Mall sinks but Union City rises

Failure causes ripples, too, as some businesses in the area around what is now Union Station Mall have learned since it shut down in November and was sold in foreclosure last week.

Jackie Lugo, the owner of Cash-It USA, has seen the stream of customers to the check-cashing firm about a half- mile from the mall slow from 120 a week in 2009 to about 35 now.

So she shut off the heat, and her four children no longer go to day care — instead, they go to work with Lugo. They’re the only ones there since Lugo let her employees go.

“It’s a fight because of the mall closing,” Lugo said. “Everybody just fed off that attraction. Nobody has anything to feed off; everything’s just dying.”

Union Station closed Nov. 2 when Georgia Power disconnected the electricity because owner Lee Najjar had not paid his bill. Two anchors, Sears and Macy’s, own their own land and have remained open, though Macy’s announced last week that it plans to close the store. A going-out-of-business sale begins today.

The mall had been struggling for some time, with newer shopping centers in Fayetteville and Newnan luring customers away. Business was not booming, but vendors said they still had enough foot traffic to make a go of it.

But the pain isn’t universal.

As the mall’s star faded over the years, Union City stopped depending on it as a revenue generator. This year it adjusted its budget to reflect that. (Until recently, the mall owed about $250,000 in back taxes to the city. The debt still isn’t fully paid.)

Steve Rapson, Union City’s city manager, who as a teenager took his future wife to the mall on dates, calls Union Station’s troubles “disheartening from a city’s point of view.”

But Union City officials don’t seem to be wringing their hands. They have been too busy welcoming a stream of new business to the growing community. More than 2,000 new jobs have come to Union City in the past 18 months. Kraft Foods created 500 jobs at its warehouse and distribution center of nearly 1 million square feet near Union Station. The Seattle biomedical firm Dendreon has invested $70 million in a 155,000-square-foot facility that is making a new cancer drug and created another 500 jobs in the area, some of which pay $80,000 to $90,000 a year.

Rapson credits the city’s Opportunity Zone for the flood of jobs. The zone is a state designation that lets the city give a tax credit of $3,500 per job tax credit to new businesses that move to Union City and hire more than two workers. The program has been around since 2004 and helps communities combat blocks of boarded-up businesses and factories, a scenario that’s become more common with the recession of the past few years.

In 2009, Union City became the first city in metro Atlanta to be approved for a zone, which is set up in communities with a poverty level of at least 15 percent in a census tract block. The program is administered by the Georgia Department of Community Affairs.

Since 1999, the population of Union City has grown from about 12,000 to just over 20,000, and the city expects to add 5,000 more residents by the middle of the decade. By then, city officials expect Parkway South, a 9-mile corridor that southside officials hope will become the “Ga. 400 of the south” to be more of a reality. The “high-activity” corridor would link major roads with rail and air (Hartsfield-Jackson International Airport). For now, it’s a 2-year-old dream that has been deferred by the bad economy.

What will become of the mall is unknown.

Rapson is waiting for what’s coming and is open to any ideas and visions the new owner may have for the mall.

A positive sign, he said, is that the firm that took over the mall in receivership in November, Colony Capital, paid half of the mall’s $250,000 in back taxes — a debt accumulated over several years — in late December. The rest is expected to be paid to the city by mid-March, he said.

Colony Capital, a California investment company, shares an address with MB REO-GA Retail, the group that bought the mall last week for $5 million. Colony also shares an address with the commercial real estate venture that owned the mortgage on the mall after the original lender, Alpharetta-based Integrity Bank, failed in August 2008.

Lisa Baker, a spokeswoman for Colony Capital, said the company will not comment on anything related to any individual property in its portfolio.

Some Union City residents and former mall tenants said they would like to see Union Station reopened. Others have suggested more ambitious plans.

Linda Johnson, co-chairwoman of Union City’s Zoning Commission, would like to see the mall become a walkable residential community.

Marcus Hardy, the owner of the Lucky Stars tattoo parlor that relocated after Union Station closed Nov. 2, said he simply hopes it doesn’t become a flea market.

Paul Lukez, the owner and principal of the Massachusetts urban design firm Paul Lukez Architecture and author of “Suburban Transformations,” said an empty mall gives the community a chance to correct the mistakes of earlier development. He and colleague Chris Zarek say dead malls might sometimes become medical centers, loft space for artists, schools or government and cultural centers.

Zarek, in an e-mail, said whatever happens with the mall, it should be tied in better to the community. He believes reopening it as a shopping center probably isn’t the best choice.

“One thing to keep in mind, from the community’s perspective, should be a desire to break the cycle of mall cannibalization,” he wrote. “Camp Creek Marketplace steals shoppers from Union Station, which then revamps to steal shoppers from the next struggling mall property, and so on. Simply trying to update the fixtures and compete for the same vendors may be the riskiest avenue for the new owners of Union Station to try.”

And if they do succeed, he emphasized, “it probably means failure for another property nearby.”