Tuesday, June 27, 2000
City OKs funds for Nordstrom
By Robert Anglen
The Cincinnati Enquirer
If a deal can't be made over the location of a downtown Walgreens, then the deal for Nordstrom is dead. But that didn't stop City Council from approving a financing package Monday that will pay for a Cincinnati Nordstrom.
Members said issues surrounding Walgreens do not involve the city and they are confident developers will work out a compromise.
This is a big day for the city. We're in the best position we've ever been in terms of getting a Nordstrom downtown, said City Manager John Shirey. I don't think (Walgreens) is going to stop the project.
A $12.7 million loan from the Cincinnati Equity Fund requires moving Walgreens out of a promised site at Sixth and Race streets. Although that loan makes up a quarter of the $48.7 million Nordstrom package, council members said it is up to developers and the equity fund board to find a solution.
WHAT IS CEF?
The Cincinnati Equity Fund was founded in 1996 and represents investments by 12 of Cincinnati's most visible businesses. They are: Procter & Gamble, Broadwing, Cinergy, Western-Southern Life Insurance, Firstar, Bank One, PNC, KeyCorp, Castellini Co., Cintas, Taft Broadcasting and Cincinnati Development Corp. |
The fund's goal: Provide capital to spur downtown development by investing in either new projects or the renovation of others to help revitalize the city's central business district. The fund acts as a gap lender, meaning it provides low-interest loans to fund a portion of project's costs.
It has provided financing for such projects as Over-the-Rhine's Emery Theatre, the Albert B. Sabin Cincinnati Convention Center and renovation of The Crown, now Firstar Center.
And Nordstrom developers said Monday that the equity fund board will likely back off if Nordstrom is threatened.
Our understanding is that the equity fund would not let the requirement hold up the Nordstrom store, said Thomas Stapleton, vice president of Eagle Properties.
If the equity fund is unwilling to bend, he said the deal for Nordstrom will fall apart.
Then the equity fund will be the reason for not going ahead with Nordstrom, Mr. Stapleton said.
Equity fund board members could not be reached for comment Monday. But in an interview last week, board member Neil Bortz said nobody was looking to hurt or slow the Nordstrom deal.
He said the board voted last month to install the requirement as a way to move Walgreens from a site across the street from where Nordstrom would be built. They proposed building Walgreens a block west at Sixth and Elm streets.
The only reason the equity fund board could attach the restriction to the loan is because Eagle's parent company, Western-Southern Life Insurance Co., represents Walgreens.
Western Southern is also a member of the equity board, which represents investments from 12 of the city's most visible businesses.
Mr. Shirey agreed the project will stop if the equity fund doesn't yield. Given the history of Walgreens, he doubts the pharmacy will capitulate.
The site picked for Walgreens was part of a $3.7 million settlement by the city after it forced the pharmacy out of the Fifth and Race Tower to make way for a department store that was never built. Walgreens through Western-Southern has said it does not want to move.
Councilman Todd Portune, said he doesn't think the city should be leaving these kinds of loose ends, but other council members argued that this is just one of several issues that can be worked out between now and when a final contract is written in September.
Whatever happens, council members said no more city money would be put into the project. A motion that will be voted on Wednesday but has already been signed by the majority of council caps the city contribution at $35.9 million and makes developers responsible for any overruns.
That contribution includes $26 million from the city, a $5 million loan from the state, and $5 million in tax increment financing, which Nordstrom will pay in lieu of property taxes.
The motion also requires Nordstrom to stock the store with merchandise as high in quality as another store planned in Deerfield Township.
It also requires the city to hire lawyers specializing in retail to negotiate with Nordstrom and Eagle; requires the city attempt to acquire air rights over Nordstrom, for future expansion of the convention center; and asks developers to recruit other high-end retailers to the area.
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