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Mall may see big changes

Northland Mall

WORTHINGTON — It appears new life may be coming to the long-dormant Northland Mall site.

The Worthington City Council agreed during its Monday meeting to enter into negotiations with PBK Investments LLC, a firm out of Minnetonka, on a TIF development agreement with the city to become the new developer of the mall. Phased construction on the current mall site will include a large mix of developments including potential restaurant and retail space, commercial space, multi-family housing and related parking facilities.

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In order to enter in the TIF development agreement, PBK Investments is required to put forth $9 million toward mall improvements. The city has been working with PBK to finalize the deal for the past nine months.

Brian Pellowski, owner of PBK Investments, was in attendance Monday and shared his vision for what he hopes the Northland Mall will become.

“Our vision is that we would completely scrape the existing center,” Pellowski explained. “In the front part of Oxford Street would be the general retail with smaller outbuildings for smaller tenants. There would be some medium-boxed industries, such as Michael’s Crafts and possibly a pet store, and then the movie theater would be on the other side where Kmart currently is.”

Pellowski added that there would be room to possibly add a Kwik Trip or a SuperAmerica convenience store.

The goal is to move the retail space closer to Oxford Street and create a more open-space mall rather than an enclosed mall, Pellowski said. The second half of the vision is to create apartments and other additional housing in the back part of the mall location, he stated.

While a concern about addressing local consumer needs when bringing new retailers into the mall was brought up, there will be plenty of opportunities for the public to weigh in.

“Public hearings will be a part of this process, and people can weigh in in that fashion,” Worthington City Administrator Craig Clark said.

Pellowski also addressed the need for keeping Northland Cinema 5 in the community, noting that “saving the movie theater is paramount.”

“I’ve been in talks with the owners of the movie theater and they want to continue to be in the community and to be able to put up a new movie theater,” he said.

Todd Farger and David Fetters, the owners of Northland Cinema, were in attendance at Monday’s meeting, and stated that they appreciate the community’s support and are hopeful for the future.

“We’re excited about the potential of a new location,” Fetters said. “We just need to get through this one- to two-year process, but we’re getting excited about it.”

The new developer has agreed and shall be responsible to pay all of its respective costs for the acquisition and redevelopment of the project. The city, in order to encourage the developer to proceed with construction and redevelopment of the project, would be willing to pay certain public development costs to be incurred by the developer to construct the mall project.

The city also agreed that it will issue general obligation bonds or provide limited obligation pay-as-you-go TIF repayments, subject to acceptable market conditions, in the amount necessary to pay for such public development costs. The amount will be determined at the time of the execution of the development agreement.

According to Clark, the bonds are based on eligible redevelopment costs of the developer. This would include the costs of property acquisition, demolition and site preparation, among others. The $9 million figure is based off an estimate of eligible expenses, and at this point is a minimum. Should PBK Investments add more value — and as eligible expenses remain — the city could increase its participation.

Services to proceed with the demolition of the former Kmart building were also approved during the city council meeting.

On June 26, the Nobles County District Court issued an order giving the city of Worthington the authority to proceed with the demolition of the structure, provided the ownership, Northland Mall Realty LLC, failed to do so itself or file a financial bond of $379,764 with the court by July 11. Ownership failed to do either by the court-issued deadline.

With the clear authority to proceed, the next step is to engage professional services to complete environmental assessments, completion of a hazardous building materials survey, preparation of demo specs and project inspection/oversight.

Quotes from Wenzel Engineering, the firm who completed the structural assessment, and Peer Engineering, a firm that provided the city similar services for the Gateway gas demolition as well as environmental services for the Center for Active living and fire hall projects, were received.

Wenzel’s quote was $40,370 while Peer’s was $19,795. Recognizing the large difference in the prices quoted, details that may have led to some level of price discrepancy were examined.

One difference between the quotes is related to the level of detail of the preparation of the specifications related to the common wall between the former Kmart facility and the remainder of the mall. Wenzel’s proposal includes the preparation of specific instructions for the demolition of that space, while Peer’s quote indicates its specifications would include language that the demolition contractor would be required to retain the services of a licensed engineer to conduct a third-party structural inspection of the building to ensure the common wall is not adversely affected.

While both approaches are acceptable, the cost for this service gets shifted from the professional services phase to the demolition phase of this project under Peer’s proposal.

City council member Diane Graber brought up the concern that while Peer Engineering is the less expensive option on paper, there could be additional costs during the demolition part of the plan that are included in the Wenzel Engineering quote, but not in Peer Engineering’s.

“As staff we believe that there is not $20,000 of unforeseen expenditures with Peer Engineering,” said Director of Community and Economic Development Bradley Chapulis.

City council member Scott Nelson was in favor of holding off on the demolition pending the outcome of the possible new mall developer. Nelson argued that the city could possibly save money if the new developer was to demolish the building itself.

“What council agreed to tonight was the right to negotiate,” Chapulis explained. “There’s a lot of legwork that needs to be done by PBK that isn’t necessarily guaranteed, but at the same time we do have a regulatory obligation to protect the health and safety of the public.”

After reviewing both proposals, the city council approved the contract for Peer Engineering by a 3-1 vote. Nelson voted against the motion, stating that he is not against the demolition but that it could be delayed. Mayor Alan Oberloh and council member Mike Kuhle were both not in attendance.

Daily Globe Reporter Erin Trester may be reached at 376-7322.

Erin Trester
Erin Trester is the crime and city reporter for the Daily Globe. She's a native of Lewiston, MN, but moved to Buffalo, NY to attend college and obtained her bachelor's degree in Communications. She started at the Western New York Catholic Newspaper as a reporter in Buffalo, but in October 2013 she returned to her home state to start with the Daily Globe. Most of her spare time is taken up by her 13-year-old thoroughbred named Faith, but some of her other hobbies include reading, fishing and spending time with friends and family. 
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