Council bets on Westdale

Westdale's ambitious transformation from dead mall to multiuse development may be short of cash, but it had no shortage of identities at Tuesday's City Council meeting.

Could it be the city's 'worst nightmare,” or maybe a 'jewel?” It's a 'dangerous precedent,” or perhaps a 'destination.” It might become a 'retail powerhouse,” but it's undoubtedly a 'risk.”

So what's it going to be? Place your bets.

The council placed its latest wager, voting 7-1 to proceed with negotiations that likely will end with the city guaranteeing an $11.5 million bank loan to developer John Frew and his Westdale investment group. Two years ago, the city provided the project with $5 million through a bond sale and approved Tax Increment Financing, plowing any property tax growth back into the project to cover development costs. The total project is estimated at $90 million.

Frew told the council he needs bucks to finish infrastructure work on the site, roads, utilities, etc. Without completed infrastructure, he can't lock in deals with retailers and other potential tenants. Without those deals, he can't get traditional financing.

'Call us when you're done. We don't want to be in a construction zone,” Frew said of his retail prospects.

Frew said it took more time and cost more than expected to 'de-mall” the Westdale site. And with that, a front-runner for word of the year was born. 'De-mall is a word I learned in this business,” he said.

So the council faced choosing between a swift-approaching fiasco, the collapse of a project already well underway, or the lower risk of a future one. Council member Ralph Russell voted no, insisting the loan guarantee would set a 'dangerous precedent.”

God bless him. But let's face it, the precedent was set long ago. Our magical 'free” market no longer bakes a cake of this size without a heaping cup of public assistance. Everyone from the banks on down expects it. Without it, no cake. That leaves many of us frosted.

But I've seen much worse deals than this one.

Frew wanted the city to float more bonds. Instead, it will backstop a bank loan to be paid out in phases and only if Frew's team meets its development goals. The bank has five sources of money to tap for repayment before taxpayers are at risk. And if Frew defaults, the city gets Westdale's land lease, giving it control of the site, rent money from existing tenants and the ability to hire a new developer. The lease is worth $27 million, officials said.

What happens without a deal? Good question. Maybe a giant mud pit sits idle indefinitely while leaders seek a new developer. If they find one, guess what they'll ask for, first thing. See cake baking above.

'I don't see anyone else standing in line outside the door waiting to take on this complicated project,' said Council member Monica Vernon.

Council member Scott Olson, a commercial realtor who served on a special council committee crafting the proposed deal, summed up the majority's core contention.

'The risk we're taking is well worth taking,” Olson said.

Council member Justin Shields acknowledged that risk, but insisted that there are 'no guarantees” in life. Well, unless you need a loan to redevelop a large shopping mall.

The third column I wrote from this perch in 2007 was about reviving Westdale. It featured a retail expert insisting the mall's only chance at revival was dramatic reinvention.

I've heard from countless people over the years wondering why the city doesn't do something about Westdale. I helpfully proposed 'The Ronald Wilson Reagan Museum of 1980s Culture” and the 'Ethamall,” America's first shopping center powered by corn fuel.

No takers. Can you believe it?

So now we're in the middle of doing something about Westdale. As much as I dislike developers with a hand out, I can't see how rejecting this deal leads us to a better place, or a better deal.

It's still a promising project smack in the middle of the city's fastest growing quadrant. It's odds for success still outweigh its boondoggle risk. Retail is a priority in a city where sales taxes pay for roads and flood protection. The city's already all in. It's too late to fold.

l Comments: (319) 398-8452; todd.dorman@thegazette.com