The empty Borders Books space at Fourth Street Live may be setting up Metro Mayor Greg Fischer for a major dilemma – play ball with The Cordish Companies, or lose the chance to get a game-changing downtown retailer.
As Insider Louisville predicted back in January, bankrupt Borders Group leaving the most visible space on the entertainment district is becoming the top retail story of 2011.
Executives with the Baltimore-based Cordish are telling metro government officials the developer can replace Borders with a hot retailer.
For a price.
Insiders describe discussions during which Cordish officials have suggested they can secure top retail tenants including a new urban prototype Target Corp. store if city officials are willing to provide tax rebates, taxing districts and other incentives, or even subsidize the project.
“It came down to, ‘How much money do you want to spend? How nice of a downtown can you afford?’ ’” said an insider with direct knowledge of the meetings.
After an initial exchange of e-mails, Cordish officials did not make anyone available to Insider Louisville for an interview.
Chris Poynter, communications director Fischer, said Fischer met with Cordish officials in Baltimore last Friday to discuss the vacant Borders space. The company is looking at several options, “but nothing is firm at this point,” Poynter said.
Landing an apparel chain or multi-line consumer retailer would be a major coup for downtown, which lost its last large retailer in 2003 when Little Rock, Ark.-based Dillard’s Inc. closed its store in what was then The Louisville Galleria.
(Fourth Street Live does include a CVS drugstore/pharmacy.)
Even if city officials were willing and able to give tax rebates, incentives or even cash to consummate the deal, the political blow-back could be significant.
Previous Cordish deals with the Abramson and Armstrong administrations were overly generous and under scrutinized dating back to the genesis of Fourth Street Live, said multiple sources in city government.
In the most recent controversy, the city gave Cordish a $1.8 million forgivable loan in 2009 to extend Fourth Street Live into the Hertz Starks Building and ultimately to the proposed Center City, a downtown entertainment district that never happened.
Instead, Cordish executives used the money to buy out the Lucky Strikes space in Fourth Street Live and covert it to Sports & Social Club.
Cordish executives and Abramson administration audit officials refused to disclose details about how the money was spent, stating that to do so would reveal confidential, “proprietary” information.
Regardless of past issues, nothing can go into the Borders space without Cordish, which owns Fourth Street Live. And that’s a problem for downtown development and Louisville convention and travel interests.
The single biggest complaint from out of town visitors is the lack of downtown retail, says one longtime downtown development official: “By far, the single biggest complaint.”
In March, Louisville Metro government officials and officials with the Greater Louisville Conventional & Visitors Bureau told Insider Louisville they were collaborating with Cordish on “a detailed plan” to bring a specific tenant to Fourth Street Live.
However, Jim Wood, CVB president and CEO, said his organization now “is sitting on the sidelines,” waiting to see what Fischer, Cordish and Louisville Downtown Development Corp. officials decide would be the best use for the 30,000-square-foot, two-story former Borders space.
LDDC chariman Alan DeLisle declined comment, referring Insider Louisville to Margaret Handmaker, Fischer’s chief of Economic and International Development.
Handmaker did not return calls for comment.
Wood called the former Borders “the most important retail space downtown,” adding there’s “a lot of debate” among officials about what would be the city’s best play.
While he declined to say what sort of tenant would most benefit Louisville’s tourism and convention trade, Wood added he’s confident the right retailer will step up “and it will be the right next step for Louisville.”
But the question becomes, “What will it take financially and politically?”
In March, media relations executives at both Bentonville, Ark.-based Walmart and Minneapolis-based Target told Insider Louisville their companies are not considering Louisville for new urban prototype stores.
Executives at both companies have plans for increasing their urban presence, but initially are entering first-tier cities or entrenching in those largest markets.
Most officials told Insider Louisville they’d support a deal, even if it meant incentives from the city. “I think (Fischer will) take the chance and do it,” said one downtown development official.
Investors with downtown stakes say a Target or any national discount retailer or grocery would transform the business center.
A Target would be the store with the widest appeal and the tenant that would most boost downtown property values, said Mendel Hertz, a partner in the Miami-based, family owned real estate firm that owns the Hertz Starks Building on Fourth Street Live.
“I don’t know a single person who hasn’t gone to Target,” Hertz said.
In addition to the empty Borders space on Fourth Street Live, he said he’s also concerned about other vacancies including the former Steward’s Dry Goods building across Muhammad Ali Boulevard from the Starks.
In the pre-Recession days of 2006, Florida-based developer Eric Batchelor moved out most of the Stewart’s building tenants to make way for a $60 million conversion into a hotel, a project that never happened.
“That building has been empty since 2006,” Hertz said. “That’s an entire quarter block … that’s a lynch pin for downtown. To me, that’s more important (than Borders).”
Even though his company has had issues with Cordish, winning a suit to recover rent owed on the never-realized expansion of Fourth Street Live, Hertz said he favors the city doing what’s practical to get Cordish to find the best tenants for the Borders space.
Others are skeptical. “There’s not been anything other than restaurants that have worked downtown,” said one economic development official. “And that’s true all the way back to the Galleria.
“I hate it, but that’s the truth.”
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