Although potential developers do not yet have a cost-effective plan for revitalizing the heart of Bountiful's downtown, the City Council has voted unanimously to let them keep trying.
Convened as the Redevelopment Agency, the council gave Johansen-Thackeray and Co. another 90-day "benchmark" to work on a proposal for the controversial Block 29, bordered by Main Street and 100 West and by Center Street and 100 South.John Thackeray - whose company signed a five-phase agreement with the Bountiful RDA in January - told the council Monday night that the project has some problems.
"The bottom line is, the costs are too high and the estimated revenues are too low," he said, reporting to the council after having completed the first three-month benchmark, or phase, of the agreement.
"Our thinking is it can still be viable," but it isn't going to be easy, he said.
Indeed, it wasn't easy for four previous developers either, who failed to redevelop the block.
Johansen-Thackeray, which owns Foothill Village in Salt Lake City, wants to put a similar shopping center in downtown Bountiful. It would feature four to six major retail stores - 10,000 to 20,000 square feet each - and 15 to 18 smaller tenants. The $8 million project also would encompass parts of the blocks to the north and south of Block 29.
One of the major obstacles to the project is persuading the existing property owners to sell at a price reasonable to the developers.
"All (five) of the property owners have indicated they are willing to sell," City Manager Tom Hardy said. "But there's quite a gulf between market value and what the owners are asking."
Of major concern to council members Renee Coon and Barbara Holt was the fact that Johansen-Thackeray was not planning to compensate the city for RDA-owned land, which makes up more than half of the 174,000-square-foot Block 29.
"In all honesty, I have to say I'm not willing to continue with this agreement as long as there's no compensation for the RDA property," Coon said during the meeting, the first 20 minutes of which was open to the public.
The council then went into a closed session, which lasted about 80 minutes. After the closed session, the council, without discussing what changed the minds of Coon and Holt, voted unanimously to allow Johansen-Thackeray to proceed with the second "benchmark," conditions of which must be met by July 9.
Hardy said a possible agreement in which the city gets some of the yearly profits of the development may allay the council members' concerns over the city's getting no money for the city-owned property.
Such profit-sharing, however, may not amount to much. Hardy said current forecasts show the development, in a worst case scenario, would lose about $250,000 a year. In a best case scenario, it would produce a net profit of only $150,000.
In all probability, though, the development, according to the forecasts, would break even, which is a problem for potential investors.
"No one wants to finance a break-even proposition," Hardy said.
To make the project more economically sound, Johansen-Thackeray can try to negotiate better property prices, reduce construction costs by building multistory structures, or try to get higher rents, Hardy said.
Between now and July 9, Johansen-Thackeray must:
- Execute purchase agreements on all properties necessary for the development in downtown Bountiful.
- Obtain all necessary approvals from governmental agencies for the project, including the city's permission to close 100 South between Main and 100 West.
If Johansen-Thackeray is successful, the city must approve a third 90-day "benchmark" for the developer.