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City of San Bernardino
Study Session Meeting
Informational Report
Date:January 31, 2024
From:Charles A. Montoya, City Manager
Department: City Manager’s Office
Subject:Carousel Mall Redevelopment Project (Ward 1)
Executive Summary
Informational report on the re-development of the 43-acre Carousel Mall site in the heart of downtown San Bernardino. The report includes site history from development of the Central City Mall to renaming of the site Carousel Mall, closure of the mall, subsequent demolition process, and redevelopment plans for the site.
Background
The Carousel Mall, originally Central City Mall, was developed under Central City Project No. 1, which was a $100 million joint city improvement effort between the Federal Government’s Department of Housing and Urban Development and the San Bernardino Redevelopment Agency. The purpose of the project was to transform 93 acres of deteriorating property encompassing the old Central Business District into a modern thriving downtown area, with the focal points including a state-of-the-art mall, a civic and cultural center, and high-rise developments of commercial and financial institutions.
In 1967, the design contracts for the mall portion of the Central City Project were awarded to Gruen and Associates, the same architecture firm that would later be awarded the design contract for the City Hall building. The mall site, which would include the Harris building, would occupy 44.5 acres of the 93-acre Central City Project, with the mall building itself encompassing 13.3 acres and offering a total leasable area of 979,534 square feet. Included in the project would be a three-level parking structure capable of accommodating over 1,000 vehicles.
Construction on the mall itself was completed in 1971, where it was initially used for art exhibits, concerts, and charity balls while the shops and departments stores were still being completed. The mall officially opened under the name of the Central City Mall on October 11, 1972, and represented a unique combination of ownership patterns: the mall and entire parking area, including the three-level parking structure, were owned by the San Bernardino Redevelopment Agency; the department stores, which included JC 1 8
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Penny, Montgomery Ward, and Harris, would own the pads on which their buildings were located; and the shopping center developer, the Central City Company, would own the pads on which the mall satellites stores were located. Over time, the City of San Bernardino would acquire all but the Harris building, where the City now owns approximately 43 acres of the original 44.5-acre site.
The development of the Central City Mall accomplished three basic objectives. First, it created an improved retail environment, generating $50 million in retail sales during its first year and creating over 2,000 jobs. Second, it reversed the downward trend of assessed property values. In 1965, the total assessed valuation for the Central City Project area was $8.4 million, which rose to approximately $12 million one year after the opening of the Central City Mall and to $18 million by 1980. Third, it triggered the development of surrounding parcels by attracting visitors to the downtown area by the tens of thousands.
The initial success of the mall, however, was not sustainable, and it would face several challenges that would lead to its decline as a center of retail commerce. In the late 70’s, the Interstate 15 freeway was realigned to the Ontario region of the West Valley, redirecting traffic that previously had come through the City. The Interstate 15 alignment through San Bernardino became a secondary freeway, now Interstate 215, and significantly reduced the volume of cars that would stop in the downtown area for gas, food, shopping, and lodging. The reduced volume of traffic was exasperated by the closures of Norton Air Force Base, Kaiser Steel, and the Santa Fe Rail Yard in the late 1980s. This resulted in the loss of over 20,000 union jobs, causing a significant loss of spendable income in the region, impacting retail sales. Finally, the Central City Mall’s close proximity to the Inland Center Mall reduced developer interest at Central City location.
In 1991, the Central City Mall was renamed the Carousel Mall and was renovated to revitalize its image and make it a more attractive location for businesses and customers.
While this worked for a time, the mall would continue to see long-term decline. In 1999, Harris moved to the Inland Center Mall after being acquired by Gottschalks. Shortly thereafter, Montgomery Ward closed in 2001, followed by JC Penny in 2003. Consumer interest in the traditional enclosed mall was on the decline, and by 2016, the Carousel Mall had only 18 tenants compared to the 100 tenants it had in the 1980s. The Carousel Mall officially closed on August 22, 2017.
Over the years, the City has explored multiple efforts aimed at the site's redevelopment, with previous attempts at development proving to be unsuccessful. The City issued a Solicitation of Interest in 2014 for the reuse/redevelopment of the 43-acre site. In 2015, AECOM/Fransen entered into an Exclusive Negotiating Agreement (ENA) with the City to discuss the reuse and master planning of the site. AECOM/Fransen prepared a 1 8
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strategic plan for the property, but development never progressed, and the ENA was subsequently abandoned.
In 2019, the City issued a Request for Proposals (RFP) for a developer to execute a vision for urban development with vertical mixed-use format at the site. Of the proposals received in 2019, Downtown USA and ICO Real Estate Group were selected and combined efforts under the name “RDICO” to enter an ENA with the City for the development of the site. As a result of a misalignment in the State of California’s Housing and Community Development Department’s (HCD) acceptance of the City’s Surplus Land Act process for the Carousel Mall site, the City Council made the decision to terminate the ENA in 2023 to satisfy HCD.
Throughout its closure, the Carousel Mall became a health and safety burden for the City.
The mall experienced multiple break-ins, fires, and vandalization, causing structural damage and requiring the City to expend additional resources in securing the site.
