Legislation was introduced at the June 8 City Council meeting that, if passed, would authorize the city to issue up to nearly $16 million in bonds, sometime in the future, to provide financing for the stalled Laurel Mall renovation project.

According to Robert Doory, the city's bond counsel, if the ordinance passes, the mall's developers will be in a better position to get a loan approved for the proposed $450 million mall makeover.

"Private lenders want to know the city is committed to participate in this project," Doory told the council.

Construction on the mall was slated to begin in January, but so far owners Somera Capital Management and AEW Capital Management have not been able to lock down the necessary financing.

"Mall ownership is actively seeking construction financing from a variety of sources," said Thomas Falatko, a Somera senior vice president. "Redevelopment timelines are predicated on securing the construction financing."

In December, council members approved a special tax increment financing (TIF) district at the mall that would allow the mall's developers to use 60 percent of future real estate tax increases for infrastructure improvements, such as a new parking deck at the mall and paving of nearby roads.

No new taxes would be imposed on residents if the TIF is approved, but bonds would be sold to investors to generate the TIF funds, which the new legislation would authorize.

"We need to send a signal that we are interested in having a viable project that will be good for the city," said Mayor Craig Moe.

The mayor and Doory made it clear that when and if the bonds are issued, the city would not be responsible for repaying them, but the developer would be, even if the project ended up in default or is sold.

"The bonds are not an obligation of the city -- never was or has been," Doory said.

Providing a large tax break to the mall's developers through a TIF is an idea that has faced resistance from many residents. Karen Lubieniecki, president of the Laurel Historical Society, called the proposed legislation "premature and unnecessary," given the current recession and tight credit markets.

"It's disturbing to see this reappearing when the markets are so bad," she said. "At some point the viability of this project has to be called in question. I think it has no chance of happening."

City officials admitted that a bond issuance at this time won't happen because the current market is not conducive to investors being attracted to such a deal.

"This is a step that Somera needs for its lenders," Doory said.

But longtime Laurel resident James McCeney suggested that the legislation be held off until Somera secures financing and new mall tenants. It's been months since the last tenant announcement, Mimi's Cafe, and the current ailing property is filled with empty stores.

"This is like buying a pig in a poke," McCeney said. "The (economic) landscape has changed and I wonder if we will get the same product we were told of several months ago."

City officials reminded residents that because the mall is being developed as a revitalization overlay zone, changes in the project's design must be approved by the council and the city's Planning Commission.

"Nothing's changed for us and my clients are anxious to move forward with the project," said Edward Gibbs, legal counsel for the project's developers.

Nationwide, industry experts predict retail construction will drop by 30 percent this year, and maybe more since a significant number of malls scheduled for completion in 2009 are being developed by financially strapped General Growth Properties, managers of Laurel Mall.

Bob Mignon, chairman of the Laurel Board of Trade, is satisfied that the city is protected against being strapped with bond debts if the TIF is approved. Where he has doubts is whether the upscale retailers that mall owners want can be convinced to locate here.

"I'm skeptical that upscale retailers think there's a good market for them in Laurel because there's so much good retail within a short distance of Laurel," Mignon said. "I'd like to see another group come in with fresh ideas and maybe build an office complex there that would bring more jobs to Laurel."

But Mayor Moe told the council he will do all he can to make sure the renovation plans for the mall are realized.

"We won't get all the stores we want ... (but) that's an important piece of real estate for the city and it needs to be first class and not something the public can't use," Moe said.

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