Northland Shopping Center: Financial problems

Financial Problems that lead to the closing of Northland Center in Southfield Michigan.

Part two of three

The City of Southfield, Michigan purchased Northland Mall from the court-ordered receiver, and the $27 million mortgage lien on the property was extinguished upon the City’s purchase of the property. Northland Center in 2015 had major financial and structural problems.

The receiver’s report recapped in The Detroit Free Press stated: Northland Center was losing approximately $250,000 every month, and nearly half of the tenants failed to pay rent on time. Northland had $3 million dollars in unpaid bills, which included $700,000 in overdue water bills. Its anchor stores Macy and Target closed, and $27 million was owed on a $31 million dollar loan.

Beyond major financial problems, Northland was in disrepair. The receiver reported that Northland’s water tower was broken, its roof and electrical systems were in poor shape, and an estimated $6 million or more was needed to return the Center to a functioning shopping mall.

The City of Southfield wants to demolish the buildings, remediate the site, and attract a mixed uses development to this site, which is located at Eight Mile and Greenfield Roads. The City of Southfield stated in Southfield Living Magazine that it will not have to increase taxes to purchase, demolish and clean up the property nor will the City have to increase taxes to replenish the funds being spent on the project. The funding for this project is as follows:

  • The City of Southfield spent $2.4 million to purchase Northland Center
  • The City of Southfield anticipates spending an additional $8-10 million on the demolition and remediation of the property.

In addition to taking advantage of available low interest and no interest government loans and/or grants, the two primary sources of funding being utilized are from the following restricted funds:

  • The Tax Base Initiative Fund (TBIF)—which can only be used for city redevelopment projects—has set aside $7.8 million over the past two years.
  • The Local Improvement Revolving Fund (LIRF)—which is reserved solely for capital projects—began in 1983 and has $15.3 million of which $12.5 million is in liquid assets.

Those in Michigan State University Extension that focus on land use provide various training programs on planning and zoning, which are available to be presented in your county. Contact your local land use educator for more information.

Part one – Proactive blight elimination and economic redevelopment

Part three – The shopping center turns 30

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