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The city of Charlotte won't be buying Eastland Mall for redevelopment.
The City Council told staff Monday night in closed session to drop the issue by a 9-1 vote, with the city and the owners far apart in a purchase price.
Council members had previously directed city staff to offer $7.4 million for almost the entire 90-acre site, but the owners wanted the city to pay the taxable value of the land, which was about $23 million.
The vote probably means the city will forfeit $400,000 in options it spent to buy the empty Belk and Dillard's department stores in 2008.
"I believe now isn't the time to purchase the property," said Charlotte Mayor Pat McCrory, a Republican, after council members emerged from their private meeting.
N.C. law allows council members to discuss some items, such as real estate acquisition, behind closed doors. Afterward, McCrory publicly announced the results of their vote.
Mayor-elect Anthony Foxx, a Democrat, said he doesn't think the new council taking office Dec. 7 will change the city's position. Foxx declined to say whether he would have bought the mall for $7.4 million had the owners accepted, though he said a lower price would have made the deal "easier."
Democrat Nancy Carter, who represents the east Charlotte neighborhoods surrounding the failing mall, was the lone vote to keep a possible deal alive.
"I don't know what's going to happen now," Carter said. "I think there is so much potential there."
The city hopes that Eastland is transformed from a failing mall to a mixed-use community. It planned to partner with a private developer to improve the area by possibly building a streetcar down Central Avenue and committing $17 million in streetscape improvements.
The city was considering buying the entire site to make it more attractive for a developer. The Eastland site has at least 10 owners, and the city was concerned that negotiating with all of them would be too difficult for a developer. In buying the site, the city hoped to create one parcel - with one owner.
Republican council member Andy Dulin said he didn't support the $7.4 million offer, though he described the offer as a "hard business deal." But he said another problem with the city buying the mall is that no one is building anything today.
"There is zero interest in this nationally or locally," Dulin said.
In addition, he said, the city had estimated it would cost $10million to demolish it.
The mall, built in 1975, was once one of Charlotte's prime shopping destinations. But Eastland has lost customers to other malls, such as SouthPark, and three of its four anchor stores are now empty. By one count, there are 59 small stores operating in the mall, though it's unclear how long many of them will stay in business.
In spring and summer 2008, the city took out options to buy the empty Dillard's and Belk stores for $3.5 million each. The city hoped its investment would entice a private developer to buy the rest of the mall, and the two could enter a public-private partnership.
After the economy went deeper into recession in the fall of 2008, the city paid to extend the options. They expire at the end of March 2010.
Ohio-based Glimcher Realty Trust, which managed the in-line stores between the anchors, had been trying to sell its piece of the mall since 2005. In September, it turned over the property to its lender, LNR Property Corp. of Miami Beach.
Dulin said LNR was more motivated to sell than the owners of the anchor stores. He said Dillard's, Belk and Sears don't owe money on their mall property, and didn't want to accept a lower sales price.
Possibly complicating the negotiations were the prices on the original options. The city had pegged the price of the two department stores at $7million, and then offered $7.4 million for the entire mall.
Dulin said the city was considering buying almost all of the 90-acre site, except for a few parcels on the corner of North Sharon Amity Road and Central Avenue.
The council's decision means the property owners must still pay county and city property taxes, which are due in January. The tax bill for the entire 90-acre site is $1.04 million, according to property records.
McCrory said the mall owners should either spend money and improve the site or tear it down.
Democrat Warren Turner didn't attend Monday's closed session meeting.
