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[whitespace] City, mall owners plot Vallco's renewal

Cupertino--Cupertino took the first steps in Vallco Fashion Park's redevelopment last week.

In a joint session of the City Council, Redevelopment Agency and Planning Commission, the city designated Vallco as a Redevelopment Survey Area.

By designating the survey area, the city can begin the study phase to determine the redevelopment assistance Vallco will need.

"We're starting a process that takes seven or eight months to complete," said Don Brown, city manager. "During that time all the final details of the finances will be worked out, all the other taxing agencies will be notified and consulted with, an environmental impact report will be completed and a detailed project plan will be developed."

Vallco, what was once a premiere shopping destination in the South Bay, experienced declining sales and high vacancy rates in the last decade.

Sales at mall shops peaked at $223 per square foot in 1993-92. Despite a strong economy, sales have dropped 23 percent to $172 per square foot.

Vallco is lagging behind sales at Stanford Shopping Center and Valley Fair. Sales at Stanford are more than $500 per square foot and more than $600 at Valley Fair. Vallco's sales are also lower than the average for West Coast malls which is just over $200 per square foot.

"Vallco has abnormally high business vacancies, abnormally low lease rates and high turnover rates," said Tim Kelly of Keyser Marston Associates, Inc., the city's consultants.

Vacancy levels have been on the rise for several years. At the end of 1998, Vallco had a 26 percent vacancy rate.

With recent renovations and expansions at competing centers--Valley Fair, Town and Country Village, Sunnyvale Town Center and Stanford--Vallco needs to redevelop to remain competitive.

For redevelopment to occur, the Richard E. Jacobs Group, Inc., Vallco's owners, the city's consultants and the city have all reached the conclusion that use of public funds are necessary.

"The basic theory is that without some public involvement financially, [redevelopment] would not happen and the mall would continue to decline," Brown said.

The study will determine how much public assistance Vallco will need in its redevelopment. February is the target date for completion of the study.

If the study is successful, construction of a new department store could begin in spring of 2000.

The preliminary plan for Vallco's revitalization includes four components--the opening of Macy's, adding another fashion department store, attracting a movie theater and upgrading the current retail merchandise mix.

The first of the four phase plan was completed last November when Macy's opened in the old Emporium location.

Negotiations to bring Dillard's into Vallco as the new anchor store are very far along, said James Eppele, the Jacobs Group's real estate development vice president.

The addition of a movie theater is not the only entertainment upgrades the Jacobs Group wants to make.

"We have plans for a new food court and other restaurants to cater to the shopper and the nearby office employees," Eppele said.

While the redevelopment of Vallco will take time, Eppele assured city officials about the Jacobs Group's dedication to the project.

Eppele cited the resurgence of Major League Baseball's Cleveland Indians as an example of perseverance and dedication. In 1986, the founder of the Jacobs Group purchased the Cleveland Indians and began a nine-year turnaround plan. At the time, the Indians consistently finished in the bottom of their division, but the team is now considered a model baseball franchise.

"We're asking for patience in the process," Eppele said. "It's not going to happen overnight, but we're going to work as hard and long to make this possible."
Michelle Ku

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Web extra to the July 29-August 4, 1999 issue of Metro.

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