OUTLETS of Hostility

Egoconsumed developers, lobbyists, flacks, detectives and lawyers generate fear and loathing a la Barbarians at the Gate. The reason? Two proposed outlet malls the Valley doesn't really need.

It is a showdown the likes of which Arizona has probably never seen. The two teams have been hand-picked, with money seemingly no object, from the cream of the Valley crop. The rosters read like a Who's Who of Arizona business hotshots--engineers, lobbyists, public relations flacks. Consultants of every stripe, from traffic to environmental to political. There's even a private detective or two in the mix.

And the lawyers. With this much at stake, there are certainly lots of lawyers buzzing around. All these lawyers are specialists. Zoning specialists, environmental specialists, regulatory specialists, contract specialists and media specialists. Specialists in the administration of, and defense against, defamation.

Talk to a few of them, and it quickly becomes apparent that they all know one another. This morning, they're savaging each other in court or in the newspapers; tonight they'll be sipping Cutty Sark at the Biltmore and talking about their new eight-irons. They're hired guns. It's just business. Nothing personal.

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With so much intrigue and political hackery and money swirling around, and so many marquee names on the list of combatants, what they're all fighting about may seem anticlimactic.

They're all fighting about a mall. An off-price outlet mall.
The most basic question is usually the least entertaining one, and so it is here: Does the Valley really need another mall? Even another outlet mall? Even a bigger, busier, noisier outlet mall, with giant television screens and dozens ofmovie theatres and even a 700,000-gallon aquarium--er, sorry--"multisensory marine science center"?

It doesn't matter. The Valley's getting another mall. That fight was over before it even started. This fight is about where the mall will go.

Two national mall development giants--Petrie Dierman Kughn of McLean, Virginia, and Taubman Realty Group of Bloomfield Hills, Michigan--and Grossman Properties of Phoenix are hoping to develop the $100million, 100-acre Great Mall of Arizona at I10 and the Superstition Freeway.

Just four miles to the south, the Mills Corporation, a huge developer based in Washington, D.C., plans to put an even larger mall at I10 and Ray Road in Chandler. If it gets off the ground, it will be called Chandler Mills.

Both development groups say they have the experience and the tenants to make their plans work, even as both acknowledge that the Valley retail market can only support one of them. Somebody's going to make a lot of money, they all say, and somebody's going to lose a lot.

It may be an understatement to say that the scrap has reached ludicrous proportions; each development group has spent untold thousands so high-priced, high-profile locals can lob suits, countersuits and disinformation at one another.

Although the potential financial rewards for the victor are indeed huge, one thing just about everyone agrees on--off the record--is that the fight has become less about money and more about ego.

Retail development is a highly speculative enterprise, something akin to oil wildcatting. It is not the kind of business good losers get into.

"I have never seen, in my 20-plus years ofrepresenting developers, one developer go after another with so much vigor and misinformation," says Paul Gilbert, a high-profile zoning attorney who is working on the Chandler proposal. "I do not like what Isee happening."

But representatives for the Tempe proposal make the same kinds of comments, in virtually the same words.

For the cities involved, the struggle is less acrimonious, but hardly friendly. The stakes are too high. Tempe, where PDK and Taubman want to put the Great Mall of Arizona, is rapidly running out of open land to develop, and needs to squeeze every last sales-tax dime it can out of what acreage it has left.

Chandler, a smallish town sporting big-city ambition, wants to put Chandler Mills right next to Intel and Motorola in its municipal trophy case--nearly doubling its own annual sales-tax revenue in the process.

In their efforts to keep their respective projects on the fast track, both cities have cut corners and massaged zoning and approval processes and offered the developers hefty inducements to hurry up and break ground.

Ultimately, though, both sides agree on one thing. Neither group will start up the bulldozers until it's holding signed leases from enough big-name tenants ("anchors" in the retail vernacular) to secure financing. Neither developer has the $100 million or $150 million it needs for its project jangling around in its pockets. Banks aren't eager to lend that kind of money without ironclad lease commitments from retailers.

The ferocity of the fight already has both developers bleeding. PDK-Taubman wanted to break ground July 1, with completion scheduled for October 1996. How far back the groundbreaking has now been pushed, no one at the company will say.

The Mills project also was supposed to be under construction by now, so it would be finished at about this time next year. That timetable has been pushed back, too, and Mills and its spokespeople are as tightlipped about firm groundbreaking dates as their competition.

They are quiet about it because it is the key to the fight.
All of the lawsuits, disinformation and politicking on both sides are designed to do one thing: spook the other side's prospective anchors and delay groundbreaking. Both sides know that whoever starts moving dirt first will likely win the race of the outlet malls.

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