City Throws Shade on Sunset Mall's Property Rights

SAN ANGELO, TX — The owners of Sunset Mall, in the new world of the land of Amazon.com and e-commerce, struggle to reinvent the Mall constantly. With 74 stores listed in its directory, the mall is sensitive to the change the City planners and the City Planning Commission recommended for the 93 acres that incorporate the Mall and a few other commercial properties in the area. The Mall is located at 4001 Sunset Dr.

The City staff wants to consolidate the zoning classifications by retiring the General Commercial/Heavy Commercial Zoning (CG/CH) classification that the acreage incorporating the Mall is currently categorized. Replacing the “heavy” zoning will be a General Commercial Zoning (CG) District. It’s just an administrative change, City staff argued.

The folks who own land there, particularly the Mall owners, are concerned because the new zoning classification is more restrictive. They purchased the land under the “Heavy Commercial Zoning,” or CG/CH, which has less restrictions than CG-zoned land. Imposing CG restrictions are tantamount to reducing the use, and therefore the value of the land, they argue.

Definitions from City of San Angelo Ordinance

Version April 4, 2017

• CG (General Commercial) District. The General Commercial District is intended to provide opportunities for development of commercial establishments of higher intensity, with larger trade area, floor area and traffic generation than Neighborhood Commercial uses. Limited outdoor storage, screened from adjacent residential uses, may be appropriate.
• CG (General Commercial) / CH (Heavy Commercial) District. The CG/CH District is intended as a transitional district for areas previously zoned C-2. The CG/CH classification is not available for requests for zone changes to land not zoned CG/CH on the initial effective date of this zoning ordinance. It allows most uses allowed in CG and CH Districts, but not all such uses. (Refer to the Use Table in Sec. 310.) It is intended that areas within CG/CH zoning districts will be changed to other zoning districts, based on comprehensive land use plans adopted by the City Council.

Specific Use Case Allowed Under CG/CH but not under CG

• Game Hall: A game arcade, bingo, billiard or pool hall. (Allowed under CG/CH, conditional with Planning Commission approval under CG).
• Camground/RV Park: temporary, often overnight accommodations for camping units and recreational vehicles. (Planning commission approval under CG/CH, not allowed under CG).
• Rental, Equipment: firms leasing or renting heavy vehicles, equipment and machinery under 3.5 tons to the public, may also provide product repair. (Allowed under CG/CH, conditional with Planning Commission approval under CG).
• Vehicle Repair: service to passenger vehicles, light or medium trucks, other consumer motor vehicles, generally, the customer does not wait at site while service is being performed. (Allowed under CG/CH, conditional with Planning Commission approval under CG).
• Industrial Service: firms servicing industrial, business or consumer machinery, equipment, products or byproducts. (Allowed under CG/CH, conditional with Planning Commission approval under CG).
• Wholesale Trade: firms involved in sale, lease, or rental of products for industrial, institutional, or commercial business. (Allowed under CG/CH, conditional with Planning Commission approval under CG).
• Warehouse and Freight Movement: firms involved in storage or movement of goods. (Allowed under CG/CH, conditional with Planning Commission approval under CG).
• Group Living: residential occupancy that does not meet the definition of “household living”. (Council approval for CG/CH; not allowed under CG)
• Plant Nursery: facilities producing flowers, shrubs, and horticultural or household plants for retail or wholesale trade. (Allowed under CG/CH, not allowed under CG).
• Other: Not allowed under CG, but allowed under CG/CH: Food and beverage processing; drug processing, tobacco manufacture; building materials processing; light metal fabrication; jewelry fabrication; processing and fabrication of optical and scientific instruments; artificial limb fabrication; broom fabrication; manufacture of wearing apparel including boots and shoes; bags and mattress manufacture.

Outgoing Mall General Manager Steven Niles told the City Planning Commission last month that the new zoning would inhibit its quest for more tenants. He said uses such as major car repair, retail distribution centers, game halls, and plant sales, would no longer be allowed.

The Planning Commission voted unanimously to approve the new zoning designation for the Mall area anyway.

The City staff countered that getting a “conditional use” exception from the City could approve many of these uses lost in the change.

