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We are working hard to bring new merchants, service providers and restaurants to the City of Oak Ridge in the hope of making Oak Ridge a better place to live and work. Our goal is an economically, technically, and aesthetically successful revitalized downtown center. We have recently encountered mixed signals and discouraging news relating to our plans to redevelop the mall and would like to take this opportunity to inform the citizens of Oak Ridge regarding the progress of our redevelopment plans. First, a few background facts.
The Oak Ridge Vision - Beginning in 1998, Oak Ridge officials sought the assistance of professional consultants to develop a planning process aimed at involving local citizens in identifying a vision for future of the City of Oak Ridge. After many meetings between city officials, professional planners and citizens of Oak Ridge in 2001, the Oak Ridge City Council adopted the Oak Ridge City Center Master Plan.
This Master Plan does not require any specific land owner to develop or remodel its land, it does, however, provide the "official" plan for the systematic development (and/or rede-velopment) of approximately 293 acres in the heart of Oak Ridge. The Master Plan is intended to serve as the guide post for the future growth and development of the city, and includes conceptual ideas as well as specific land uses for the "City Center". It is in-tended to guide government, citizens and the private real estate development community regarding how to develop and/or redevelop the key areas described in the Master Plan. The guidelines set forth in the Master Plan included recommendations regarding traffic, public land use, retail/commercial land use, office land use, housing development, archi-tectural design issues, pedestrian facilities, and signs.
While the Master Plan was intended to be conceptual, it provided very specific goals set by skilled and experience professionals to foster sustainable real estate development in the center of Oak Ridge. The Master Plan states "projects within the boundary [of the 293 acre "City Center"] must conform to the Master Plan and its designated land uses and design guidelines." The Oak Ridge Mall, which we purchased in June of 2003, forms a significant portion of the property described in the Master Plan, being approximately 65 of the 293 acres addressed in the plan. Since our purchase of the Oak Ridge Mall, our team has invested large amounts of time and money to develop a complicated and exten-sive renovation plan for the property that conforms with the guidance provided in the City Center Master Plan.
Our Investment in Oak Ridge - Our group of investors was formed in 2002 for the sole purpose of exploring the acquisition of the Oak Ridge Mall. We were impressed by the progressive and forward looking nature of the City Center Master Plan, and were confi-dent that there was a financially feasible opportunity to redevelop a struggling property and to provide the citizens of Oak Ridge with what they desired, as expressed through the Master Plan.
We named our company the Oak Ridge City Center, LLC because we intended to do our best to redevelop the mall in accordance with the Master Plan so that it forms the town center. We relied on the fact that the City Council adopted the Master Plan by formal vote as the basis for our understanding of what the citizens of Oak Ridge wanted and our belief that future development in the City of Oak Ridge would be done in accordance with that plan. We were so confident that we were giving the city what it wanted that we asked for some public funding to assist with our redevelopment efforts. As expected, there was some amount of controversy among the residents of Oak Ridge surrounding our request, and the issue was the subject of a referendum. After the referendum failed, we still believed in our plan, and with encouragement from some city officials, purchased the Oak Ridge Mall in June, 2003. Prior to closing on our purchase of the mall, several city officials assured us that they would try to put some incentives in place to help ensure the property's redevelopment in accordance with the Master Plan. In December 2003, the Oak Ridge City Council passed a resolution approving certain property tax abatements that are to become effective when the mall is redeveloped. We sincerely appreciate and are thankful for that support.
After the City Council passed the property tax resolution, we began planning our rede-velopment of the mall in earnest. Since January 2004, we have spent over one million dollars planning the entire project and implementing the first phase of the redevelopment, which involves the renovation of the building currently occupied by the office supply store, Staples, so as to improve its appearance and provide additional space where we are relocating the few tenants remaining in the interior of the mall. Our final set of plans and specifications for the redevelopment of the Mall, formally known as the Oak Ridge City Center PUD (Planned Unit Development) was prepared in accordance with the Master Plan and was approved by the Oak Ridge Planning Commission in the fall of 2005. We are currently implementing phase one of our plan and are relocating tenants from the inte-rior of the mall so we can implement phase two, which involves the demolition of the existing enclosed mall space.
The Future - For now, however, we have decided to put our redevelopment plans on hold and we want to explain how this will effect the Oak Ridge Mall and why we made the decision to suspend the overall redevelopment plans. By putting our plans on hold, we do not mean to suggest that work on the project will cease completely. We will, how-ever, not be tearing down the interior mall space on the timetable we originally projected. We feel that it is necessary to stop our plans at this point because we no longer under-stand whether the city supports the implementation of the Oak Ridge City Center Master Plan, which forms the very basis of our redevelopment plans.
