OK, the city of Charlotte has now spent $150K on options to buy two of the five anchor store slots — Dillard’s and what was Belk’s — that make up Eastland. Why? I do not understand the logic. More precisely, I understand the claim behind the moves, but it makes no sense.
City council — increasingly a wholly-owned subsidiary of city staff — thinks that the options give the city control, hence leverage, over future re-development of the 70-acre site. Let’s think about this.
If I am a big real estate re-development corp, Massive Johnson LLC let’s say, I would look at Eastland with the city options and see trouble. City staff obviously intends to micromanage re-development on the site, which may or may not mesh with my analysis of what is best for the site. At minimum, city involvement is going to mean lots of back-and-forth during the process, a headache that may just not be worth it.
Unless.
Unless the city comes up with a big fat hunk of cash to underwrite my development, share risk, while virtually guaranteeing me a profit. Maybe tax increment financing for the deal. Massive Johnson could swing with that kind of action.
So forget the $25m. number being used as the cost to the city for the re-development of Eastland, already an obscene amount of money. Given that the city options make private development of the site less likely, the city is reducing its leverage by the hour. I would not be surprised if the price tag eventually doubled.
And it’ll be Charlotte taxpayers who get stuck by some Massive Johnson in the end.
