Main Street: Ready to close by end of June, AMSE property the one remaining hurdle

 

Note: This story was last updated at 8 p.m. June 13.

RealtyLink, the developer that has proposed redeveloping the former Oak Ridge Mall, says it is ready to close on the roughly 60-acre site by the end of June and start construction immediately, but there is one last hurdle: The company is concerned about any redevelopment of the property across the street at the American Museum of Science and Energy that could compete with its proposed project, known as Main Street Oak Ridge.

So, RealtyLink has asked that, if the federal government wants to dispose of the AMSE property at some point in the future, the city would negotiate with the U.S. Department of Energy through the General Services Administration to either have the property transferred to the city, or allow RealtyLink to negotiate directly with DOE and GSA for a property transfer.

The Oak Ridge City Council will consider a resolution allowing the city manager to start the negotiations, should they become necessary, during a meeting on Monday, June 13.

So far, DOE and GSA have not publicly announced plans to dispose of the 17.12 acres in and around AMSE. But there have been public discussions about what to do with the property during the past 15 years or so. DOE has said it is not in the museum business.

Among the options that have been discussed, although not implemented, is transferring AMSE to the city. Another proposal a decade or so ago would have combined a Target and Lowe’s development in front of AMSE and across the street at the shopping center occupied by Oak Ridge Bowling Center, Pet Supplies Plus, and Big Lots.

In a June 8 memo to City Council, City Manager Mark Watson said DOE has asked the GSA for help using its assets, including the 17.12-acre AMSE site, to “help secure a path forward for their mission of public education and public outreach.” The AMSE property could help offset DOE costs as it helps plan, along with the National Park Service, for a new Manhattan Project National Historical Park that includes Oak Ridge, Watson said.

There are no current development proposals for the AMSE property, either at the museum or on the federal property near it. But RealtyLink seems to be seeking to protect itself from competition there that would compete with Main Street Oak Ridge and hurt the mall redevelopment.

“Any redevelopment of that property (the AMSE property) that competes with Main Street either directly or indirectly will be devastating to our efforts to provide the community a much-needed, quality, retail-centered mixed-use town center,” RealtyLink Principal Neil Wilson said in a June 2 letter to Oak Ridge City Manager Mark Watson.

“We are finally in a position to close on the property by the end of June and begin construction immediately thereafter,” Wilson said. “This issue regarding the AMSE property is the only remaining hurdle standing in the way of that closing. However, my partners, investors, and I simply cannot take that financial risk to move forward until the issue is resolved. We must be able to control the redevelopment of that property.”

Oak Ridge retail consultant Ray Evans said the potential development of the AMSE property was also an issue for the previous developer, Crosland Southeast, and the current owners, Oak Ridge City Center LLC. RealtyLink took over as master developer in September 2015.

Watson has recommended approval of the land transfer resolution, which would also include 1.87 acres of adjacent city-owned land for a total of 18.99 acres that could be developed.

The discussions of what to do with the AMSE property, at least during the past decade or so, haven’t proposed ending operations at the museum. Instead, they’ve focused on how to keep the museum operating, possibly with some changes, while easing DOE out of the museum business. However, the Target/Lowe’s proposal would have affected at least some of the green space in front of AMSE, which is the space between the museum and South Illinois Avenue.

The AMSE property is included in an economic impact area associated with the mall redevelopment. That plan was adopted by the Oak Ridge Industrial Development Board, Oak Ridge City Council, and Anderson County Commission. Property tax revenues from the future development of the property would be used to repay a $13 million tax increment financing, or TIF, loan.

Oak Ridge National Laboratory manages AMSE for DOE. ORNL spokesperson David Keim said the City Council resolution is a very early step in what could be a long process.

“We’ll have to wait to see what happens, but we expect to continue operating AMSE for the foreseeable future,” Keim said. “We’re going to continue operating AMSE. That’s our immediate plan.”

