Citizens Oak Ridge
Letter to the editorFailure of Crestpointe won’t be benign4/25/2007To the Editor: One of the important Crestpointe unknowns is, where will the customers come from? If they're drawn mainly from the existing Oak Ridge customer base, as many of us believe, then • There will be no net increase in sales tax revenue; • Several of the existing stores along Illinois Avenue and in the Mall, which appear to be just barely hanging on, will likely go out of business, shifting shopping to a more awkward location; • $10 million will be added to our debt — or is it $15-$20 million including interest on the bond issue? • Apparently we also lose the prospect of a rebuilt mall. In other words, this will not be a benign failure. Charlie Jernigen, treasurer of FOR, cites GBT's projection of an optimistic $142 million in annual sales, most coming from new money. Sorry, Mr. Jernigan, not good enough, not by a long shot! First of all, that's from the developer who is trying to sell you the project. Second, surely you realize that you can get any sales projection you want, depending on what you assume. It's the old "garbage in, garbage out" issue. If you assume a Crestpointe Target just like the one in Turkey Creek that feeds off ten times the customer base, plus an optimistic mix of un-named "power stores," you evidently get some good sales projections. But is it realistic or bogus? And can those stores, whatever they may be, actually stay in business? It is positively eerie how the Crowne Mall episode is being replayed. Crowne is also a reputable shopping center developer that came in with optimistic sales projections. City Council was hooked. And you know what, the sales predictions seemed to be correct — for the first year. During that time the stores were obligated to the mall by contractual arrangements with Crowne. After this mandatory one year, many started closing up shop. Some were in the red. I happen to know that Lane Bryant had decent profits, but left anyway because they were not meeting their owner's goals. After two years the mall was largely empty. Can anyone say why the Crestpointe history would be any different? We are basically the same city we were then. The point is that initial sales projections from the developer are not significant. They can be anything depending on the input assumptions. And besides, it's the long haul that counts. And that depends on what are those "power stores" are and whether or not they can stay in business at that location. I can agree with Jernigan on one point. GBT has indeed done their job well. They have developed a great sales pitch and sold Council. But the city has NOT done their job at all. They have passively accepted GTB's projections, and have made no effort to identify the "power stores," which actually drive the entire project. Nor have they verified the viability of these "power stores.” There are other important issues that need to be discussed, such as the ethics of using tax money for projects that may put some stores out of business, and whether or not it makes sense to alter the natural economic mix of retail by municipal subsidy. Robert Wichner Oak Ridge |
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