By DAWN WOTAPKA and A.D. PRUITT in Wall Street Journal
NEW YORK — After 15 years and more than $150 million invested, Taubman Centers Inc. has been dealt a major setback on its proposed Mall at Oyster Bay on Long Island.
BLOGGER COMMENT: $150 million of developer’s risk capital evaporates… no big deal… that is capitalism. Now consider the hundreds of millions dollars of construction materials and construction wages that will never be paid. Now ponder the annual impact of this decision: no mall means no jobs for hundreds of potential retail employees and the loss of massive real estate taxes that will not be paid over the useful life of this mall. New York just gave a Bronx Cheer to over a Billion Dollars in economic stimulus! Environmentalists take note… this is no virgin park, but the site of a former wire factory!
The New York State Court of Appeals — the state’s highest court — recently said it won’t consider the developer’s case to build a high-end mall that local activists bitterly oppose.
That leaves Michigan-based Taubman with a tough decision: admit defeat and sell the land, consider a mixed-use development or try again, increasing one of the most expensive mall tabs in Taubman’s nearly six-decade history.
Investors and analysts expect more details and, possibly a decision, in the company’s earnings discussion expected later this month.
A spokeswoman for Taubman, which has seen its stock plunge by more than 50% in the last year, said the company was disappointed and is “reviewing our options.”
It had requested permission to appeal an earlier ruling siding with the town’s demand for more environmental review, lengthening the development timeline.
The fight has taken a financial toll: In its fourth quarter, Taubman recognized a $116 million impairment charge, as it reported a quarterly loss.
“So far, it’s been cash out that went somewhere else instead of shareholders, so that’s a negative,” said Todd Lukasik, a Morningstar analyst. “Any payout from this is going to be years down the road, if ever.”
Taubman first discussed plans for the showpiece on a former wire-factory site just off a main highway in 1994.