The Longmont Urban Renewal Authority will have to put up $6.3 million to acquire the Dillard’s store at Twin Peaks Mall, a court-appointed commission ruled Monday.
As soon as LURA deposits the funds with the Boulder District Court — with money from NewMark Merill — it will take title to the store and NewMark can begin converting Twin Peaks into an outdoor mall, Village at the Peaks.
A jury will set a final price in a trial scheduled for April. Meanwhile, Dillard’s can withdraw funds from the court deposit, but the amount will count against the final jury award.
LURA filed last spring to condemn the store so an $80 million mall renovation could proceed. During negotiations with Dillards, the authority offered $3.6 million, but in court proposed a price of $3.03 million, the value estimated in December by appraiser Harold McCloud.
In negotiations with both the authority and mall owners NewMark Merill Mountain States, Dillard’s asked for $5 million. Once matters went to court, the retail chain ordered a formal appraisal by Larry Stark, president of National Valuation Consultants, who came back with $6.3 million.
Dillard’s vice president of real estate Chris Johnson called the commission’s award a “vindication,” though not the victory the store wanted.
“My goal was really to keep the store open,” Johnson said. “All we did was operate a store that had been in Longmont for 16 years. We did not think of closing. And now we’re going to be.”
That closing was ordained in August when Judge D.D. Mallard ruled that LURA could claim the store’s title after a preliminary price was set. A closing date for the store has not yet been announced.
LURA officials declined to comment on the decision.
The amount is more than twice the valuation set this year by the Boulder County Assessor’s Office, which valued the Twin Peaks store at about $2.9 million for tax purposes.
In court, Stark said he reached a value based on the income the Dillard’s store would likely generate if purchased by an investor and leased out for retail, while McCloud used a cost approach that started with the land value and then added in the depreciated value of any improvements.
Both sides also used examples of other sales that they considered similar to what Dillard’s would bring on the open market. Stark’s samples drew from other major retailers, such as Home Depot or Kohl’s, and were mostly pulled from out of state; McCloud’s concentrated on Colorado properties, mostly former retail sites that had been bought and turned into something else.
LURA’s attorneys attempted to draw from Dillard’s own information to support the urban renewal authority’s numbers. They noted that in a 2009 property-tax protest, the chain valued its own store at $3.8 million, and that a 2007 sale of a second Dillard’s at Twin Peaks Mall — formerly a Joslin’s — was made for $4 million to the mall’s then-owner, CBL & Associates.
Dillard’s attorneys argued in return that the 2007 sale had been a friendly one for a CBL mall improvement project that never happened, due to a sale of the entire mall to Panattoni Development for $33.6 million later that year. If that second sale was worked out on a square-foot basis, the attorneys argued, the “Dillard’s South” store actually sold to Panattoni for about $6 million.
Johnson said the tax protest had been a “backward-looking” value, based on the store’s value during 2007 and 2008, when the economy began to slow and then crash.
“The methodologies you use for an appraisal are a lot different than what you use for property tax,” he said.
Two members of the court commission — attorneys William Gray and Marcus Painter — were nominated by Dillard’s; the third, commercial real estate broker Scot Smith, was a LURA nominee.
Scott Rochat can be reached at 303-684-5220 or srochat@times-call.com.
