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Westminster Mall purchase and sale FAQs

(May 03, 2011)

Following are answers to some of the common questions being raised about the City of Westminster's redevelopment efforts at the Westminster Mall.

Have a question that is not answered? Send us an email and we will do our best to respond.

Why did the city do this?
The City of Westminster, acting as the Westminster Economic Development Authority, took the step to acquire the Westminster Mall as a strategic move to exercise control over the fulfillment of the city’s vision for the site: a vibrant, high-density urban village with office, residential and retail uses.

The city was able to negotiate a deal with the mall ownership and avoid a lengthy and costly process to acquire the property via the eminent domain process.

Having control of the property will help speed the process of redevelopment and provide the city with added control over the project.

How much did the mall cost?
The mall cost $22 million. The city will pay $18.5 million at closing on May 10 (UPDATE: The deal closed on May 10) and then has up to 12 months to pay the remaining $3.5 million. (UPDATE: The final payment was made May 27 - more information here.)

What did the city buy?
The Westminster Economic Development Authority previously purchased the vacant Macy’s and Mervyns in the mall as well as the Trail Dust Steakhouse building on the mall property. Before the most recent deal, the city controlled about 20 percent of the mall property.

The latest deal acquired the balance of the mall property, except for the Sears building and parking area, the Brunswick Zone and the dental offices on the northeast side of the property. The city now controls about 90 percent of the 105-acre site.

What happens to the mall tenants? Will the city be managing the mall?
The city will be managing the mall on an interim basis until a deal with a developer can be negotiated. The plan is for the city to keep open the Sears and JC Penney stores while closing the few remaining in-line tenants (those in the enclosed mall space). Dillard’s, which has operated as a clearance outlet for the past year or so, has indicated that they intend to close their store within the next 3 months.

Many of these tenants have been operating for some time on month-to-month leases. The tentative future of the mall has been a reality for these tenants for some time. Following closing on the purchase and sale of the mall on May 10, the in-line tenants were provided notice of termination of their leases.

Outlying businesses, such as the Olive Garden restaurant, U.S. Bank, Brunswick Zone and dental offices, will remain open.

Will the mall be demolished soon?
The plan calls for some demolition to start this summer, and a phase I of redevelopment to open in 2015.

What will be built on the site?
The city’s vision for the site is a vibrant, high-density urban village with office, residential and retail uses. Learn more about the city’s vision for the site.

How could the city afford to buy it given its recent budget reductions?
The city has been gradually saving for anticipated expenses with the redevelopment of the Westminster Mall property for a number of years. The savings were accumulated from “one time” sources of revenue, for example savings on capital projects and annual carry-over funds. City ongoing operation funds, such as funds for salaries and benefits for the workforce, were not used on the Westminster Mall acquisition.

The city has taken a carefully considered, strategic approach since 2002, planning for the eventual shutdown of the mall due to the market conditions the mall faced. As part of this planning, the city has actively facilitated development of other revenue-producing projects to offset the reduced revenues from the mall (from $8.5 million in 2001 down to $1 million in 2010). These deliberate actions have left the city in a sound financial position to invest in the future of the mall site.

How does this fit with the long-term sustainability position the city is striving for?
The purchase of the Westminster Mall is a strategic step in the long-term financial sustainability of the City of Westminster. Revenue models for future years are counting on a revitalized commercial and residential development that will generate sales and property tax.

The redeveloped mall area will contain a mixture of retail, office, residential and entertainment, providing a vibrant business and residential area. The alternative was a vacant, boarded up, old shopping center serving as an attractive nuisance for crime. This ongoing deterioration has a multiplying effect on the immediate neighborhood, dragging down the attractiveness and vitality of surrounding property and reducing property values for individual property owners.

Is it normal for a city government to be involved in economic development to the extent of buying the property?
In the past, the City of Westminster has taken an active role in economic development by gaining control of key properties for use in retail development. The City of Westminster used a similar strategy to assemble land in the development of both The Orchard Town Center and The Shops at Walnut Creek. For the redevelopment of the Westminster Mall, the city expects to see a good return on its investment in the coming years as the development moves forward and creates private-sector jobs, as well as tax revenues for the city.

What’s happening with finding a developer?
The City of Westminster is currently interviewing a number of national developers to determine the best fit for developing the city’s vision of an urban center in a suburban community.

Will the city sell the mall to a developer and recover its investment?
Yes. The city will not be a long-term landowner at the mall site. The plan is for a developer to acquire the property from the city as redevelopment occurs.

It is important to note that the city is not a traditional real estate investor and is not primarily focused on the rate of return on the real estate itself. The city has functioned as a property assembler, preparing the property for redevelopment by the private sector. The city’s return will come from the reinvestment (and resulting tax dollars) and the return to vitality of this important location in the city.

Private investment and dollars generated from the redevelopment itself will support the project. The city will not be utilizing general tax dollars or general obligation bonds for the project.

How long until whatever will be there starts getting built?
This is a long-term project. Construction of a phase I could start as early as late 2013 with opening in spring 2015. A lot is dependent upon market conditions.

What happened to the lawsuit the mall owners brought against the city?
As part of the purchase and sale of the mall, a settlement agreement was reached in the mall lawsuit filed in August 2010. The lawsuit is being dismissed by the plaintiffs.

How can I get the latest updates on the redevelopment of the mall?
For the latest information, continue to visit or sign up for the website news feed.

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