Year in Review: Promenade on Oxford -- a timeline
Jan. 30Brian Pellowski, owner of PBK Investments, speaks at the Worthington Regional Economic Development Corp. conference and unveils preliminary plans for the Northland Mall property redevelopment. Pellowski explains that the mall building was ...
Brian Pellowski, owner of PBK Investments, speaks at the Worthington Regional Economic Development Corp. conference and unveils preliminary plans for the Northland Mall property redevelopment. Pellowski explains that the mall building was too deteriorated to be rehabilitated and must be torn down to make way for new development.
Forty citizens gather to discuss the future of Oxford Street and the potential for future redevelopment and revisioning. Northland Mall was identified as the number one priority for attention and redevelopment on the street.
The former Kmart portion of the Northland Mall was in thick of the demolition process. City officials stated that the assessment on the main mall building was still progressing. Mayor Mike Kuhle said that the teardown “starts us on the path for redevelopment on that part.”
Steve Robinson begins job as Worthington’s city administrator. He comments that working on the resolution of the Northland Mall is one of the goals he would like to accomplish during his tenure.”
The TIF (tax increment financing) district proposal is given first approval by the Worthington City Council on March 10. April 27 is announced as the date of a public hearing for citizens to voice their support or opposition to the project.
WREDC board member Kevin Donovan announces that “some very good anchor tenants” have already been secured for the development. He reiterates plans for more restaurants, a possible gas station and a movie theater with stadium seating.
PBK Investments owner Pellowski estimates that “toward the end of August, the city will go into demolition of the mall,” while noting that “a lot of things can change that.”
The Worthington City Council approves the TIF plan from the Northland Mall property. Worthington’s TIF plan will allow for a maximum 26-year tax increment. Kuhle and Pellowski both speak at the council meeting in support of the plan, with Kuhle noting that the TIF district “allows us to work with developers and come up with a sensible plan to redevelop the whole project.” Asserts Pellowski: “... I’m not a person who gives up or walks away when times are tough, and I think that all of us together as a great partnership will make this into what it should be.”
The Worthington City Council votes to approve an interim loan of what is now more than $1.2 million to 7 & 41 LLC - the real estate arm of PBK Investments - for redevelopment at the Northland Mall site. The loan will help the company acquire the mall property, finalize redevelopment plans and secure traditional permanent financing.
Pellowski signs the closing paperwork and becomes the official owner of the Northland Mall property. This was seen by city and WREDC officials as a huge step toward moving forward and cleaning up the neglected mall property.
Promenade on Oxford is officially selected as the name of the new Oxford Street development to be built on the former mall property. Jim and Iris Pierce submitted the winning entry and were presented with a $500 check from Pellowski.
Long-term Oxford Street reconstruction and redevelopment plans are exhibited at a public meeting. The Promenade on Oxford is mentioned as a huge component of this redevelopment, and Pellowski says he believes it’s smart that Worthington is planning for the future - and that these other plans will only benefit the mall site redevelopment.
Kuhle says in a Daily Globe interview that “there are some challenges moving forward in financing and making the project feasible” and that the city is currently in the process of obtaining a market assessment on the property based on the improvements being proposed. This assessment would give the city an amount of money it could use in the establishment of the TIF district.
Kuhle explains that the assessment should be completed by the county in the next few weeks and will then be provided to the developer.
Kuhle also states some information on the project timeline: “I know the developer has his own timeline. I‘ve heard from his timeline that the mall needs to be torn down by Nov. 1, but I’m not sure that’s realistic. It’s all depending on market assessment and the development agreement entered into by the city and developer.”
Kuhle also notes that Pellowski already has an agreement in place with “a large retailer” and is working with a Twin Cities-based apartment development business that could be providing as many as 96 new apartments at the Promenade on Oxford site.
The Worthington City Council votes to authorize city staff to prepare two versions of a development agreement for the former Northland Mall site. City Administrator Steve Robinson explains that the two options will enable the council and Pellowski to consider which option is the most beneficial for both parties.
Option one would provide a general obligation bond for an amount supported by the tax increment from the proposed development, while option two would provided a pay-as-you-go TIF bond up to $10 million or for 20 years - whichever occurs first.
Pellowski and the city of Worthington are at odds over the financing of the Northland Mall redevelopment project. Pellowski said at a special city council meeting on Monday night that he could not move forward with this development plans until the city agrees to provide general obligation bonds TIF financing. Pellowski stated that there was “going to be a shortfall” between the tax increment and the amount needed to do the project, and claimed that he was nearly $10 million dollars short of what we would need to fully develop the property.
Kuhle and the city said that they would prefer to use the pay-as-you-go TIF, which would apparently minimize risk to the city, while the general obligation TIF would give Pellowski a large amount of money that could be lost if the city doesn’t pay back.
Dan Schleck, Pellowski’s lawyer, says that if the project does not move forward as planned, there will be legal actions. He states that both types of TIF have the same level of risk - a point with which the city’s financial adviser, Rebecca Kurtz of Ehlers Investment Partners, adamantly disagrees.
The Worthington City Council and Nobles County Board of Commissioners meet in joint session to discuss ongoing issues with the proposed development of Promenade on Oxford. Assessments on the property determined that $3 million would be available through Pellowski’s preferred general obligation TIF bond, which leaves a $6.8 million funding gap (with Pellowski seeking $9.8 million to move forward with mall demolition).
A letter was sent to Pellowski outlining two options: Pursuing the TIF bond once he submits documentation, or opting for the pay-as-you-go-bond.
It was also reported during the joint session that Pellowski also failed to provide more specific details about his development plans, and did not offer verification of insurance on the property or pay his second-half property taxes that had been due Oct. 15th. This put Pellowski in breach of his contract.
The current mortgage on the property also expires on June 1, 2016.
WREDC Executive Director Abraham Algadi tells commissioners that the WREDC wants to hire an independent appraiser to assess the property using all three assessment methods (replacement costs, comparing like properties or utilizing income projections). This second assessment would hopefully be based on more information than was provided to the county, because the developer might be too shy to share personal information and financial data to the county that would then become public information.
Algadi states that he will deliver a new appraisal to the county by the end of January.
Northland Cinema owner Todd Frager appears before the Worthington City Council and asks if the city plans to keep working with Pellowski and PBK Investments on the development of the Northland Mall property. Frager expresses concerns about the direction talks between the city and the developer have taken.
Frager says that Pellowski has given him an adjusted plan, and that at press time it looked like a four-to-six month window, which would cost him more money. He believes that opening in time for summer 2016 is in jeopardy.
Kuhle expresses support for Frager and the theater, but Frager said he may “pack up and ship out” after an important meeting the following Tuesday.