"During a recent campaign debate, Mayor Teresa Isaac caused jaws to drop by suggesting that she might wield the big stick of eminent domain to prod the absentee owner of the former Lexington Mall into reviving the abandoned commercial site, exquisitely located near the city's urban core. The mayor complained that Saul Properties of Bethesda, Md., has refused to return her calls or those of others who have tried to ascertain the site's future. In one press report, Julian Beard, the mayor's director of economic development is quoted as saying, "It's the developers who are calling me back and saying Saul won't talk to them. I don't even know how to get in touch with Saul at this point."
Contact information is readily available online at www.saulcenters.com.
Saul insists it never received a call from Mayor Teresa Isaac or anyone else in her administration. We did call. Although they did not respond immediately, after our publication of an article related to their lack of action at Lexington Mall, a Saul official returned our call, resulting in an amicable, detailed discussion.
Some background
It has been over a year since Saul Holdings LP settled a protracted eight-year court battle with Home Depot, clearing the way for the 315,000-square-foot former Lexington Mall to be redeveloped. The mall's last tenant, Dillard's, shuttered its doors in September 2005, and there has since been little or no visible activity at the site. A news release from Saul Centers, Inc., a subsidiary of Saul Holdings LP, with properties in Oklahoma, Georgia, Florida, North Carolina, New Jersey and Kentucky, dated September 29, 2005, stated that the firm had "engaged land planners and assembled a team to proceed with conceptual designs." Since then, however, there has been little or no communication from the company.
This lack of communication is set against the backdrop of a Lexington that is actively engaged in exploring urban infill as an option to expanding outward and gobbling up those rare and vaunted soils that are the essence of its stature as "The Horse Capital of the World." Allowing this 30-acre commercial site located within New Circle Road to sit unused, unproductive and unattractive is pushing commercial growth to the outskirts - into our dwindling suburban land supply - adding to pressures to expand the Urban Services boundary and, in turn, contributing to a domino effect that could gradually send development sprawling over our priceless rural identity, destroying Lexington's magnetic balance and scale and the reason many of us are here.
The abandoned site is situated well within Lexington's Urban Services Area. Its blighted condition can only be depressing the value of neighboring properties even as it fails to contribute something, anything, to the city tax base.
Beard, the mayor's economic development chief, said he knows of no significant legal, financial or zoning obstacles standing in the way of redevelopment. Any zoning issues pertaining to the site would immediately receive high priority attention from the city, he said, if Saul Properties would only communicate its needs or wants.
It is appropriate for the city to try to ascertain whether the property owner intends to soon return tax base supportive economic life to the site. In light of the Saul official's candor, threatening condemnation runs counter to opening a line of productive communication.
The September 22, 2006 edition of Business Lexington, quoted Beard as saying three high-profile national developers had contacted his office to inquire about the site. According to Beard, one of those developers whom he declined to name, but thought to be Steiner & Associates of Columbus, Ohio, wanted to transform the 30-acre property into a "lifestyle center," an attractive "town center" mix of retail and entertainment venues and residential units.
A Saul Properties official contacted Business Lexington on September 26. Requesting that he not be named, the official acknowledged that his company has an image problem in Lexington; said the company wants to repair that perception by resuming a positive posture in the Lexington community; and asserted that he is confident that a successful project will soon be attracted to the Richmond Road site. He revealed that the Saul family is pressuring him and his colleagues to "get this thing done," in Lexington. The official cited the protracted eight-year lawsuit with Home Depot as a prime culprit in chasing away many opportunities. Business Lexington has learned independently that this included Fresh Market which eventually grew impatient while waiting for Saul and Home Depot to settle their legal wrangle, pulled out of the deal, and is now locating in the Lansdowne Shops.
It was confirmed in our conversation that interested parties are now in discussions with Saul. These include big-box retailers who have submitted plans and have made it clear that they want the site. The Saul official stressed, however, that his company is holding out for a deal with an upscale retail tenant whom his experience tells him would enjoy phenomenal performance in such a location. He said two additional tenants would follow. He emphasized that the latter option is by far preferred over a big box retailer. Underscoring that his company is at the mercy of the timing of the potential lead tenant, he said he is pulling out the stops to try to win a commitment adding, "we're not going to let go."
We believe the best outcome for Lexington would be in keeping with the mixed-use motif that makes sense for nearby neighborhoods as well as a city engaged in revitalizing its urban core. And, by the way, we feel strongly that Lexington does not need yet another "big box" retailer.
The absence of communication from Saul Properties has been a sore point, leaving the matter to imaginations. To many of us, it seemed that the company must have had bigger fish to fry and had simply written off "little old" Lexington. Now, however, we are assured by the Saul official that a week hasn't gone by since the settlement of the Home Depot lawsuit that the Lexington property hasn't been under discussion.
We take Saul officials at their word that they are sincerely concerned about the quality of their relationship with our city. We were delighted to learn that every attempt is being made to breathe new life into Lexington Mall.
Lexington does, however, have a legitimate interest in expecting concrete action and soon.
Does the city have leverage at its disposal? Indeed it does. The question is whether it is wise to deploy it.
In the best of times, condemnation is controversial, but in today's highly charged atmosphere revolving around ownership of Kentucky American Water, it is downright radioactive.
The Kentucky constitution prohibits its use to take private property for transfer to a private entity for the purpose of industrial or commercial development. The controversial 2005 ruling by the U.S. Supreme Court in Kelo v. New London does not supercede Kentucky's constitutional prohibition.
The 2006 General Assembly redefined state law to strike a balance between the rights of property owners while allowing communities to address blighted properties. House Bill 508 ensures that in Kentucky, eminent domain cannot be used in cases such as Kelo.
The mayor does have at her disposal, consistent with Kentucky law, the power to declare the Lexington Mall property blighted and undertake an urban renewal condemnation. Such action is constitutional in Kentucky so long as the "blight" determination is valid. Under KRS 99.010 to 99.310, criteria for such a determination include: "excessive land coverage... the existence of buildings which, by reason of age, obsolescence, inadequate or outmoded design or physical deterioration have become economic or social liabilities, or both." Presently, Lexington Mall does seem to fit the description.
We recognize the delicate nature of negotiating and coordinating among multiple tenants and hope Saul Properties succeeds in its efforts to produce results. In the meantime, we're looking for wise and aggressive civic leadership to engage this absentee property owner and press for a positive outcome that results in a thriving and attractive economic engine rising from the abandoned Richmond Road derelict that is the former Lexington Mall.
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