The Marquis Shopping Center has a big empty space where a flagship tenant was and has piled on even more debt than what its former developers stumbled over, but York County is confident it is about to get a windfall of new revenue from the development.
So far, the sales and property taxes generated by the stores still open at The Marquis are covering the development's required payments on its debt, which could reach $33.9 million if the developer uses all of the $5 million addition the Board of Supervisors authorized last month.
County officials remain optimistic that the promise of a new retailer — Sam's Club — and the windfall of new sales revenue and businesses it could bring, will help send sale receipts and property taxes soaring to help recoup all the $33.9 million infrastructure cost of the development.
"The Supervisors have consistently, from the very beginning, supported the endeavors to enhance business development in that area," said York County Board of Supervisors Chairman Thomas G. Shepperd Jr. "We're going to do everything we can to help that business area succeed."
James W. Noel Jr., director of the York County Office of Economic Development, said the Marquis Community Development Authority plans to issue the bonds for the project this fall.
The authority is the entity the county set up in 2008 to finance necessary infrastructure for the project. The idea is to use tax revenue generated by stores in the center to cover that road, water and sewer work.
It was the authority that handled the 2012 debt restructuring that reduced the Marquis debt to $28.9 million.
Supervisors originally authorized raising $32.9 million in 2007 to be used on infrastructure in The Marquis.
Although the Board of Supervisors approves the authority's bonds, the county is not ultimately responsible for paying the interest and principal — that falls on the developer.
The process is that the developer forwards sales and property taxes from the Marquis to the county treasurer, who in turns sends the money on to MuniCap Inc. — a Maryland-based firm that then pays the owners of the bonds.
"A lot of CDAs that are developed throughout the United States have their hooks into the local and state governments," Shepperd said. "What that means is that when something fails, the city or the county or the state has to come in and bail it out. That was something we were very concerned with. So when we crafted the CDA, we wanted to be very careful to ensure that (if) it tanks, it's not going to take taxpayer money down with it."
Since the Marquis CDA was created in 2008, the Marquis retail development has pulled in $7.2 million in sales and property taxes.
So far, the development has netted $984,250 for fiscal year 2015. The fiscal year ended June 30, but the county is still collecting sales and property tax money.
Shepperd said while the development has had its setbacks, he's confident the new round of bond improvements will help bolster The Marquis, even if it means pushing the debt ceiling for the project higher.
"We have nothing to gain by that failing up there; we have everything to gain by that succeeding," Shepperd said. "What's bothered the board the whole time is that we've been very anxious that those big businesses … we don't want them to close."
'We did everything we could'
Plans for The Marquis originally called for more than 250 new retailers, more than 600 housing units and land set aside within the neighborhood for a new elementary school campus.
It was a reciprocal approach to growth in the go-go real estate market at the time: build commercial and the rooftops will follow.
And that's exactly what the first developers, Premier Properties USA, did — bringing the county a bevy of new big-box stores, such as Target, Kohl's, Dick's Sporting Goods and Best Buy, to the area.
However, there were plenty of stumbles along the way.
The development eventually was auctioned off to another development team, which in 2010 defaulted on a $1.3 million tax bill — money the authority was able to cover using sales and property tax receipts recouped from the retail development, and from money set aside from the CDA's debt service reserve fund.
Ultimately, much of the project stalled, subcontractors went unpaid for months, and the Great Recession settled in — leaving the promise of York County's most highly anticipated retail development mostly unfinished.
The development, minus the property owned by existing big-box retailers, including Sam's Club, was later acquired by Dallas-based Todd Interests — a real estate brokerage firm specializing in repurposing and developing various shopping development across the country — that owns more than 70 acres of commercial and residential space in the development.
But despite the new ownership, not much has changed at The Marquis, at least physically.
A timeline for the construction and opening of the new Sam's Club has not officially been announced, said Bill Wertz, Wal-Mart spokesman.
J.C. Penney closed its doors in April — leaving a 105,000 square-foot vacancy in the center. None of the 650 new housing starts have come to fruition, despite an uptick in new housing starts and sales occurring in the surrounding areas, and a lack of signage along Interstate 64 makes finding the shopping center difficult.
Shawn Todd, CEO of Todd Interests, did not return multiple phone calls and emails for comment.
Shepperd contends the best is yet to come, adding that recently approved subdivisions, such as the 220-unit Whittaker's Mill development, will help bolster the development. He added that County Supervisors have changed the name of the highway fronting the development to Marquis Parkway to help guide travelers to the center.
"We did everything we could to help that organization," Shepperd said. "The old saying that businesses follow the roads, we've loaded it up there. We know, Shawn Todd knows, that if we get a good grocery business, like Sam's Club, the synergy will draw restaurants … and what happens then, is people will come to the shopping center."
Big box blues
As county economic leaders are banking on the promise of trickledown commercial investment at The Marquis, national retailers are having another conversation: deflating their physical footprints, and scaling back rapid development.
In many cases it's already occurring in Hampton Roads.
Kmart and Sears are subdividing and leasing their space to other retailers — a notable trend in York County, when Kroger recently opened a new store in space formerly owned by Kmart in the Village Square at Kiln Creek Shopping Center along Victory Boulevard.
Kroger still is seeking a tenant to fill its existing space in the Kiln Creek center.
Home Depot is looking to sell off parts of its parking lots to fast food joints and auto repair shops while it slows plans for new stores. Walmart is opening more of its stand-alone Neighborhood Market stores across the region and country, as shoppers opt for smaller store concepts instead of its massive superstores.
Meanwhile, Target is closing some of its stores as it tries to balance its growing online sector and deflating sales at its U.S. stores. It remains unclear whether the Target at The Marquis is slated for closure.
Target officials could not be reached for comment Tuesday afternoon.
Chris Rouzie, senior vice president and regional manager with Cushman & Wakefield/Thalhimer, said Hampton Roads' marketplace is complex, adding that some big-box retail, such as grocery stores, are doing well in the region.
"These smaller stores want to be convenient," Rouzie said of the recent grocery store boon in the region. "They want their customers to get in and get out on a regular basis."
It's a measure, Rouzie said, that could draw other retailers to a development, but it can be risky for any retail project depending on its location.
"There's still interest in brick and mortar stores," Rouzie said.
It's interest Joseph Girard hopes will help fill the now vacant J.C. Penney building he owns in The Marquis.
Girard said he's still working to secure a tenant for his property — adding that he's been touting the new Sam's Club as a drawing point, although remaining mum about the prospective tenant and when he hopes to lease the building.
"I'm excited about the Sam's Club," Girard, who lives in New Hampshire, said. "We have potential tenants interested in building and hope to have leased as soon as possible."
Noel said he's confident The Marquis will see more accelerated success.
"Sam's Club is going to be a good draw for that development," Noel said. "I think with Sam's Club, more businesses will come, and that only means more money will be generated in the development."
O'Neal can be reached by phone at 757-247-4744.