That’s a no-go, argued new Mall General Manager Sabrina Tatsch at Tuesday’s City council meeting. If a potential leasing client learns there is bureaucracy involved in allowing it to operate their business—such as a light manufacturing operation that creates purses for sale in back for the front retail side—they’ll likely pass on the opportunity and go lease a place elsewhere.

Council Discussion

Councilman Lane Carter was concerned the new designation would limit the utility of the Mall by restricting it from becoming a distribution center for online orders. The Mall may have to reinvent itself in the new economy, Carter argued, and the City shouldn’t restrict potential growth or new business opportunities.

Councilman Tom Thompson echoed Carter’s concerns, and said sometimes the City doesn’t think through potential ramifications that will be detrimental to future use.

Planning & Development Services Director Jon James countered that the current “heavy” designation could create problems the other way, by not protecting the residential properties around the mall. What if, James said, someone installed a full-scale distribution center and all the large truck traffic arrived.

Thompson reconsidered his earlier concern and agreed that commercial traffic could become a problem, citing the fact that a commercial truck driving school is routing student drivers in their big rigs through streets in his district.

Mayor Brenda Gunter said if she owned the Mall, she would be very protective of her property. She said she wouldn’t want any obstacles like a new zoning designation. “I want to make sure they have the best possible opportunity to lease space in that mall,” she said.

Councilman Harry Thomas argued for making the change, citing the need for the City to protect all citizens, particularly residential property owners. He reiterated that CG zone restrictions could be overridden on a case-by-case basis for new lease prospects at the Mall.

In a conversation with Tatsch, Council learned of problems with obtaining conditional use permits. The processes of obtaining them are open record. Potential lease clients likely will not want to have their desire to move into the Mall publicized in public forums like an open meeting of the Zoning Commission or at City Council. It will alert competitors, she argued. The task of obtaining a Conditional Use permit was too high a roadblock for effective lease sales. “Deals can be dead before they have a chance,” she said.

Commercial Real Estate Professionals

Commercial Real Estate Broker Steve Eustis approached the dais and argued against the change. He addressed another property impacted by the zoning change; the building that formerly housed a lumberyard that is today owned by a group headed by Steve Stephens and leased to Blue Cross/Blue Shield of Texas. He argued that when Stephens purchased the building, it was understood what the zoning classification was. The change of zoning classification is akin to taking value from the property owners. He urged council to deny the change.

What wasn’t discussed in the back-and-forth between members of the Council and citizens impacted was what would become of the Mall’s district if one of the two proposed interstate highways were routed near the Mall. Easier access to a major east-west or north-south nationwide artery would make a property zoned for Heavy Commercial much more valuable for distribution operations. Eustis emphasized that the Stephens property had a large storage area in its rear that was formerly the lumberyard. Tasch noted that her company is always looking at ways the market is evolving so it can maintain the Mall’s economic viability for the community.

Eustis, who has worked in San Angelo commercial real estate for years, didn’t believe the zoning change was needed. No one who owns commercial property there requested it, he said. “You’re rezoning their property against their will.”

Councilwoman Billie Dewitt took an activist role in urging the zoning change; this was not just an administrative change proposal to her. She said her task from the voters was to be a good steward of the community. “I struggle with the idea that we may put something more onerous in there (the Mall property), knowing the commercial space does back up to residential areas,” she said.

Real Estate Broker Lance Lacy said whatever zone the Mall sits within and its impact on abutting residential property owners is already baked into the value of nearby residential lots and homes. The Mall existed there long before any residential home was built there, he argued. The buyers of those residential properties bought them knowing (or having the ability to learn) what the impact of a neighboring district with CG/CH zoning would mean.

Conclusion

In the end, Dewitt made the motion to approve. Thomas seconded the motion. Then the Council voted 4-3 in favor of changing the designation from General Commercial/Heavy Commercial to just General Commercial. Voting for the new CG designation were Dewitt, Councilman Lane Carter, Thompson, and Thomas. Opposing were Mayor Brenda Gunter, Councilman Tommy Hiebert, and Councilwoman Lucy Gonzalez.

Sunset Mall is owned and operated by Jones Lang LaSalle, a global corporation with its U.S. headquarters in Chicago.