations stepped forward to applaud the mall, and one resident, Ann Stone, urged the city to consider a greater role for Granby Street.
The council's actions Tuesday are nearly all that's necessary to move the project forward:
The Norfolk Redevelopment and Housing Authority will apply to the U.S. Department of Housing and Urban Development for a $33 million loan that would pay the city's share of the cost of building the Nordstrom store.
The development agreement with the authority gives it the power to work with Conroy, who will round up the other retail stores and begin the process of building the mall.
The city's long-term spending plan now includes the bonds that will finance the mall's two new parking garages, sewer and water lines, and other improvements.
The council will hold public hearings again when the bonds are actually sold. The city also will have to approve site plans for the project.
Norfolk hopes to hold a groundbreaking and get construction started in December. The mall would open in 1997.
The letter of intent stipulates that Macy will operate a store in MacArthur Center for at least 20 years, the first 15 of which it must carry the Macy's name. Macy's also agreed not to build another store within 25 miles of the site.
Nordstrom has agreed to operate a store there for 20 years and not build another store within 50 miles.
The agreement with Macy's took longer partially because R.H. Macy & Co. Inc. has spent the past two and a half years in bankruptcy. The New York-based retailer fell victim to the debt it took on in a 1986 leveraged buyout.
Macy operates 124 upscale department stores across the country. In addition to the Macy's name, it operates stores under the I. Magnin and Bullock's names. Sales in its fiscal year that ended July 31 were $6.3 billion.
There is no doubt that the well-known Macy's name will have a long life. But it remains to be seen whether Macy retains its independence or is bought out.
For now, the bankruptcy court in New York is letting Macy control its reorganization. But if it can't please its creditors, buyers are waiting.
Conroy, the other important element announced Tuesday, brings extensive mall development experience to the project, especially his working relationships with both Nordstrom and Macy's. He is a former vice president in the real estate division of Macy's.
In 1985 he formed the Conroy Cos. in partnership with Melvin and Herbert Simon, owners of the national mall development and management firm Melvin Simon and Associates.
Since then Conroy has developed The Far East Center, a 1-million-square-foot center in Washington, D.C., to open in 1995; Lakeview at Gwinnet, a mixed-use project northeast of Atlanta; and an 800,000-square-foot retail and hotel complex in Douglas County, Ga., near Atlanta.
Conroy formed Conroy Development Co. in 1988 to pursue development opportunities independent of the Simons. Its current projects include Westchester Place, a 1-million-square-foot mall being developed with Saks Fifth Avenue in White Plains, N.Y., and Fawcett Place, a renovated landmark in downtown Greenwich, Conn..
Now Conroy and the city must sign up another department store as the center's third anchor. City officials have been tight-lipped on whom it may be. Smithwick has said only that it needs to be less upscale than Macy's and Nordstrom, both to avoid competing with those stores and to appeal to a wider market.
``We're negotiating with several people,'' Smithwick said.
by CNB