Hickory Hills Marketplace development plans have been squashed following the anchor tenant backing out and mounting missed payments by the developer, leaving Springfield Public Schools for now holding the bag at its former elementary and middle school property.
In a Dec. 7 letter to SPS, developer Paul Larino terminated his purchase contract for the former Hickory Hills School property at Chestnut Expressway and Highway 65. Larino cited an inability to secure Eau Claire, Wis.-based home-improvement store Menards as anchor tenant of the development he planned after agreeing to buy the district’s 16 acres for $4.45 million. Larino and his company, Larino Properties LLC, strained the deal by missing four scheduled payments, and after receiving alternate payment plans by SPS, he ultimately committed at least $225,000 to the district in nonrefundable earnest money, payments in lieu of interest and penalties, and covered the roughly $750,000 school demolition expense.
“We’d been hearing rumors that Menards was thinking of pulling out for a couple of weeks,” Springfield Board of Education President Tom Prater said the week after the board received Larino’s letter. “I think everyone on the board was disappointed that he couldn’t follow through on the purchase offer.”
In the letter – reviewed by the school board during a Dec. 11 executive session – Larino wrote, “The viability of the development rested on securing a major anchor tenant and adequate financing. Menards was under contract to purchase the anchor lot and construct a large home improvement store thereon. Menards terminated their contract with (Larino Properties) just a few weeks before it was scheduled to close. Also, we encountered numerous delays and scheduling issues that impacted our ability to secure bank financing for the remainder of the project.”
Larino did not return Springfield Business Journal’s calls, and Todd Chambers of Chambers Real Estate, who Larino had hired to market the Hickory Hills Marketplace, declined to comment.
Prater said the purchase contract expired Dec. 18, and he expects to have the property listed for sale around the first of the year. He said no real estate firm had yet been selected.
“The district is anxious to see this property developed commercially because the potential for personal property tax collection is there, the potential for new jobs in the community is there and the potential for sales tax revenue is there,” Prater said. “Those revenues have a positive effect on not just the school district, but the community as well.”
Prater described the nearly 50-acre development plan as “a complex deal” involving multiple property owners, a community improvement district established by Springfield City Council and a Greene County-administered neighborhood improvement district. The centerpiece of the plans was thought to be secured when a spokesman for Menards, which operates 262 home-improvement stores in 13 Midwest states, told council members in January it planned to bring 150 jobs to the development when it built its store on 16 acres at Hickory Hills Marketplace.
Now, not only is Menards walking away from the Hickory Hills development, but it also has shuttered plans for a second area location in Battlefield at Larino’s Wilson’s Creek Marketplace. A spokesman for Menards cited current economic uncertainty as the reasons for backing out.
“The concern we have is that economic conditions will worsen and that the federal government will impose more and more restrictions on business going forward, which is very discouraging,” spokesman Jeff Abbott said via email. “If one or both of these things happen, investing in new stores is fool hardy. Hopefully, we’re wrong. If and when economic conditions improve, and if we survive the “fiscal cliff,” we hope to be able to reconsider.”
Nearly 200 miles northwest of Springfield, Larino is moving ahead on a $26 million retail and entertainment center in Grain Valley, a suburb of Kansas City.
Grain Valley City Administrator Alexa Barton said the development’s anchor tenant, B&B Theatres, opened Dec. 19.
“We wanted it opened before the first of the year, and (Larino) was able to meet that schedule,” Barton said. “We are continuing conversations about future development in that area, and we are really excited about the movie theater opening.”
The silver lining for SPS, according to Prater, is the Hickory Hills property is now more valuable because the school facility has been demolished.
“I suspect when we have it reappraised, which should happen sometime in the next several weeks, we’ll find the value of the property has gone up and the taxpayers will be able to realize more gain on the sale of the school land now that the building is torn down,” Prater said.
School board Vice President Kris Callen estimated the cost of demolition at more than $750,000.
“Having the building demolished at Mr. Larino’s expense is a benefit to the district and our patrons. It saved us a significant amount of money,” Callen said.
