THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Tuesday, March 14, 1995 TAG: 9503140295
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY ALEX MARSHALL, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 89 lines
The MacArthur Center mall, seen as vital to downtown's redevelopment, will not open on schedule in the fall of 1996.
The city also will miss its goal to break ground on the project this month, said Robert B. Smithwick, director of development. City officials hope to start construction by next month, he said Monday, and to open the $270 million center by January 1997.
The mall, which will be anchored by the Seattle-based luxury department-store chain Nordstrom, will lose the lucrative 1996 Christmas season.
The delay in opening results from indecision by Federated Department Stores, which has yet to approve plans for a Macy's to be the mall's second anchor.
Federated merged with Macy's after Macy's signed a letter of intent with the city last year. Now Federated is reviewing the deal and has yet to sign off on it, Smithwick said.
``We're at their mercy,'' Smithwick said. ``We can't force the issue.''
Smithwick said he expects Federated to tell him in the next few weeks that the project is on.
``By this time next month,'' he said, ``we should be ready to move forward.''
The mall is a key to the redevelopment of the city's downtown, officials say. It is planned for 17 acres that were cleared during urban renewal decades ago and have satvacant since.
The city has agreed to put about $100 million in loans and infrastructure into the project, which is supposed to create 3,000 jobs. The developer and Nordstrom have promised to try to hire low-income Norfolk residents.
Once Federated commits, Smithwick said, other aspects of the project should be able to move forward. With Macy's signed on as an anchor, Smithwick said, developer Alex Conroy should be able to secure financing for the project and land a third major department store for the mall.
If Federated gives the go-ahead soon, Conroy may still manage to finish building the center before the end of 1996, Smithwick said.
But department stores, and, therefore, the mall, would likely not open until January 1997.
The demands of a Christmas shopping season, Smithwick said, require that a department store open by Oct. 1 or wait until the New Year.
Should the Macy's commitment fall through, Smithwick said, his department has plans for pursuing other stores.
``There are six or seven others that would serve as logical retail anchors,'' Smithwick said. He declined to list them or to say how far Norfolk was in contingency plans with them.
Nordstrom remains committed to the project, Smithwick said. It is proceeding with design work, he said, and is close to working out the details of its lease. Nordstrom officials did not return calls seeking comment on Monday.
The Norfolk project is probably not high on Federated's priority list, Smithwick said. The company is still mired in its merger process with Macy's, combining departments and eliminating duplicate positions, Smithwick said.
Officials with the Cleveland-based firm could not be reached to comment on the contract.
Mayor Paul Fraim said the delay in opening the mall should not be considered a significant setback. Nordstrom officials always believed the center would not open until the spring of 1997, but the city pushed a more ambitious schedule, Fraim said.
The Macy's lease isn't the only loose end the city still must tie down. The project depends in part on a $33 million loan to the city from the federal Department of Housing and Urban Development. That agency is under congressional attack, with some attempting to eliminate it entirely and others working to cut back money it has already allocated for this year.
HUD has announced that the city won its loan. But the actual agreement has not been signed, said David Rice, executive director of the Norfolk Redevelopment and Housing Authority.
The redevelopment agency and HUD officials are still working out details of the loan, Rice said, particularly the repayment schedule.
The city is asking that it be structured with a balloon payment at the end of 20 years, requiring a large lump sum payment at the end of the loan rather than regular payments over 20 years, Rice said.
HUD usually prefers regular payments over 20 years, but probably will approve the city's request, Rice said.
The city is eager to secure the loan quickly, in case Congress cancels the program under which Norfolk is receiving the money. Rice said this is unlikely, but he would not rule it out.
``It's always a worry,'' Rice said.
KEYWORDS: NORFOLK DOWNTOWN DEVELOPMENT MACARTHUR CENTER SHOPPING
MALL by CNB