At the same time, Keim said, “we need to remain open to new ways of fulfilling our public education and outreach mission, particularly with the arrival of the national park.”

It’s not clear how the establishment of the new national park, which also includes Los Alamos, New Mexico, and Hanford, Washington, could affect the negotiations. The National Park Service has had representatives stationed at AMSE for the new park. The resolution to be considered by City Council on Monday says DOE, the National Park Service, and the city are collaborating to determine the best way to preserve and interpret Manhattan Project history and to reach out and educate the public.

 

Keim said AMSE’s function is public education and outreach, and that’s not rooted to a specific building.

“It can be fulfilled in a variety of ways,” he said. “That’s a discussion the community needs to have.”

A series of four community meetings in 2014 were designed to gather input on the future of AMSE operations. Those meetings were sponsored by the City of Oak Ridge and the American Museum of Science and Energy Foundation.

AMSE is supported financially by three DOE/National Nuclear Security Administration sites in Oak Ridge: ORNL, East Tennessee Technology Park, and Y-12 National Security Complex.

Here are some conditions that would apply to the potential property transfer negotiations that could involve the city, DOE, GSA, and RealtyLink :

• If GSA negotiates with RealtyLink, the city would use commercially reasonable efforts to help a potential transfer or sale, and assist with local approvals, in return for “considerations that would enhance the DOE and NPS missions of public outreach and education.”
• If GSA negotiates only with the city, and the city is successful in getting the land, it would give RealtyLink a right to the first option to buy the land at a price of $200,000 per acre, or the value of the “consideration” divided by 17.12, whichever is greater. RealtyLink would have 180 days after a fully executed purchase agreement for due diligence and 45 days to close after that. RealtyLink would agree to develop the property in a way that is agreeable to both parties, but a development that maximizes sales tax revenues would be a primary focus for both the city and the developer.
• RealtyLink would agree to develop the property in a manner that would generate at least $140,000 per year in new property taxes by the 2021 tax year and at least an additional $150,000 by the 2024 tax year.
• In exchange for the city donating its 1.87 acres, RealtyLink will include, somewhere in the Main Street Oak Ridge project, at least two acres of community-oriented amenities such as, but not limited to, bicycle and pedestrian ways. RealtyLink’s expenses on those amenities would not be required by the city to exceed $374,000. The city resolution pointed out that the AMSE property and adjacent city-owned property “represent an important segment of central Oak Ridge adjacent to Oak Ridge Associated Universities, as well as the (Oak Ridge) Municipal Building, Civic Center Complex, and A.K. Bissell Park.”

Main Street Oak Ridge would redevelop the former Oak Ridge Mall as a mixed-use development that would include retailers, restaurants, residential units, and possibly a hotel. In May, Oak Ridge Mayor Warren Gooch said Dick’s Sporting Goods, PetSmart, T.J. Maxx, and Ulta will have new stores at Main Street Oak Ridge. Also, Belk and JCPenney are renewing their leases at the 58-acre site, and negotiations with other major retailers are continuing, Gooch said.

The mall is now mostly empty, but Belk and JCPenney remain. The two anchor stores would stay, and the enclosed space between them would be demolished as part of the long-awaited redevelopment, which previous estimates have said could cost $85 million.

During an IDB meeting on Monday, Evans, the city’s retail consultant, said attorney Mark Mamantov was authorized to finalize TIF documents last week. Execution of the TIF documents is part of the closing on the former mall property, which is now known as Oak Ridge City Center. A TIF (tax increment financing) uses new property tax revenues generated at a site to help pay for development costs.

See the Oak Ridge City Council agenda for Monday evening here. The agenda includes Wilson’s letter, a memo from Watson to City Council, and the proposed resolution.

The Monday night City Council meeting starts at 7 p.m. in the Oak Ridge Municipal Building Courtroom at 200 South Tulane Avenue. Watson said Wilson will be at that meeting.

More information will be added as it becomes available.

See previous Main Street Oak Ridge stories here.

 

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