Southwyck woes fuel North Towne worries

Joe Rigali, owner of Kings Internet Cafe, says he finds it hard to understand why no one has developed the Southwyck land, left, because Reynolds Road has plenty of traffic.

The Blade/Lori King
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The former North Towne Square has been victim to vandalism and flooding since its closure in 2005.

As a debate rages in Toledo City Council chambers over a proposal to tear down the old North Towne Square mall in North Toledo, the site of another former shopping center across town serves as a bleak warning of how redevelopment plans can go awry.

Southwyck Shopping Center on Reynolds Road in South Toledo -- a once-vibrant mall that slipped into decline and then closed in 2008 -- is today a giant, weed-strewn concrete lot. It's been two years since contractors leveled the property, with the help of a $1.5 million loan administered by the city, but the much-touted plans for turning the site into a sprightly mix of shops and housing have long become a wistful dream.

Instead, "for lease" signs dot office buildings and storefronts close to the former mall, outnumbered only by the potholes along Southwyck Boulevard. Residents and local businesses, once excited about the prospects for change, have grown increasingly frustrated with the property's stagnant condition.

"I think it's sad," said Kathy Camp, who in her job as a manager at Kings Internet Cafe looks out onto the mall site every day. "If they're going to tear it down, then do something with it. Look at what's happened here. Everything died and that was it."

Ms. Camp's boss, Joe Rigali, said he finds it hard to understand why no one has developed the site. Reynolds Road has plenty of traffic and potential customers, he said. The Southwyck land easily could become a money-maker for someone with a good idea and the ability to invest, he opined.

"It's pathetic. It's the biggest waste of space in Toledo, I think," Mr. Rigali said. "It's a scar. It's given everybody a very pessimistic attitude about the neighborhood. It's just time for this part of town to be developed."

Cement blocks prevent cars from entering the parking lot of the former Southwyck Mall in Toledo.

Past lessons

The Southwyck site's ongoing state of limbo is one reason some Toledo councilmen have hesitated to support the North Towne proposal. Mayor Mike Bell's administration wants to acquire the North Towne property on Alexis and Telegraph roads from the owners and demolish it using the same source of funds used for Southwyck -- a grant from the U.S. Environmental Protection Agency that the city typically loans out to businesses and organizations to clean up brownfield sites.

Mr. Bell and his administration say North Towne has great potential as an industrial or manufacturing site, given the former mall's proximity to Chrysler's Toledo Assembly complex. Once the building is torn down, the city hopes to sell the land and recoup the estimated $700,000 in demolition costs.

"Sometimes you have to spend money to be able to make money," Mr. Bell said at a recent news conference to announce the plan. "Most people who want that property aren't going to come in and tear it down. So if we clean it and get it straight, we can sell it for the appropriate price, get our money back, and it's actually going to create something very positive in that corridor."

But some councilmen fear the Bell administration's plans are overly optimistic. They worry the city could be left with a huge tract of land that it can't sell, unable to recoup the demolition fees and replenish the loan fund. Unlike the Southwyck site, which remains in private hands, North Towne would become the city's responsibility, putting it on the hook for thousands of dollars in annual maintenance costs.

The Bell administration has tried to assuage such fearful comparisons by heralding a potential future development at Southwyck. Mayor Bell and his staff insist a deal for Southwyck is in the works and could be announced in two to three months. While the property's principal owners, MD Management, refused to talk to The Blade, two businessmen reportedly involved in the project confirmed they are in negotiations to purchase the site but declined to give specifics.

Such promises of future activity, however, are of little bearing to Councilman D. Michael Collins -- whose district includes Southwyck -- as he considers the North Towne proposal. What's happened so far at the Southwyck site does not bode well for North Towne Square, he said. "Southwyck has far better demographics than North Towne," Mr. Collins indicated. "If Southwyck is on hold for development, what would cause one to believe that North Towne would be a successful project?"

The North Towne deal

The comparisons with Southwyck are not the only concerns some councilmen have with the North Towne deal.

Another issue is a clause in the Bell administration's proposal with North Towne's owners that would allow the California-based developers to repurchase the property for the cost of the demolition once the mall is gone. If the city wants to sell the land to someone else, the owners would have to agree on the purchase price and they would reap nearly all of the profit from the sale.

Some councilmen say they are uncomfortable with that arrangement because it means the owners would have a say in the future of the property even when it is legally owned by the city. Furthermore, the appraised value of the land as presented by city officials appears to be more than the property is actually worth, they maintain.

A preliminary appraisal report on the property, presented to council last week by Brad Peebles, the city's economic development commissioner, assesses the value at between $50,000 and $55,000 an acre, provided the property is zoned for industrial use. If all 69 acres are sold to a new developer at the $50,000 value, the current owners would receive an estimated $3.5 million windfall, minus the demolition costs.

