Greendale is taking a major step toward buying Southridge Mall’s former Boston Store — which could bring new uses to the redeveloped property.
The Greendale Community Development Authority voted 6-0 Friday to declare the vacant department store as blighted.
That legal designation is a step toward acquiring the property through eminent domain. That state law allows local governments to force the sale of dilapidated properties that harm a community’s growth.
The authority’s recommendation needs approval from the Village Board.
Meanwhile, the village has been negotiating with the building’s owner to acquire the property and is close to securing a purchase contract, said Alan Marcuvitz, the authority’s attorney.
“Hopefully, we’ll have more good news to report soon,” Marcuvitz told board members.
If the village obtains the property, it would then market the site to prospective buyers, he said.
Those new owners could reuse the 219,775-square-foot building, Marcuvitz said, or demolish it and redevelop the entire 14- to 15-acre property — which would include the parking lot.
Those steps are designed to preserve the $15.5 million property tax base represented by the building and its lot, he said.
Marcuvitz also said a redevelopment of the property could involve a new tax incremental financing district to help pay for the project. That would require additional authority and board approvals.
The building has been vacant since Bon-Ton Stores Inc., the operator of Boston Store and other department store chains, was liquidated in 2018.
That led to a foreclosure by its lender, a Bank of America affiliate, which acquired the property in October 2019.
The property owner in December objected to the blight proceedings.
However, Eric Hatchell, the property owner’s attorney, said Friday that Marcuvitz’s comments about the pending purchase agreement are accurate.
Meanwhile, Southridge is facing other challenges.
A 2020 report from New York-based Kroll Bond Rating Agency said the mall’s ownership— which doesn’t include the Boston Store building — would be transferred from an affiliate of Simon Property Group Inc. to its lender through a deed in lieu of foreclosure.
Southridge’s financial performance has deteriorated significantly since Indianapolis-based Simon, one of the nation’s largest mall operators, used the property as collateral for the loan, the report said.
It also said Southridge had a 73% “in-line” occupancy rate. That rate doesn’t take into account the mall’s department store anchors.
Along with the former Boston Store, the former Kohl’s store has been vacant since 2018— when the retailer opened a new store at the nearby 84 South development, in Greenfield.
Greendale has a lot riding on Southridge.
The village provided $12 million to help Simon’s earlier efforts to redevelop the mall, which included opening Macy’s in 2012.
Around $5.4 million is still owed and is to be repaid by the improved mall’s property taxes by 2024.