A recent vote by the City Council, for instance, supports relocating a creek to allow for the expansion of a strip mall shopping center in close proximity to the Oak Ridge Mall property and the rezoning of an undeveloped green space next to the Museum of Science and Energy for the construction of another strip shopping center. Taken together, these expansions could result in more than 200,000 sq. ft. of new retail space which could seri-ously jeopardize our ability to lease the space in our project. We do not expect that our development be the only "kid on the block" or that we receive unreasonable preference from the city, but we are concerned that Oak Ridge cannot support that much new retail space and are reluctant to invest additional money when the landscape seems to be changing around us. While we support renovation and improvement to the Museum, we do not believe the changes which the City Council recently approved are consistent with the ideas described in the Master Plan. They are in our minds, material changes in the rules for future development as we understood them. Because of these changes, our team now wonders if our development plans are taking the proper course and whether those plans, if implemented, will provide a return on our investment sufficient to justify moving forward with such a complicated and expensive project.
Simply stated, we are unsure of the city's continued commitment to the Master Plan. We have asked this question of city officials and have been assured of the city's commitment, but we are left asking how those statements of commitment to the Master Plan align with recent actions and statements made by city officials that seem to materially vary from, and in some instances, directly contravene the goals outlined in the Master Plan.
Our planned redevelopment will require the investment of tens of million of dollars over and above our initial investment in the mall. While there are those citizens and officials that tell us "you should just proceed as it will take a few years to get the Museum land developed", such a statement misses the point as far as we are concerned. There was a Master Plan approved that advocated clear design and land use criteria governing how Oak Ridge will change and grow for decades to come. Overbuilding of retail facilities is not a part of that plan and vacant retail shop space is not the legacy with which we intend to burden the City of Oak Ridge or our investors. We have a great stake in Oak Ridge's future, and are sincerely committed to improving the city with a successful downtown revitalization.
Is the city committed to this Master Plan, as was our initial understanding, or are there other criteria that are not spelled out for the developers who wish to operate in Oak Ridge? We based much of our design criteria and planning around, not only our private investment, but upon land uses and design criteria for the entire Oak Ridge City Center described in the plan. Now, it appears to us that the Master Plan, which, at no small ex-pense, was carefully crafted by urban planners and the citizens of Oak Ridge, only takes up space in a drawer. Some city officials we spoke to told us that they have not even read the document.
While we hopeful of implementing our plan, we will not be able to do so if the potential results do not justify the investment. We feel that the prudent course of action, for our-selves and for Oak Ridge, is to stop our progress for the time being until we are assured of the city's commitment to the guidance under which we prepared our redevelopment plan. Hopefully, we can get a better understanding of what direction the city officials want to see the city center take in the coming months. At this point, we are uncertain what direction that will be and whether city officials will continue to rezone other vacant or under-developed parcels creating even more new retail zoned land.
It is our recommendation that the city not change the Master Plan without first seeking input from its citizens and professional planners. We recommend that if changes are to occur in the Master Plan or the strategy set forth in that plan, then those private develop-ers, like Oak Ridge City Center, LLC, that have invested in property within the City Center and have clearly established our intent to redevelop property in conformity to the Master Plan, should be consulted about these changes and their potential impact on our developments and the retail industry within the city as a whole.
We want to be clear. There is nothing inherently wrong with developing more strip cen-ters in Oak Ridge and we are not asking for preferential treatment. We are, however, seeing what we believe is a radical change from the intentions outlined in the Oak Ridge City Center Master Plan. If the intent is to deviate from that commitment, then provide definitive information about the changes so that we can better understand and evaluate the implications to our project plans. We recommend that this process involve public input and professional planning so changes and their long term impact are well thought out and not driven by the pursuit of tax dollars. Once we better understand how the city council plans to support or modify the Master Plan, we will be in a position to make rational and definitive decisions regarding how we need to invest additional money in our redevelopment plans.
Our group is very excited about the future of Oak Ridge. While we cannot tell you ex-actly how this will work out, we can say that we have already invested large amounts of time and money, not only in the mall, but in the future of Oak Ridge. Oak Ridge is a wonderful city and we are pleased that we have invested in the community. We under-stand that the success or failure of our plans for the mall are dependant, in large part, on community decisions that either support or do not support a downtown revitalization project. That is why we have tried to explain our position in this way. We want Oak Ridgers to know that we are committed to the future of Oak Ridge and will continue to make all reasonable efforts to resolve the issues outlined herein.
We wish everyone a very merry holiday season and happy New Year.