Wednesday, November 29, 2000

Council looking for new ideas

City 'fires' Nordstrom developer

By Robert Anglen
The Cincinnati Enquirer

        Cincinnati's city manager sent a termination notice to the developer of a proposed downtown Nordstrom on Tuesday and said a search would begin soon for “the highest quality and most creative competitive proposals.”

        Less than a week after the Seattle-based retailer pulled out of a $48.7 deal for a store at Fifth and Race streets, John Shirey is terminating a contract giving exclusive development rights of the site to Eagle Realty Group, the real estate arm of Western-Southern Life Insurance Co.

[photo] The search is on for a new company to develop the corner of Fifth and Race streets.
(Steven M. Herppich photo)
| ZOOM |
        But officials at the company — which owns half the site — said Tuesday they still have a year in which to develop it and said they were unaware of any termination letter. They said they still are looking at options for the property.

        “We put a lot of time and effort into this project, and we're still committed to developing it,” said Sherrie O'Rear, a spokeswoman at Western-Southern.

        “The most advantageous and exciting proposal for development may be for a use, or a mix of uses, we have not yet contemplated,” Mr. Shirey said in a private memo obtained by the Enquirer. “We now have an opportunity to let all creative proposals compete, and we should avoid constricting our choices.”

        Mayor Charlie Luken confirmed Tuesday that contracts give Eagle another year under a “default” clause, but said the company has already been on notice for a year that the city has wanted to default.

        “I have been urging this course for a long time,” he said. “I have no objection to Eagle being one of the bidders on the site. I just think the exclusive arrangement needs to be stopped.

        “I have told the city manager on more than one occasion that we should have defaulted the contract,” Mr. Luken said. “They could have been defaulted last January.”

        Noting remarks Eagle officials have made about doing the project to help the city, and claiming the company was not making any money off the deal, Mr. Luken said, “If they are in it for the good of the city, they will step aside.”

        Mr. Shirey said contracts do give Eagle a year from the time it is notified of a default to correct the problem, much like a probationary notice. So Eagle could remain the preferred developer on the site until Nov. 28, 2001.

        But Mr. Shirey said he is meeting this week with Eagle to negotiate some kind of compromise.

        “They have a year in which to cure the default,” he acknowledged. “I certainly don't want another year to go by without a deal being made for the Fifth and Race street site.”

        It comes down to a “business proposition,” Mr. Shirey said.

        But in this case, the proposition is further tangled because Eagle owns one of the two parcels that make up the site; the city owns the other.

        Asked if Eagle might sell the site to the city or to another party, the developer had no comment.

        “It would be premature for us to discuss our next steps until we meet with the city manager,” Ms. O'Rear said.

        Mr. Shirey said the city is already preparing to turn the site — which is now an open dirt pit — into a 200-space surface parking lot. Although some members of council said they wanted it open in time for Christmas, Mr. Shirey said it won't be finished until April.

        Nordstrom's board of directors said last week it was pulling out of deals to build stores here and in downtown Pittsburgh. With falling profits and weak sales, store officials said they wanted to concen trate on existing stores.

        A deal to build a Nordstrom in Deerfield Township was apparently not affected by the store's decision.

        Mr. Shirey is urging City Coun cil not to focus on just landing another department store at the Fifth and Race site. After seven years of courting Nordstrom, he said, the city might be better off considering things like residential, office space or a hotel.

        “I think retail needs to be a part of the development,” he said. “Beyond that, I don't think we should lock ourselves in.”

        Council members, many of whom had not seen the termination notice Tuesday, said they agree — and hope Eagle won't stand in the way.

        “I think it's good to clear the deck and open the other door to new ideas,” said Councilman James Tarbell.

        Western-Southern was given the first opportunity to develop the site and failed, he said.

        “Fifth and Race is not on the edge of town underneath a bridge,” he said. “I think it's time to open the door and see who else walks in.”

        But Councilman Phil Heimlich says opening up the process doesn't go far enough. As long as the city is involved in trying to develop the site, he said, he doubts it will be successful.

        “The process needs to be spearheaded by private-sector experts, not city staffers,” he said.

       Jeff McKinney contributed to this report.


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