But the report, prepared by the local Martin and Wood Appraisal Group, is starkly different from another opinion provided to Mr. Peebles by real estate company Signature Associates more than a month ago. In that assessment, sales associate Steve Serchuk and his colleagues valued the site at between $10,000 and $20,000 per acre if zoned for industrial use.

"That's a huge variance," Councilman George Sarantou said, adding that other real estate people he's talked to seem to agree with the lower value. "I'm just absolutely mystified why such a discrepancy."

Mr. Peebles did not return phone calls requesting comment Friday.

Another concern of some councilmen is that the proposed deal is too favorable toward the owners, rewarding them despite their failure to maintain the property and keep up on taxes and fees. As part of the deal, the principal owners -- 22135 Roscoe/Canoga Park LLC, owned by California businessman Joseph Kashani, according to public records, and S. Kahen Holdings, LLC, owned by Sammy Kahen -- would have to make good on about $147,000 in property taxes and $30,000 in outstanding fees to the City's Departments of Neighborhoods and Code Enforcement to secure the deal. According to information provided by the city, they would be pardoned about $137,000 in unpaid utility bills. The $40,000 they would have to pay to the Public Utilities Department would only come due once the land is sold on to someone else.

Moreover, Mr. Kashani has been involved in similar situations across the country, including in Oakdale, Minn., and Kansas City, where local governments purchased malls he owned for millions of dollars after they were allowed to deteriorate.

Bob Streetar, community development director for Oakdale, said his city paid about $6.9 million to get control of the mall, although Mr. Kashani sought a much higher amount. Oakdale is developing the site for commercial and residential use, a project it expects to be successful, he said.

Although Mr. Kashani and Mr. Kahen still have a stake in the North Towne property, it is now owned by four companies, said Toledo attorney Matthew Fischer, who is representing the owners in negotiations with the city.

The attorney has said previously that his clients wanted to redevelop the mall, but were hit hard by the recession. The property has been vandalized and sustained flooding since it closed in 2005.

Mr. Fischer, who did not return phone calls on Friday, said at a City Council hearing recently that if the purchase and demolition deal does not go through, the current owners will drag out attempts to mandate demolition of the Toledo property through the court system for another two to three years.

Toledo Councilman Adam Martinez said he would rather the city just force the owners to give up the former North Towne property through foreclosure.

"I just don't think we should be supporting bad behavior and allow these developers to repeat the cycle because ultimately that's what they're going to do," he said. "I think there are alternative opportunities and options that we have that the administration has not fully exhausted."

But other councilmen feel the city must simply make the best of a bad situation, even if it means granting some concessions to the mall's negligent owners.

"It's one of those situations where there is no good answer. We've been given a choice between a really distasteful thing, having it sit there and slowly deteriorate, or putting government money in to get it torn down and ready to sell," Councilman Mike Craig said. "Neither one is a good choice, but having it torn down is better for the city than letting it sit there and deteriorate."

Neighbors weigh in

Despite the discontented rumblings from some on council, those who live and work in the North Towne area seem genuinely excited the mall could soon be torn down. To many of them, how the project is financed is of little concern. What they care about is finally seeing an end to the troublesome eyesore.

"If nothing else, rip it down," said Jim Uckele, a retiree who was working out at the 21st Century Super Fitness Center on a recent afternoon. The gym is on the site of the former mall but would not be torn down under the city's proposal.

"With these economic conditions, you don't know who's going to put money into it. It may be a few years," Mr. Uckele said. "But it would be better to tear it up now and get it used some time in the future."

At the Darla & Co. Hair Salon and Day Spa next to the gym, the future of the mall site has become a hot topic of conversation among customers and staff, stylists there said. Many hope to see another retail outlet on the parcel, such as a Walmart.

"They're excited. It's about time, a lot of people are saying," hair stylist Erica Vara said. "I hope they get something over there that'll bring more people to the area. And hopefully it'll bring more clientele here too."

Joe Rigali, owner of Kings Internet Cafe, says he finds it hard to understand why no one has developed the Southwyck land, left, because Reynolds Road has plenty of traffic.

The south side

Back at the former Southwyck property, expectations for the future are a little more muted. Mr. Rigali at the Kings Internet Cafe said he is optimistic about the city's indications that development could come soon to the site. But others in the area have been let down too many times to believe anything will really happen, he said. "Things are proposed and brought and shown, and then nothing happens, so why get excited over it?" he said. "I'll believe it when I see it, and hopefully I'll see it sooner than later."

Timothy Foster, meanwhile, a retired autoworker who lives close to the mall, said he and his neighbors like to amuse themselves by coming up with their own plans for the Southwyck site. So far, the best idea they've come up with is to make it into a giant ice-skating rink.

"Somewhere where you can take the kids. Somewhere where they can still make money and bring business here," he said. "Maybe a developer has something in the works. We just wish we knew."

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