Another Roadblock for Mall Project Resort Theaters' Bankruptcy Has Developer Seeking Another Extension

Article excerpt

The much-delayed Main Street Florida Mall could be facing more delays now that a key proposed tenant has declared bankruptcy.

And delays could lose it public assistance worth more than $17 million unless the city of Jacksonville extends a deadline for construction to begin.

Resort Theaters of America, of Shawnee Mission, Kan., a movie theater company expected to be an anchor tenant in the mall, declared Chapter 11 late last month.

The movie theater company said it is trying to attract additional financing in the next three to five months.

The collapse of Resort Theaters is important to the financing of the mall since lenders on retail projects typically justify their loans on the basis of cash expected to be generated from tenants.

The developer of the mall, Destin-based The Oliver Group, said earlier this year it has had problems financing the venture.

Meanwhile, The Oliver Group faces a Dec. 31 deadline to get construction under way or face not qualifying to receive $17.5 million in city economic development incentives after the mall is completed.

The company intends to spend $17 million on infrastructure such as roads and sewerage, which would be repaid by tax breaks from the city over a 15-year period.

The proposed mall would be part of a 500-acre, mixed-use development, including hotels, apartments and office space, and it would be the first of its kind on the Northside.

In July 1997, the Jacksonville Economic Development Commission agreed to give the project the tax incentives that would be spread over a 15-year period. The agreement grants the incentives when the mall is completed.

In June this year, the company received an extension to the city's July 2000 deadline for starting work. The extension was needed because the financing company The Oliver Group was working with needed more time to review the $120 million, 70-acre mall.

The construction process is expected to take about 14 months.

The mall was scheduled to be completed in March 2002, Bill Pope, president of The Oliver Group, said in September.

Pope was in Jacksonville yesterday pitching officials to extend the deadline to begin construction for another six months.

"There is really two positive components and one negative component of the story," said Mike Weinstein, executive director of the Jacksonville Economic Development Commission. The first is that the city of Jacksonville is not out any money while waiting for the project to get under way. "We have no money at risk," said Weinstein.

The second positive element is that Pope and The Oliver Group already have an investment to protect and, therefore, have a strong incentive to succeed, said Weinstein.

"We, as a community, would like to see it work as well, especially when we are not at risk," he said.

The negative is the problem with the Resort Theaters bankruptcy.

What makes the Resort Theaters' problem particularly ticklish is that some of the proposed mall's tenants have leases that require the presence of a movie theater in the mall, said Weinstein. …