Riverchase Galleria study gets lukewarm reception from city leaders

by

A proposal for a $241 million redevelopment of the Riverchase Galleria presented to the Hoover City Council Monday night was met with mixed reviews and a lukewarm reception from numerous city leaders.

Mayor-elect Nick Derzis and several City Council members who will be returning in the next term said that while they do want to see redevelopment occur at the Galleria, they found the study lacking.

The study, conducted by a national real estate, tourism and economic development consulting company called Hunden Partners, laid out a proposal for the former Sears and current Macy’s department store sites to be demolished and replaced with 542 apartments, an 1,100-seat Center for the Arts, 44,000 square feet of new retail space and 44,000 square feet of green space for gatherings.

The goal is to reverse the trend of declining visits to the Galleria campus by reducing the retail space, creating a more walkable mixed-use center, adding entertainment and adding a residential component that automatically boosts the number of people in the vicinity.

The proposed redevelopment is estimated to cost $241 million, including $146 million in a first phase that would include the former Sears site and $95 million in a second phase involving the Macy’s site.

Such a redevelopment of the Galleria likely would generate $396 million in net new spending over 10 years, 156 new jobs, $74 million in net new earnings, $6.1 million in new lodging tax revenue and $3.1 million in new sales tax revenues, the study said.

If no redevelopment occurs, sales taxes likely will decline significantly over the next 10 years, the study predicts.

Current Hoover Mayor Frank Brocato noted the study indicates that some level of public investment in the redevelopment would be essential and that the whole idea is only conceptual at this stage and dependent on buy-in by people who own the properties in question.

“If the people who own it don’t have any interest in doing it, it doesn’t matter what great ideas you have,” Brocato said. “They’re going to have to be on board with that as well.”

About $169,000 of the study was funded by the city, but the other $31,000 was split between Brookfield Properties (which owns the largest portion of the mall campus), Jim Wilson & Associates (which owns the office tower), Associa McKay Management and Hyatt Regency Birmingham – The Wynfrey Hotel.

However, key players in this redevelopment plan would be TransformCo, which owns the former Sears site, and Macy’s, which owns its store and two large parking areas.

Brocato said the proposal from Hunden Partners lines up with the city’s comprehensive plan, but it will be up to the new administration taking office Nov. 3 to review it thoroughly and see if they want to move forward with any of it and bring it to life.

MAYOR-ELECT RESPONSE

Derzis thanked Hunden Partners for its work on this study and for briefing him and his transition team on the company’s findings and recommendations, but there’s still a lot of work to do before determining if it will be advanced as recommended.

Derzis expressed concern over the narrow scope of the study, noting that it focused solely on the southern end of the Riverchase Galleria without addressing the larger property footprint or neighboring commercial areas, such as the adjacent Patton Creek shopping center.

“I was disappointed by the limited scope of the study,” Derzis said. “It did not include meaningful engagement with other property owners. It made no specific recommendations or assumptions for broader redevelopment. It also omitted case studies on how the city might act as a catalyst for investment and completely excluded Patton Creek. Most concerning of all, the public was not given a voice in this process.”

Derzis said he and his transition team have been actively pursuing and talking to people about how to redevelop those commercial areas.

“The revitalization of Riverchase Galleria and Patton Creek is the top economic development priority of my administration,” he said. “I am committed to working tirelessly to bring all relevant stakeholders, including our residents, into a transparent process. Together, we will develop and execute a solution that delivers results, makes Hoover residents proud and reestablishes our city as Alabama’s premier retail destination.”

Derzis said he has been encouraged by talks so far and the realization that bold action is needed.

“Redeveloping Riverchase Galleria and Patton Creek will not be easy,” he said. “There are multiple ownership interests and significant financial challenges involved, but failure is not an option for Hoover’s future.”

