Thursday, June 22, 2000

Council to OK Nordstrom


But majority wants strings attached

By Robert Anglen
The Cincinnati Enquirer

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Nordstrom store in Indianapolis.
(Michael E. Keating photo)
| ZOOM |
        There are enough votes on Cincinnati City Council to put a Nordstrom department store downtown. But most council members want to attach conditions to a $48.7 million incentive package for the Seattle-based retailer.

        Those conditions would cap the city's contribution, ensure cost overruns are borne by the developer and bring in outside lawyers to negotiate terms with the developer and Nordstrom.

        It would also require the store to stock merchandise “as high or higher” in quality as a second Nordstrom proposed for a new mall in Deerfield Township in War ren County.

        That was enough to sway councilman Phil Heimlich.

        “I've come to the conclusion, after a great deal of thought and research, that this is not a good deal,” he said. “But it is the only deal we could get.”

        A preliminary agreement with the developer, Eagle Realty, comes up for a council vote Monday.

        Councilman Todd Portune, who said he likely will vote in favor of an agreement, said the conditions favored by Mr. Heimlich and four others do not go far enough.

        “What does it do?” he asked. “It is a far cry from the specific things that need to be done.”

        He said the conditions don't address several issues, including ownership of the building and air rights above the store that would allow development on top of Nordstrom.

        “There are things I might add to it,” Mr. Portune said.

        He also questioned why outside experts need to be brought in to close the deal.

        A letter of intent signed by Nordstrom last month outlines a $48.7 million package: $26 million from the city to build the store, a parking garage and skywalks; $12.7 million from the Cincinnati Equity Fund, formed by private businesses to help downtown develop ment; $5 million in tax-increment financing, which Nordstrom will repay in lieu of property taxes; and a $5 million loan from the state that city officials say they will repay.

        In return, Nordstrom will lease the property at Fifth and Race streets for 20 years, renewable for up to 70 years, and maintain the building, adjacent property and skywalks. It would open the store by spring 2003.

        A motion signed by Mr. Heimlich, Mayor Charlie Luken, and council members Alicia Reece, James Tarbell and Charles Winburn would cap all city contributions for the store at $35.9 million. That would include the city's direct contribution, the state loan and the tax-increment financing.

        “I don't want this to turn out like the Bengals' new stadium,” said Ms. Reece. The county is on the hook for about $45 million in cost overruns at the stadium.

        Mr. Heimlich said city administrators have been moving forward with very little vision — that instead of trying to put together a complete retail project, they concentrated on a single store.

        “Three or four years ago, the city should have been lining up realty in the area,” he said, “so that instead of a stand-alone store (it) could have had lots of retail components,” he said. “But despite my disappointment in the city administration, this is the only option available. We have allowed ourselves to be put in a position where we don't have any other choice.”

        He said the deal for Cincinnati eclipses most others — including Indianapolis, Norfolk, Va., and Providence, R.I. — in that the city is putting up much more money up front and getting a lot less for it.

        Those cities, he said, used money generated by projects to create downtown shopping centers in which Nordstrom is a tenant.

        “Here, the city got a store, paid a huge sum of money and that was it,” Mr. Heimlich said.

       



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