Tuesday, October 26, 2010

Hickory Hollow Mall leases go to Metro Council

Metro to pay $1.8M annually for space in Hickory Hollow By Michael Cass • THE TENNESSEAN • October 26, 2010 Metro government would pay more than $1.8 million a year to lease space at Hickory Hollow Mall for several city facilities under plans Mayor Karl Dean has sent to the Metro Council. The three lease agreements, with terms of 10 to 15 years each, call for Metro to rent more than 350,000 square feet in the former J.C. Penney and Dillard's buildings and in nine spaces on the mall's first floor. The city eventually would have options to buy the Penney and Dillard's buildings. Dean announced last month that he planned to build a community center, a library, a public health center, a park, and the Tennessee State Fairgrounds flea market and expo center at the mall near Bell Road and Interstate 24. His administration filed the lease proposals with the council office Friday, giving them a chance to win final approval by mid-December. Under the three agreements, Metro would: • Lease 138,189 square feet in the J.C. Penney building for $690,945 a year — $5 per square foot. The city would be able to buy the building from Hickory Hollow/SB LLC for up to $4 million after two years, with the purchase price dropping with each passing year. The two-story Penney building would house a 23,000-square-foot library and archives reading room; a new home for the library system's archives; and a 25,000-square-foot regional community center. A "multi-acre" public park would sit in front of the building, which would have 362 parking spaces. • Lease 200,000 square feet in the Dillard's building for $1 million a year, also $5 per square foot. Metro would be able to buy that building from Hickory Hollow/SB LLC for an estimated $5 million after four years. About half of the purchase price, which would drop by $200,000 each year, would repay Hickory Hollow/SB LLC for building out the space for Metro's use as a flea market and expo center. Dean wants to redevelop the fairgrounds, which will stay open until the mall is ready for its events. Hickory Hollow/SB LLC still needs to close on its purchase of the facility from Dillard's, Metro Finance Director Rich Riebeling said. • Lease 15,351 square feet of reception and clinic space from Hickory Hollow Mall Limited Partnership for the public health center on the mall's first floor. Metro would pay $12 to $16.12 per square foot over 15 years, with annual rent starting at $184,212 and ending at $247,458. The agreement says Metro ultimately could consolidate the services it offers in that space with programs in other "mutually agreeable space" owned by Hickory Hollow Mall Limited Partnership or any of its affiliates. The city also can terminate the lease with 90 days' notice if it loses federal funding. Hickory Hollow owner CBL & Associates Properties Inc., which is based in Chattanooga, controls both of the entities Metro is negotiating with, Riebeling said. Contact Michael Cass at 615-259-8838 or mcass@tennessean.com.

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