Wednesday, February 9, 2011

"It's [not] the economy, stupid"

Everyone stop what you're doing, there's a really quick important message you need to see: Stop blaming the economy. It's getting old. By now, if you're a successful developer whose head isn't up your bum, you've figured out how to make things work.

This guy (Stanton Nelson), is not a successful developer. His project, the University North Park/University Town Center (not), has been in limbo for a few years. It started with a bang, winning approval from Norman residents for a TIF district which helped pay for basic infrastructure, lured an Embassy Suites hotel as an anchor, and he was able to build big retail anchors such as a Super Target and Kohl's among others.

Then the problem came with what was next: The lifestyle center, which he was contractually obligated to build, was supposed to be built in the next phase, due east (across the super-nice 24th Street with curves that the city built him) from the Target. Was it the economy, or was it that he was never prepared or willing to build the lifestyle center from the beginning? You decide. But one thing is clear, this guy was a clown from the beginning, and Normanites were delusional to ever believe him while he was blowing smoke and naming potential tenants that wanted to sign with him, tenants such as: Oh yeah, Restoration Hardware, Banana Republic, Urban Outfitters, Anthropologie, Trader Joe's, a Whole Foods of course, and a whole host of other big-name retailers that OKC and Tulsa have even been clamoring for (except Tulsa already has several of them). First mistake: real developers don't drop names like that. Second mistake: real developers don't do things contingent on taxpayer help, without which their project is doomed. Third mistake (lookin at you, OU): real developers don't name a project after a university that is located 3-4 miles away.

This guy is not a real developer.

Now Norman is looking to move on. He will likely not be involved in this development much longer, so Norman is hoping for the best case scenario: move on, shut him down with penalties, and get a more competent developer to come in. Sounds good.

The problem is that it hinges on the development of the Legacy Park. The contract the city and he entered into was that the city would build the park, he would build the lifestyle center. If one party failed, the failing party would pay a penalty to the other, in this case, it will be the developer. The city will spend $5.9 million on the park and then probably get that back under the terms of the penalties, but in order to prevent that from happening, the developer is refusing to donate the land to the city in the first place, which was also in the contract.

He's citing economic problems for why he can't donate the land to the city. It's great that he's looking out for the city's best fiscal interest, but it's plainly obvious he's just trying to prevent what would proceed after that from his failure to develop the lifestyle center, I believe by 2016 (it is now 2011, obviously..4-5 years into the development schedule of this project). Call a spade nothing but a spade. The city has the money because it comes from the TIF, which has been generating a lot of revenue ever since Target went in, and would generate even more revenue for the city if Stanton Nelson were actually a serious developer capable of pulling this project off.

Here's my take: Recall James Carville's famous quote, "It's the economy, stupid." In this case, Mr. Nelson, "It's not the economy, stupid. It's you." Look all around the metro, and even more, look in some of the cities across the nation that are still being very successful. Large developments are still occurring, quite contrary to Nelson's lame argument that "nobody is building lifestyle centers right now." Which begs the question, if that were true, then what ARE they building? Because Moore is moving forward with the Fritts Farm project (Target has already broken ground WITHOUT taxpayer subsidies in this case), the Moore Warren is fixing to pull of another ambitious expansion that will make it truly impressive, and among countless other projects, even Midwest City is going forward with the next expansion phase of their town center which is far better than anything built in this area of Norman lately. In West OKC, the walls have been going up for a few months on the massive new outlet mall out there. You don't think that project could be pulled off if "nobody is building lifestyle centers right now" ?? The City of OKC invested in that project purely to defend its tax base from the other ankle-biting suburbs.

Clearly the economy is not stopping the momentum in Moore, which is continuing to literally suck the life out of Norman's tax base at this point. This is something that the City Council, looking for its livelihood to support its civic services and infrastructure, is most concerned with. A guy who can not build a lifestyle center in a development that is already anchored by an Embassy Suites, a city-developed park, a Super Target, a Kohl's, and more--and then makes lame excuses for himself, is not just a failure in this particular project, but is a total all-around business failure. I am a college kid, give me a chunk of land already anchored by all of these things that other retailers would clamor to be around, and I could do better than what Stanton Nelson wants to finish out his development with: Jack in the Box, GameStop, Portrait Studio, Discount Tires.

I think penalties are a euphemism for how the City of Norman should treat this guy, who must be a secret double agent developer working for Moore on a mission to prevent Norman from growing its tax base and retail amenities. That is the only explanation I can think of. I'd say the city needs to file as many actions as possible to take this guy to the cleaners literally (or whatever he built instead of say, the GAP, or Dillard's).

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