City considers public financing to hasten mall redevelopment

City’s chief planner says visible progress has taken longer than expected

City Administrator Kristie Mills said Somera Capital, owners of Laurel Commons, ‘‘paid a big price for the mall,” referring to the mall’s debt outweighing its equity when Somera purchased it in 2006.

The revitalized mall will include a 16-screen movie theater, a food market, health club, freestanding restaurants and retail stores and a 38,000 square-foot office building. An outdoor ice skating rink could be installed.

Somera Capital will also construct a five-story building that will house one floor of commercial property and 440 multi-family residential units. Three percent of the units will be reserved for workforce or moderate-income housing.

Construction is expected to begin in early 2009 and finish in late 2010.

Karl Brendle, director of community and business planning, said visible progress on the project has ‘‘taken a little longer than expected” but it’s not due to a lack of interest on behalf of retailers in the property.

‘‘It’s the market condition that we’re in,” he said. ‘‘[Somera Capital] is still doing their leasing, and the retail and restaurant sector is not disinterested at all.”

Somera spokeswoman Kristi Betz said there are no updates on mall construction, but she did confirm that Somera Capital is in discussion with city staff over public financing and subsidiary options.

During a March 24 work session, Mayor Craig Moe said his administration is not supporting any specific plan yet, and that the dialogue is currently only at the staff level.

‘‘The city is not proposing a TIF [tax increment financing],” he said. ‘‘There are a lot of things that we’re considering.”

The mayor said he wanted to dispel any concern that the city is moving forward with a TIF for Laurel Commons, and that it is only one of many options they can use to help the project progress.

Under a TIF, property tax revenues that would increase as a result of the revitalized mall would help fund public improvements that Somera would have to otherwise pay for alone. Such projects could include road improvements at the intersection of Fourth Street and Cherry Lane and Fourth Street and Van Dusen Road, Mills said.

Funding could also go toward a parking structure on mall property if there is a general benefit to the public and not just mall customers, Mills said.

The city’s first — and only — TIF passed as a joint TIF with the county in 2004 to help the development of the Centre at Laurel, located at the corners of Route 1 and Contee Road.

The TIF funded storm water management and intersection improvements ‘‘absolutely necessary” for the shopping center to function, especially since the nearby intersection was failing and one of the worst in the county, Brendle said.

City administration has no timetable on when they want to present a plan to the council for a vote. The mall owners have expressed interest to the city in applying for building permits this spring, but the permitting process and preliminary construction phases could move forward without a public financing plan, Mills said.

Moe emphasized the importance of the mall project, which is a major component of the city’s Master Plan, a guide for future development, because it will revitalize Route 1 development and economy.

‘‘We all sat up here and said we wanted to do whatever we could to help that piece of real estate,” he said. ‘‘Nothing will be done behind closed doors. It’ll be brought out to the City Council.”

E-mail Elahe Izadi ateizadi@gazette.net.