Ambassador Caffery at Kaliste Saloom Road | Lafayette, Louisiana
The What And The Why
Ambassador Town Center is a newly constructed 430,000 sf regional power center in the heart of Acadiana, anchored by Costco Wholesale. Stirling Properties set out to fully satisfy the pent-up demand at this highly trafficked location by placing several new-to-market national retailers and restaurants, such as Dick’s Sporting Goods / Field & Stream, Marshalls, HomeGoods, Nordstrom Rack, Chuy’s, BJ’s Restaurant and Brew House, Red Robin, and several others.
In December of 2014, through a joint venture with CBL & Associates Properties, Inc. (NYSE: CBL), Stirling Properties acquired 59 acres of a 120-acre undeveloped site in the heart of South Lafayette’s main growth corridor and began construction on the retail center and infrastructure. We completed our $85M scope of work 15 months later, opening the center in March of 2016. Within six months of opening, Ambassador Town Center was 100% leased.
This development had a litany of challenges starting with delineated wetlands which were required to be fully mitigated at a time when the Corps of Engineers was in a battle with Congress over proper methods. Additionally, a development of this magnitude required significant improvements to public infrastructure, made harder to attain by a changing local political environment and a marked downturn in the local economy as oil prices had begun to crash in the months leading up to closing. This created some uncertainty in our ability to close the deal and fully lease out the space to achieve investor returns.
Once in construction, we were hit with the wettest spring on record, threatening timely delivery to our tenants and leaving the center vulnerable to black-out periods and kick outs. Costco’s site development specifications were particularly onerous considering the nature of the soils and ground water issues, making it difficult to get out of the mud (literally). As a result, this was one of, if not the most difficult contractor and tenant coordination jobs we have ever undertaken.
Working closely with the Lafayette Economic Development Authority to solve the infrastructure problem, we pursued a little-used tool known as Payment In Lieu Of Taxes (PILOT). With the PILOT, the property would be owned by the local Industrial Development Board and controlled by the developer via a combination of ground leases and cooperative endeavor agreements to pay back the privately financed infrastructure improvements. To get the City of Lafayette on board with the concept, we brought the remainder of the master tract into the PILOT program to deliver much-needed roadway connections from Frem Boustany to Kaliste Saloom. This also provided the Public Right of Way for a future widening of one of those roads to accommodate additional capacity when extended farther off site to make a true arterial connector. At the end of the 12-year PILOT program or upon repayment of the $11.7M infrastructure loan, the structure will collapse and all property goes back fee simple to the respective owners and property taxes will be assessed and paid as normal. Though very complex, our development and legal teams were able to educate Costco, other outparcel buyers, and all of our respective title companies to proceed with a structure whereby neither party actually owns their real estate for several years.
The wetlands mitigation and other entitlements went smoothly thanks to our Civil Design team led by Duplantis Design Group. We were able to develop comprehensive and approved infrastructure plans for the entire 120 acres, and navigate the nuanced and antiquated platting procedures of the Lafayette Consolidated Government to deliver permit-ready projects to be able to close in time for a grand opening in the spring of 2016. Also, a significant part of that feat was due to our environmental consultant, C.H. Fenstermaker of Lafayette, being able to push through our project and secure the required 404 Permit just in time for closing. We were informed that we were the last commercial project to be issued such a permit before the Corps instituted a moratorium until the methods were worked out with Congress.
As previously discussed, the real challenges of this development began once site work commenced in earnest, presenting some of the worst site conditions we’ve seen. Recognizing this early on, we showed our commitment to the project by authorizing a significant amount of unbudgeted acceleration expense, including costly soil stabilization measures. Our preferred site work contractor, Richard Price Contracting Company, and their local sub, Cecil Perry Improvements, worked with our geotechnical engineer, Stratum, and with Costco’s consultant to develop an economical but effective soils solution to keep the job progressing while incurring significant additional labor and equipment costs on their own account. Also, having contracted with long-term partner builders such as Brasfield & Gorrie and The Lemoine Company, who joint ventured to construct the bulk of this center, paid off as they remained friendly and fully engaged to get the job done on time despite the difficult working conditions. We firmly believe that almost any other contractor would have used this as an excuse for extensive delays further jeopardizing the project. Our philosophy of assembling a project team with the right mix of financial wherewithal, local knowledge, and most importantly, longstanding relationships, was critical to the success of this project.
Despite poor soil conditions, historically wet weather, unique municipal challenges, and a complicated deal structure, we placed in service all 430,000 sf of retail in a single phase on time and only moderately over budget in the spring of 2016.
The success of this center also comes at the perfect time for the City of Lafayette, delivering much-needed jobs and sales tax revenues to an economy distressed by persistently low oil prices. Additionally, the on-site and off-site infrastructure improvements, which included two new signalized intersections, has provided immediate relief to the congestion around this busy intersection. This infrastructure also paved the way for an additional 60 acres of prime development. Such projects already nearing or having already commenced construction include a new assisted living facility, hotel, and furniture store.