By  on April 16, 2007

As open space dwindles, shopping center developers are being forced to seek locations in mature communities with existing malls.

That reality creates new challenges because land costs are higher in these locales, obtaining required permits and environmental approvals is more complicated, as well as often being difficult because of community opposition. Across the U.S., increasing numbers of local residents are battling mall development, raising concerns about traffic congestion, crime, pollution and more demands for municipal services.

A survey to gauge public opinion on new development conducted in 2006 by Saint Consulting Group, a land-use political consultancy, found that 73 percent of the respondents did not want new development in their communities.

Projects have been delayed for years as developers and civic groups become entangled in lawsuits. Taubman Center's proposal for a 860,000-square-foot Mall at Oyster Bay in Syosset, N.Y., with Neiman Marcus and Lord & Taylor as anchors, was unpopular from the start. A group called the Cerro Wire Coalition, named after the Cerro Wire and Cable Co., which owned the site, has battled against construction.

Mall developers also face opposition from competing shopping center owners. Taubman executives accused Simon Property Group of financing Syosset civic groups that object to the mall. Indianapolis-based Simon, which owns the nearby Roosevelt Field Mall and three other shopping centers on Long Island, has acknowledged that it contributed some funding to the opposition cause.

Simon executives could not be reached for comment.

The town board of Oyster Bay rejected Taubman's application in 2001. The developer took the case to state Supreme Court, calling the town's actions arbitrary and capricious. A state Supreme Court judge in 2002 ordered the town board to reconsider Taubman's proposal and during the last five years courts have instructed the town board to revisit the mall proposal. The town has appealed each time. Taubman, based in Bloomfield Hills, Mich., is too heavily invested in the project to give up, having spent more than $122.5 million. In October, Taubman said it was seeking a final decision on its land use plan. The case is still pending.

Despite the war of attrition, the Taubman Web site features a rendering of the Mall at Oyster Bay, describing the project as "an extraordinary retail opportunity."After almost seven years of litigation, a Taubman spokeswoman said, "We're in court to obtain approval to build the mall, as the town to this point has refused to issue the necessary approvals."

A town of Oyster Bay employee said that Taubman submitted a proposal for a 750,000-square-foot mall after its first proposal was rejected. The town maintains it doesn't have to consider the downsized plan because the initial public hearing was based on the 860,000-square-foot proposal.

The Taubman-Oyster Bay standoff is a scenario that developers want to avoid. Experts said inclusiveness is a key to success. That means making community leaders and local politicians part of the planning process long before a plan is formally proposed.

Macerich in 2003 made the mistake of initially overlooking residents and elected officials when it set out to redevelop Santa Monica Place in California, an aging shopping center designed by Frank Gehry. The developer's plan to demolish the existing structure and build two residential towers, was denounced by the community. Local leaders formed an organization to fight the redevelopment called the Coalition for Livable Santa Monica.

"We went back and were really humbled," said Tracey Gottsis, vice president of development relations at Macerich. "Our first proposal just didn't fit with the community's view. We took a hiatus and rethought it. We listened to the community and business leaders. We had a ton of community meetings. We addressed the reasonable scale and footprint. Now it's 530,000 square feet, the same footprint as the original and it's been well received."

Gottsis said developers face obstacles in upscale communities where residents have the resources to oppose them and are concerned about the livability and beauty of their towns. "We need to come up with ways to work with them," she said. "Maybe our first plan wasn't the right approach. The one valuable thing we lost is time. We've been working on this for four years and it will take one more year to complete the entitlement process."

Among the changes Macerich made in deference to the community was opening up Santa Monica Place to the city's Third Street Promenade, moving the food court to the upper level so diners could take advantage of ocean views and adding art installations and piazzas.Gottsis, who works at the front end of a project, tries to bring some objectivity to discussions between Macerich and local residents. "We involve a municipality from the onset and start our community outreach with sketches and boards, literally sitting and talking in people's living rooms," she said.

If residents can't afford to fund an opposition campaign, a rival mall owner may step in.

A community organization backed by the Westfield Group has been trying to stop development of Caruso Affiliated's The Shops at Santa Anita in Arcadia, Calif. The group, Arcadia First! petitioned the Arcadia City Council to reject Caruso's environmental impact report. Westfield Shoppingtown Santa Anita is adjacent to the proposed Caruso project.

General Growth Properties, which owns the Glendale Galleria shopping mall, filed suit against Caruso's Glendale Americana at Brand project in 2004, challenging its environmental approvals. A Los Angeles Superior Court judge rejected the case in 2005, and a state appellate court's subsequent ruling against General Growth cleared the way for the Americana's construction. Caruso broke ground in June.

"We encounter competition from other developers who don't want us coming into the area because we reduce their monopoly on rents," said Linda Berman, a spokeswoman for Caruso. "You have to make the community part of the process so they can see themselves as part of the finished product. You'll see the difference in the projects where developers just impose their own thinking. Their projects feel disjointed from the community."

Caruso has learned that "incentives are survival," Berman said. "You need the loyalty of your local base."

In an effort to win support, Caruso has promised to build a $22 million headquarters complex for the Arcadia Unified School District. "We didn't even know Arcadia needed a school district building," Berman said. "If you get into the community early on, you see what it cares about. Schools are a huge thing for Arcadia."

A Westfield spokeswoman responded that the company "is involved with community groups." However, she added that Westfield has a fundamental disagreement with Caruso. "We believe the market can't support that volume of retail," she said. "Westfield acquires existing assets versus building from the ground up. It's our history and practice to acquire assets and invest in them with improvements and expansions."A vote on the project by the Arcadia City Council was scheduled for April 11. Caruso made a presentation before the vote, and comments from the public lasted until 2 a.m.

"It did not come to a final vote," Berman said. "We had a great night in Arcadia. There were about 600 people there and, conservatively, I would say it was three to one in favor.'' The vote was rescheduled for Tuesday.

Even if Caruso wins approval, Westfield could file a lawsuit or sponsor a ballot initiative.

Fighting a competitor "adds at least two years to the project and millions of dollars," said chief executive officer Rick Caruso. "Unfortunately, it's part of the process. We end up getting the community's support. The competition is hoping that they cause you enough pain and delay long enough that the project goes away. It's very expensive and tedious."

Mall owners employ full campaign staffs to lobby against projects they deem to be a threat, Caruso said.

"Millions and millions of dollars are spent,'' he added. "Westfield in Arcadia...believe they own the trade area."

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