Politics & Government

Eastland Mall land value keeps dropping as years go by

The Charlotte City Council voted 8-2 Monday to sell 11.4 acres of the old Eastland Mall site to CMS for a K-8 language immersion school.
The Charlotte City Council voted 8-2 Monday to sell 11.4 acres of the old Eastland Mall site to CMS for a K-8 language immersion school. tsumlin@charlotteobserver.com

About six years ago, the city considered buying the Eastland Mall site for $23 million but backed way. Two years later, the city paid $13 million for the same 80 acres in east Charlotte.

This week, the Charlotte City Council essentially gave away 15 percent of the site to Charlotte-Mecklenburg Schools.

That suggests that finding someone to develop the remaining 70 acres could mean the city has to give away the land, or potentially give it away along with paying for other improvements.

The City Council voted 8-2 Monday to sell 11.4 acres of the 80-acre Eastland site to Charlotte-Mecklenburg Schools for $650,000.

But the contract calls for the city to give that money back to CMS to help build a road and to clean the site, so the sale price was effectively zero. In fact, the contract calls for the city to also spend $51,500 tearing down a concrete wall that runs through the property.

CMS will also spend $400,000 to help build the road.

Whether the sale is zero dollars per acre, or $57,000 per acre, it’s a far drop from previous sales of mall property.

The city wants to remake the site with a park, along with a mix of homes, offices and stores. But that hasn’t happened yet.

For years, the city has told frustrated homeowners nearby that no one is biting.

“The market price is what someone will pay for it,” said Jim Gambrell, a commercial real estate broker. “I have not seen anyone, or talked with anyone who is looking to do something with that area. There are other parts of town that are so hot, that they are concentrating on those areas, like South End, or the area on the northern extension of the Blue Line. We are seeing the west Morehead areas really take off.”

People opposed to the sale Monday did not question whether the city got a good deal. They said a school wouldn’t be a transformative project to revitalize the area.

Council member Kenny Smith, who works in commercial real estate, addressed from the dais whether the deal made sense.

“In order for this site to be worth $2 million, you have to have someone willing to pay that,” he said. “There has been no private sector interest in the site.”

He added: “A lot of developers say they wouldn’t take it for free because of the tax liability.”

Here are the most recent transactions, or near transactions, for the mall site:

▪ In the fall of 2009, the City Council came close to buying the entire mall for $23 million but backed away.

At that point, the mall was failing and its demise was inevitable. Former council member John Lassiter was one of the elected officials who said the city should refuse, then offer $7.4 million.

No deal was reached. The price would have been about $287,000 per acre.

▪ In July 2010, the entire mall closed. Days before, the main section of the mall was bought by a Houston investor, Boxer Properties, for $2.3 million.

That included 32 acres and the main section of the mall, which included the small stores in between the anchor department stores, which were separately owned.

At the time, Boxer said it wanted to convert Eastland into a Hispanic-themed shopping center, which the company had successfully done in Texas.

Boxer bought the land for $71,000 an acre.

▪ A year after buying the property, in August 2011, Boxer had not made any moves toward redeveloping the mall site. But the company did have one interested buyer: the city of Charlotte.

The Charlotte Area Transit System has a small bus station on Central Avenue, on 1.4 acres that was owned by Boxer.

The city was paying $55,000 in annual rent, and it wanted to stop writing those checks. So it offered to buy the 1.4 acres for $771,150 – a proposal Boxer Properties accepted without any haggling.

The price was $550,000 an acre.

At the time, Andrew Segal of Boxer Property said the city was getting a fair deal because the bus station is on Central Avenue. He said the Eastland property at the back of the site has “negative value” – a statement that would prove prescient.

The school sale approved Monday is for land at the back of the Eastland property.

▪ A year later, in 2012, the city reached an agreement with Boxer and the owners of the closed department stores to buy the entire mall site. The price for the 80 acres: $13.2 million. The price was $165,000 an acre.

The city received two offers for the site. A movie executive, Bert Hesse, wanted to develop the site into movie studios, stores, offices and a hotel. The developers of the NC Music Factory proposed an outdoor entertainment complex, whose focus would be a 300-foot-long outdoor ski slope.

The city decided neither plan was credible.

▪ That led to Monday’s deal, in which the city agreed to sell 11.4 acres for a K-8 language immersion school.

The price: $57,000 an acre. Or one could argue the city received no money for the sale, other than an extension of Hollyfield Drive.

The city’s appraiser, The Hopkins-McElhannon Group, said the property was worth $1.42 million. The CMS appraiser, T.B. Harris Jr. & Associates, said it was worth $638,400.

Steve Harrison: 704-358-5160, @Sharrison_Obs