City Council OK’s razing of North Towne mall

The former North Towne Square mall on Alexis Road is on the wrecking-ball list.

Toledo City Council narrowly approved a deal Tuesday that allows the Bell administration to acquire the dilapidated North Toledo property and tear it down. The city plans to use an estimated $750,000 in revolving federal grant funds for the demolition and then market the site for redevelopment. The idea is to recoup the demolition expenditure once the property is sold.

The agreement passed 7-5 during the regular council meeting. Councilmen D. Michael Collins, Joe McNamara, Adam Martinez, Tom Waniewski, and George Sarantou voted against the measure.

The Bell administration and Councilman Lindsay Webb -- in whose district the mall is situated -- have heralded the deal as a way to rid North Toledo of an eyesore and spur economic development. They have emphasized that money for the demolition will not come from the city's general fund and say the site's proximity to Chrysler Group LLC's Toledo Assembly complex and other businesses portend a productive future.

"North Towne has essentially been an albatross around the neck of this portion of Alexis Road," a triumphant Ms. Webb said after Tuesday's vote. "Tearing it down and readying it for redevelopment is going to bring new life to North Toledo."

Super Fitness, located on the North Towne property, would not be torn down.

Mayor Mike Bell said he was pleased his administration's vision for the site had pulled through intensive questioning by council over the past few weeks. He said passage of the deal is "just the first stage" in remedying the afflicted property. It is hoped demolition will begin within the next two months, he said.

As part of the deal, the California-based owners -- principally two companies owned by Joseph Kashani and 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. The owners would also cover $40,000 in unpaid utility costs, reduced from an original bill of $187,000, once the property is sold by the city.

However, the terms of the agreement make it uncertain what the project's eventual cost to the city might be. If no buyer is found once the mall is demolished, the 69-acre site could languish indefinitely, potentially costing the city thousands of dollars a year in upkeep.

Also, while the deal transfers responsibility for the site to the city, Mr. Kashani and Mr. Kahen's companies would reap the profit if and when the property sells. That potentially could net the developers more than $3.5 million.

If the buyer pays less than the appraised value, the city would be legally obligated to make up the difference, according to law department officials.

The Bell administration has said a recently negotiated clause in the agreement calling for separate appraisals by both sides will help prevent such a problem. If the city's and the developers' appraisals differ by more than 10 percent, a third, independent appraisal would be called upon.

Nevertheless, some councilmen balked after a preliminary appraisal report commissioned by the city put the land's value at between $50,000 and $55,000 an acre if zoned for industrial use. That's far higher than many real estate professionals believe the property is worth, Councilmen Sarantou and Martinez said.

An opinion of value provided to economic development director Brad Peebles more than a month ago by real estate company Signature Associates assessed the land's worth at between $10,000 and $20,000 an acre if zoned for industrial use. Mr. Sarantou said the discrepancy deeply concerned him.

"I believe we're putting the city treasury at risk if this project does not work," Mr.Sarantou said. "I want [North Towne] torn down, but I do not want to put at risk our citizens."

Mr. Sarantou and some other councilman said they also object to the deal because it rewards the current owners for their failure to maintain the former mall.

"I just can't fathom why we should reward property owners who have allowed their property to fall into disrepair and not met their obligations," Mr. Sarantou said.

Mr. Peebles countered recently that the deal, while not perfect, is the most straight-forward way to take control of the property. He also defended the higher appraisal, saying it was conducted by a professional appraisal firm -- Martin and Wood Appraisal Group -- as opposed to a real estate company.

Toledo attorney Matthew Fischer, who is representing the owners in negotiations with the city, has said that his clients wanted to redevelop the mall, but were hit hard by the recession.

He also said recently that if the purchase and demolition deal did not go through, the current owners would drag out attempts to mandate demolition of the Toledo property through the court system for another two to three years.

Also Tuesday, council agreed to transfer responsibility for on-street parking enforcement from the Downtown Toledo Parking Authority to the Toledo-Lucas County Port Authority. The transfer is a final step in a deal to sell three downtown parking garages and parking-meter management to the port authority for $12.4 million.

In addition, council approved leasing the city-owned Dura and Tyler landfill sites in North Toledo to two international energy companies. OCI Solar Power of Atlanta and Boston-headquartered CME Energy plan to build a giant solar field on top of the now-capped landfills that could power as many as 7,000 homes and would be the largest solar-energy installation in the city.

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