While more discussions are needed, Derzis said he doesn’t plan to conduct another study. “We’re studied out. We’re not going to spend any more money on studies,” he said. “We’re going to talk to people. We’re going to make things happen.”

According to the Hunden study, Hoover has already lost $75 million in retail sales since 2007, taking inflation into account.

COUNCIL REACTION

Councilman Casey Middlebrooks said the Hunden study was “underwhelming.” The idea to add apartments was not very imaginative, he said.

“I expected a little more inspired plans or at least offering multiple plans — different options,” Middlebrooks said. “I don’t think it necessarily fit the character of Hoover.”

He has heard from multiple who saw news reports about the study and agreed with those who don’t like the idea of apartments on the Galleria campus, he said.

He didn’t like that the study only considered the south end of the Galleria campus and that it didn’t include the Patton Creek shopping center. “Those two properties can complement each other,” he said.

There may be a need for some residential component in revitalization plans, but he prefers the idea of condominiums or townhomes and believes Patton Creek actually is the better fit for the residential part, he said.

Councilwoman Khristi Driver said she doesn’t think the study said much that people didn’t already know. She knew there are multiple owners and that it likely will take some type of city engagement, perhaps incentives, she said. She also wasn’t surprised to see mixed uses being recommended because that’s the trend in development circles, she said.

She wishes the study  had included a review of Patton Creek, but she knows Patton Creek owners were not available to participate due to some ownership changes that were taking place, she said.

“But overall, I think it gives us a place to start,” Driver said. “I would like to see us think about having developers come in and tell us what they think of the site. It’s one thing to have a strategy group, but it’s another to have people who do development in our area in Alabama come and say what would work for them.”

As for apartments, Driver said she was concerned about the apartment market currently being overbuilt in the Birmingham area and said those factors would have to be strongly considered before moving forward in that direction.

She would not want to see people move from other apartment complexes in Hoover to new ones and leave even greater vacancy in some of the older properties, she said.

Councilman Steve McClinton said he thinks the proposal by Hunden is a great idea, but he would have liked to have seen more ideas on how to implement it and a cohesive plan of how to make it work. Talking with current property owners was kind of a foregone conclusion, he said.

He also thought the study was lacking in breadth. “Patton Creek has to be part of the discussion,” he said.

McClinton said he’s also somewhat concerned about demolishing almost 500,000 square feet of retail space on the Galleria campus and replacing it with only 44,000 square feet of new retail space, he said. He’d like to know how the city is going to make up that revenue, he said.

Brocato said that concerns him as well, but the thinking is that having people living on the property and coming there for entertainment will help boost those retail numbers.

As for apartments, McClinton said he understands Hoover needs affordable and desirable options for young people to come back to Hoover, but he favors condominiums or townhomes more. Plus, he knows that Hoover has a lot of empty apartments and that apartments, unless restricted for people 55 and older, have an immediate impact on schools.

The Hunden study indicated that new apartments on the Galleria campus should not negatively impact enrollment in Hoover schools because new high-end apartments in areas like the Galleria typically draw more single people and empty nesters than families with children. Only 24% of rental units in Birmingham have children in them, the study said. McClinton said he suspects that percentage might be higher in Hoover.

Councilman Derrick Murphy asked whether the Hunden study took into account any ideas for transit to reduce traffic congestion or using stormwater control as a design element.

Steve Haemmerle, executive vice president of Hunden Partners, said the study did not analyze either of those issues. Malls typically have been built in suburban areas where transit was not highly utilized, he said.

Derzis said his transition team will continue digging into commercial revitalization ideas, and he hopes to hit the ground running as soon as he is sworn into office.

See a summary of the Hunden Partners study on redevelopment of the Riverchase Galleria here.

See the full Hunden Partners report.

Editor's note: This story was updated at 8:20 a.m. on Sept. 23 to correct a quote from Hoover Councilman Steve McCliinton. McClinton said he favors condominiums or townhomes more than apartments for the Riverchase Gallleria property.