THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, March 22, 1996 TAG: 9603220525
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY ALEX MARSHALL, STAFF WRITER
DATELINE: NORFOLK LENGTH: Long : 119 lines
News of two potential setbacks to the MacArthur Center project was delivered Thursday, either of which could delay construction of the $300 million upscale mall downtown.
The first was the filing of a lawsuit in U.S. District Court by the Norfolk Federation of Business Districts. The suit, which claims that the city and the federal government are illegally using taxpayer money to subsidize private merchants, seeks to stop any city or federal money from being spent on the project.
The second was a letter by the state Department of Historic Resources that contends that the city has not adequately completed an archaeological survey of the 20-acre site, a process required under federal law.
``We do need to have this resolved'' before construction begins, said David H. Dutton, director of project review in Richmond, on Thursday. ``Because once you start tearing it up to build, there really isn't much left.''
It's not clear how much impact either event will have on the construction schedule. City officials could not be reached for comment on the lawsuit. An attorney working for the city on the historic survey predicted it would not delay construction.
Design work has begun; actual construction was expected to begin by April or May, officials with The Taubman Co., the mall developer, have said.
The city is putting roughly $100 million into development of the $300 million mall. Most of the city money comes in loans, including $33 million in federal money supplied by the Department of Housing and Urban Development. This money can be used for the mall only if 51 percent of the jobs are made available to low-income residents.
The lawsuit filed Thursday seeks to stop financing of the mall on two basic arguments, said Andrew M. Sacks, attorney for the Norfolk Federation of Business Districts.
The first is that merchants at Wards Corner, Military Circle and other city areas were improperly being compelled to put their own tax dollars into subsidizing their competition.
``All the evidence seems to point that the MacArthur Center mall will severely damage, if not destroy, businesses that have been in this city a long time,'' Sacks said at a press conference Thursday afternoon on the top floor of Town Point Center overlooking the Elizabeth River.
This action, the lawsuit says, violates the 14th Amendment to the Constitution, which gives equal protection and due process to all U.S. citizens, as well as sections in the Virginia Constitution that prohibit the use of public monies for private purposes.
A second charge says the federal government violated its own rules in approving the city's request to use $33 million in HUD loans to construct the Nordstrom store.
Under the HUD program, known as section 108, a recipient of the federal money must create one job for every $35,000 in federal monies spent, the lawsuit says. Nordstrom falls short in its job creation by several hundred jobs, the lawsuit contends.
Sacks acknowledged that while similar suits have been filed across the country, none has been successful.
The Norfolk Federation of Business Districts is an umbrella group for merchant associations from such outlying areas of the city as Wards Corner, Military Circle and 35th Street. The lawsuit is part of a concentrated campaign against the mall.
In February, a consultant working with the association completed a marketing report that argued the mall would fail because not enough people from Newport News and the rest of the Peninsula would come to downtown Norfolk.
On Thursday, Sacks released a full copy of that report and said that a third party, not the business federation, paid for the research. He would not reveal the party.
The city is involved in other private enterprises. It owns Waterside, which receives public monies, and was involved in the development of the Marriott Hotel.
Although little-noticed until now, the federal law requiring a survey of historic properties could be a significant hurdle for the project.
The National Historic Preservation Act of 1966 requires the city to complete a three-part historic survey of the 20-acre site because the city is using federal money in the project, said Dutton, the director of project review.
The first two parts of the act require the city to find out whether any historic structures would be damaged, and whether the character of their surroundings would be adversely affected. The act also requires an archaeological survey, and this is where the city has run into problems.
The site traces back through some 300 years of the city's history, and before, and could have potentially significant artifacts beneath the parking lots that now cover most of the surface.
In a March 14 letter, Dutton wrote that the report filed by the city ``is still incomplete and fails to provide the level of information needed'' to know whether any archaeological sites should be listed on the National Register of Historic Places.
Dutton recommended the city complete better historic maps showing development in the area over time and run limited tests to sample what is on the site. Dutton could not predict how long this process would take.
``That really depends on the city,'' Dutton said. ``We are happy to do what we can to expedite it. I could not predict how long.''
J. Randolph Stokes, the private attorney handling the matter for the city, said a more accurate survey could be completed ``in a matter of months.''
``It will not delay construction,'' Stokes said. ``Because everything that needs to be accomplished can be accomplished in the necessary time frame.''
The historic preservation act was, in part, a reaction against the sweeping urban renewal that Norfolk and other cities pursued in the 1950s, Dutton said, which cleared large sections of century-old buildings and streets without an accounting of their historic value.
Amy Yarsinske, president of Norfolk Historical Society, said she was happy the state was requiring the city to do a more accurate survey of the site.
``This is one of the richest areas of the city,'' Yarsinske said. `` We need to know what's there. This needs to be fleshed out before they build a mall.'' ILLUSTRATION: [Color Photo]
Attorney Andrew Sacks: The suit cites violations of state and U.S.
constitutions, and HUD rules.
KEYWORDS: MACARTHUR CENTER LAWSUIT by CNB