Somera Capital Management of Santa Barbara, Calif., purchased the 32-year-old property in January 2007 for $52.65 million. About eight months later, the new owners announced a major renovation project at the mall, along with a name change to Kingsport Town Center.
This week, company representative were in town to talk to city officials about the project and to attend a meeting of the Kingsport Regional Planning Commission, which on Thursday voted unanimously to approve the proposed site plan for the project.
Jeff Fleming, assistant city manager for development, has been working with Somera on the project and said now that the site plan has been approved, the next step would be for construction plans to be submitted, acquire a building permit and start the renovation phase of the project.
Company officials say the project would likely begin in June, and they hope to be complete by 2011. The first things to take place at the mall will be interior work — upgrading the floor, ceiling, handrails, lighting, mechanical and electrical work, and constructing a play area for children.
“It’s like a home built in 1975, and they’re updating it to 2008 standards. That’s what they’re faced with,” Fleming said. “It’s not just a patch — for all intents and purposes, it will be a new building.”
In addition to receiving a face-lift, the property will also grow in size and see the addition of four outparcel properties. When the project is completed, the mall will go from its current size of 530,000 square feet to 634,000 square feet (which includes the outparcels).
Preliminary plans call for the J.C. Penney building to be demolished, with a new anchor tenant building built closer to Memorial Boulevard and separate from the rest of the mall. The anchor building would be connected to the mall with a new lifestyle center — a promenade-style area with a courtyard and shops lined down a sidewalk.
The plans also call for an extension of the building at the theater entrance of the mall, Fleming said, pulling out that section to the edge of the Sears building.
“There would be an opportunity for four or five specialty shops that would have an outdoor entrance and have a two-story glass entry that would have green space and allow a good venue for community celebrations,” Fleming said. “On top of that is where they hope to do the food court. It would overlook the atrium space and create a gathering place for people.”
According to the plan, two outparcels are called for along Fort Henry Drive and two along Memorial Boulevard. Fleming said there is a potential for a fifth outparcel. Company officials say they are focusing on restaurants for three of the four outparcels but could not name any specific restaurants at this time.
Fleming said this is the first expansion of the mall since its construction. Renovations were performed in 1989 and in 2005.
Earlier this month, Fleming told the Kingsport Economic Development Board the owners of the property would be asking the city for a financial incentive package for the project. Since then, the two parties have discussed an incentive package, which should go before the Board of Mayor and Aldermen in May. “They did ask for it, and we’re still in negotiations,” Fleming said.
Kingsport offered Roger Ball $2.75 million in tax increment financing for the East Stone Commons project and Merchants Holding Co. a $2.5 million incentive package for the Kingsport Pavilion project. Fleming said this incentive package would likely be in that dollar range.
“These types of economic incentives, they’ve become the norm nationwide. They always ask if there is a program available, and then you have to go through the steps to see if it makes sense for the public to incent the development,” Fleming said. “We will analyze the financial package, we will determine if it’s a good deal for the city, and we’ll act accordingly.”
If an incentive package is agreed upon, Fleming said there would be a signed agreement where Somera would have to meet certain criteria in order to receive the package. Since the mall does not lie within a redevelopment district, it is not eligible for TIF, but Fleming said the incentive package being discussed is similar to TIF.
“Do you wait until the center completely bottoms out before you intervene and try and help or wait until a logical point and step in and provide a strategic, targeted initiative to help them be successful to prevent them from bottoming out?” Fleming said.