Gaithersburg imposes 12-month moratorium on Lakeforest Mall site

Gaithersburg imposes moratorium on Lakeforest Mall site

Site can’t be redeveloped for up to one year

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The Gaithersburg City Council voted Monday night to impose a maximum 12-month moratorium on redevelopment of the Lakeforest Mall property.

South Carolina-based developer WRS bought the core of the mall last year, but not the four anchor store sites: Lord & Taylor, J.C. Penney, Sears and Macy’s. All of those stores except Macy’s have since closed due to bankruptcies, but their parent companies still own the anchor parcels.

City officials have said for the past year that they prefer to impose a yearlong moratorium on the property to determine the best use of the property by amending the map designation in the city’s 2009 master plan.

WRS has consistently opposed the moratorium, arguing that it would potentially drive away investors and lenders.

The company expressed its opposition again in an email to the city on Aug. 12 from WRS Executive Vice President Kevin Rogers.

Rogers wrote that a 12-month waiting period for development means that at least one of the anchor landlords will enter into a long-term lease with a tenant to help offset the company’s expense.

“In their case, it’s probably more likely than not given that most of them have dozens if not hundreds of similar vacant stores that are sitting around empty costing them money. They are highly incentivized to monetize any of their vacant assets,” he wrote.

Rogers wrote that he hopes that doesn’t happen, but it is “very probable” and would “delay redevelopment for years.”

Under a reciprocal easement agreement from the 1970s, all owners of the mall must approve any changes made to the property. WRS has been trying for the past year to acquire all four anchor sites from their owners.

An agreement between the city and WRS on Sept. 20, 2019, delayed the moratorium by 150 days to give the developer time to acquire the four anchors and determine a future use for the mall.

The council granted WRS another 90 days in February when the developer failed to acquire all of the anchors.

In May, the council granted WRS another 90-day extension because the COVID-19 health crisis has slowed the developer’s progress in acquiring the anchors. At that May 18 meeting, council members said they empathized with WRS’s struggles, but weren’t optimistic the company could complete the transaction during the current economic crisis.

At Monday’s meeting, the council voted 4-1 to go ahead with the moratorium, which expires Aug. 18, 2021. Council Member Robert Wu was the lone dissenting vote.

Most council members said that they think the moratorium will be beneficial.

“I think now is a good time to hone in on the community, the city and the master plan and this time will be well spent clarifying what this area of the city will look like,” Council Member Laurie-Anne Sayles said.

Council Member Ryan Spiegel said the goal of the moratorium is not to slow or stop development. It is to prevent development from occurring that is “not full-fledged to the best and highest use of the map designation area” that could become an obstacle to more large-scale redevelopment, he said.

“After this next year of public engagement and map designation process, we will be able to invite a bigger, bolder, denser redevelopment of the mall area that we otherwise might risk if we if we don’t have the moratorium because of the possibility that some property owners in the area may try to take actions in the interim,” Spiegel said.

He said the city could lift the moratorium before one year is up, if WRS makes “significant progress” toward acquiring the anchor sites, and if the city makes progress with its process on amending the master plan.

Council Member Mike Sesma agreed.

“This is not a moratorium to stop things and put a freeze on them things for a long period of time, as we’ve seen in the region. This is one that I think has the potential to create greater opportunity,” he said.

Wu said he supports the map redesignation process, but ultimately voted “no” because he doesn’t think a moratorium is necessary to determine the best use of the property.

Dan Schere can be reached at daniel.schere@bethesdamagazine.com

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