City considers buying vacant North Towne Square mall

In this photo from 2000, North Towne Square still drew traffic. Now called Lakeside Centre, the site has only one operating business remaining, Super Fitness. THE BLADE Enlarge | Photo Reprints

After languishing in blighted oblivion for six years, the former North Towne Square mall on Alexis and Telegraph roads soon could have a new owner: the city of Toledo.

Bell administration officials said Friday they are in negotiations with the mall's California-based owners to buy the north Toledo property and tear it down. Deputy Mayor Tom Crothers said the city would purchase the 69-acre site for a minimal amount yet to be determined, and use federal funds to clean it up so it could be sold for redevelopment. The current owners would pay back taxes on the property and $70,000 in nuisance-related fines and past-due utility fees.

Super Fitness, the one business operating at the site, would remain intact.

The news comes at a time when the city is trying to sell millions of dollars of real estate assets as a way to balance the budget. Already this year, the city has sold the Docks restaurant complex and Marina District in East Toledo to Chinese investors, and is finalizing a sale of three parking garages to the Toledo-Lucas County Port Authority.

But Mr. Crothers said purchasing and demolishing the former North Towne complex would be a chance to get rid of an eyesore, and would make use of a federal grant, not general fund dollars. Once demolished, the land would be turned into "developable green space" and marketed for reuse, he said.

"This is a property that's been a tremendous eyesore … on Alexis Road for years," the deputy mayor said. "We have an opportunity here to take down this eyesore. This is the way to do it, and it will be fully a win-win for everybody."

The mall opened in 1980. Now called Lakeside Centre, it has sat vacant since its closure in February, 2005.

California businessmen Jack Kashani and Sammy Kahen purchased the site in late 2002 for $1 million intending to revitalize it, but those plans never materialized.

Although Mr. Kashani and Mr. Kahen still have a stake in the property, it is now owned by four companies, said Toledo attorney Matthew Fischer, who is representing the owners in negotiations with the city. Those are S. Kahen Holdings, Echo Investments, Ariel Investment, and 22135 Roscoe/Canoga Park LLC, according to Mr. Fischer.

The attorney said his clients wanted to redevelop the mall, but were hit hard by the recession. The property has been vandalized and suffered flooding since it closed, he said, and negotiations with the city have been "complex."

Mr. Fischer praised Toledo's economic development commissioner, Brad Peebles, for coming up with a solution for the site.

"The mall is in a very difficult condition right now. The city has condemned it. We're in the middle of a court case in housing court over building code violations. The city building inspection department has requested the mall be demolished," Mr. Fischer said.

"The solution to resolve the immediate problem of the deteriorating condition of the mall and also working on a long-term solution for the property to redevelop it, took some creativity."

Final details of the agreement, including the sale price, have yet to be worked out, Mr. Crothers said Friday.

The current owners would retain the right to repurchase the site, but Mr. Peebles and Mr. Fischer said they have not expressed interest in doing so. The city would have to pay the current owners a still-to-be-negotiated fee if it decides to sell the property to someone else after taking title.

Mr. Crothers said the money for demolition and remediation would come from a $1.5 million U.S. Environmental Protection Agency brownfield loan, administered by the city, and previously awarded to the owners of another shuttered mall -- Southwyck Shopping Center -- for asbestos removal. That money has been paid back and some of it can now be used for the North Towne Square site, he said.

Toledo City Council must approve the deal. Councilman Rob Ludeman, who chairs the economic development committee, said he likely would request a hearing on the matter before it goes for a vote.

However, he said from what he knows of the plan, it sounds like a good idea.

"I certainly applaud the idea of getting control of the property away from the out-of-state owners and getting it ready for purchase and redevelopment by another private owner," Mr. Ludeman said.

"Obviously there's a potential to create jobs down the road. It could be used for a major retail, very big-box type of store, or industrial."

Councilman Lindsay Webb, whose district includes the North Towne site, said its location close to Chrysler's Jeep plant and I-75 makes it a perfect spot for future manufacturing.

"If you couple this with the Jeep plant expansion announcement, North Toledo has good reason to celebrate this weekend," Ms. Webb said.

"North Towne has been sitting vacant for a substantial period of time. It has really hindered our ability to carry the Alexis Road corridor forward. Tearing it down and preparing it so it can be redeveloped means nothing but good things for the neighborhood."

But Councilman D. Michael Collins questioned how the city would pay back the EPA funds, and said the project is different than that of the Southwyck Shopping Center because Toledo never bought that property. He also expressed concern the city would become further indebted.

"I hesitate to see the city of Toledo using any monies whatsoever to enhance our obligations as far as debt goes," Mr. Collins said.

"To merely purchase this property in order to demolish it based upon a speculation that the future may provide us the opportunity to sell it to someone is not a very sound business practice, and I would have to have more information before I would be supportive of it."

Contact Claudia Boyd-Barrett at: cbarrett@theblade.com or 419-724-6272.