$11M deal on table to acquire Southwyck mall shops

9/21/2007

Toledo Mayor Carty Finkbeiner yesterday disclosed that Southwyck developer Larry Dillin has offered just under $11 million to buy out two of the three owners of Southwyck Shopping Center.

The mayor alluded to the offer from Mr. Dillin while responding to questions about his proposal for the city to take ownership of Southwyck through eminent domain.

The mall is partly vacant and soon will lose its remaining anchor store when Dillard's closes in October, as planned, to relocate to a new store at the Shops at Fallen Timbers in Maumee.

"We are moving forward with what we hope eventually will be the Village at Southwyck," Mr. Finkbeiner said.

The administration has asked City Council to approve a resolu-tion giving it authority to begin eminent domain proceedings against the South Toledo mall. Council is scheduled to hold a hearing Monday.

The ordinance to acquire "portions" of the shopping center property says the city needs to extend a road through the middle of the shopping center.

Traditionally, eminent domain is used by governments making public improvements, such as new roads. In recent years, local governments have used eminent domain to take privately owned property that's deemed to be blighted and transfer it to another private entity for redevelopment.

"We see it as both. We are exploring it under both scenarios," Mr. Finkbeiner said.

The mayor said he doesn't necessarily expect a legal challenge to the eminent domain, and he said the city continues to have contact weekly with the mall's three owners.

"It is my hope that we can and will get this worked out," Mr. Finkbeiner said.

He said Mr. Dillin has made what he called "a very good offer" of just under $11 million to buy out part-owners Dillard's Inc., of Little Rock, and M.G. "Buddy" Herring, Jr., president and chief executive of the M.G. Herring Group, Dallas.

Dillard's is half-owner of the concourse sections of the mall and the former Montgomery Ward anchor building. The other half-owner of those parcels is the Dreiseszun & Morgan partnership of Kansas City. Mr. Herring owns the Dillard's store anchor building and its parking lot.

Asked how the city, if it were to exercise eminent domain, would pay for the property taken, Mr. Finkbeiner said that's where Mr. Dillin would come in.

"Mr. Dillin's offer would certainly be very much a part of the solution to that problem," Mr. Finkbeiner said.

Mr. Dillin, principal and chief executive officer of Dillin Corp., said he is in negotiations with Bill Dillard, chairman and chief executive officer of Dillard's, and Mr. Herring, and said it would not be appropriate to discuss his offer in detail.

He said he already has an understanding with the third property owner, Mr. Dreiseszun and Mr. Morgan, to participate in the project.

The three Southwyck parcels together, including the Dreiseszun & Morgan share, are valued at $13.95 million by the Lucas County auditor.

"I'm fairly confident they're not going to find another buyer close to the offer I've made. We think we've made as generous an offer as we can possibly make," Mr. Dillin said.

District 2 Councilman Rob Ludeman said the auditor's value is probably higher than actual fair-market value, given the vacancies in the shopping center, making Mr. Dillin's offer more attractive than the fair-market value that would be paid under eminent domain.

"I don't understand the stonewalling by Dillard's and Herring," Mr. Ludeman said.

Mr. Dillin's plans would eliminate much of the enclosed mall that was built in 1972.

In its place would be a mixed-use development of stores, offices, and residential development in the mold of Mr. Dillin's Levis Commons project in Perrysburg, complete with fountain, a pavilion, and a clock tower.

The administration's eminent domain ordinance calls for connecting two streets that connect with Southwyck Boulevard on opposite sides of the mall - Brownstone and Cheyenne boulevards.

Mr. Dillin said his plan has envisioned a street bisecting the shopping center property, although not necessarily exactly the way it's envisioned by the city.

Contact Tom Troy at: tomtroy@theblade.com or 419-724-6058.