According to the Public Works Department, facilities employees would spend approximately 25% of their time addressing issues associated with vandalism and breaches at the mall, taking away valuable staff resources from focusing on maintenance and repair needs in other locations. Between 2020 and 2022, the mall generated 107 fire-related emergency calls and 301 police-related calls, based on statistics from the San Bernardino County Fire District and the San Bernardino Police Department:
FIRE STATISTICS
Incident Type 2020 2021 2022 Total
Medical 10 14 20 44
Commercial Structure Fire 0 3 23 26
Other Fire 2 11 17 30
Hazmat 1 0 0 1
Investigation/alarm 0 2 2 4
Public Service 0 2 2 4
Total 14 31 62 107
POLICE STATISTICS
Incident Type 2020 2021 2022 Total
Service Call 56 121 124 301
On July 20, 2022, the Mayor and City Council authorized staff to solicit a Design/Build proposal for the demolition of the mall and approved a contract with Redwood Private Security to provide a 24/7 security patrol of the Carousel Mall grounds. Then, on December 7, 2022, the Mayor and City Council awarded a Design/Build Contract to Resource Environmental Inc. in the amount of $7.7 million, for a total project cost of $8 million when including project management and inspection services. 1 8
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In collaboration with consultants and key staff, the City has conducted critical market analysis, consolidating insights and recommendations derived from prior studies and proposals to establish the framework for revitalization and redevelopment of the Carousel Mall and downtown. Studies conducted include:
•2009: San Bernardino Downtown Core: Vision and Action Plan oPrepared by AECOM
oProvided a proposed roadmap, including community input and engagement, for revitalization and redevelopment of downtown •2016: Theater Square Strategic Plan
oPrepared by AECOM/Fransen
oProvided proposed plan for the redevelopment of the Theater Square property located at the corner of E Street and 4th Street in downtown •2021: Economic Forecast and Vision for San Bernardino
oPrepared by Patrick Adler, Ph.D. at UC Riverside, School of Business oProvided research regarding revitalization strategies and recommendations for renewal of downtown
•2021: Planning the Inland Empire’s Downtown: A Strategy for San Bernardino City
oPrepared by Christopher Thornberg, Ph.D. at UC Riverside, School of Business
oProvided economic overview and forecast of downtown San Bernardino •2021: Major League Prospect: A Strategic Framework for Growing Downtown San Bernardino
oPresented by the San Manuel Band of Mission Indians
oPrepared by UC Riverside, School of Business’s Center for Economic Forecasting and Development
oProvided a strategic framework for the revitalization of downtown San Bernardino covering employment and housing density
•2023: Downtown San Bernardino Property and Business Improvement District Feasibility Study
oPrepared by Civitas
oProvided an analysis regarding the potential pros and cons of implementing a Property and Business Improvement District in downtown •Actively ongoing: Downtown Specific Plan
oPrepared by Placeworks
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oWill provide zoning updates to the downtown core in alignment with community driven input and market analysis
Staff Analysis
A primary focal point in the revitalization of San Bernardino remains the redevelopment of the Carousel Mall, an unoccupied commercial property spanning 43 acres of prime real estate at the heart of downtown. The comprehensive demolition process commenced in 2023, followed by subsequent environmental remediation efforts, with a targeted demolition completion date set for February 2024.
Concurrently, environmental concerns within the former Montgomery Wards Auto Center building are being evaluated, and Public Works is actively planning to engage a contractor to address and resolve these issues. Additionally, strategic considerations are being explored for the former Penney’s Auto Care facility, located west of the Montgomery Wards Auto Center, which has been issued a "no further action." A “no further action” is issued by the Regional Water Quality Control Board / State Water Resources Control Board to any site in which an underground storage tank (UST) was present. This means that any environmental issues relating to the UST have been abated and that no further remediation actions are necessary at the site. This clearance means that the site is clean as related to the UST, and development may be undertaken.
This has prompted an examination of potential demolition options to the JC Penny’s building either before the contractor's demobilization or through a distinct process. As it relates to the building, by moving the demolition forward while the contractor is still on site, it will save additional costs to the City either through attempting to have the contractor remobilize (bring the equipment back on site) or having to add additional costs as a result of needing to truck materials to a remote site for processing.
The Phase 1 environmental study is complete and has been reviewed by key public works staff. The Phase 2 environmental study is pending, following the conclusion of the Request for Proposals (RFP) process for consultant selection on January 18. It is anticipated that a contractor will be tentatively selected prior to February 2024.
Subsequent studies encompassing geotechnical, which includes a soils report, and hydrology analyses, are anticipated in the coming months. As part of the City’s commitment to conduct thorough due diligence, these comprehensive assessments and studies play a critical role in informing the decision-making process and ensuring that the subsequent phases of the development align with the highest environmental and regulatory standards. The City remains dedicated to proactively addressing any environmental concerns and challenges associated with the site, thus fostering a stabilized trajectory for the redevelopment project.
The site may be divided into multiple quadrants, starting with Quadrant 1 situated at the Southeast corner of Second and E Street, and Quadrant 2 positioned at the southwest 1 8
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corner of Second and G Street. This strategic approach aims to restore the historic street grid, fostering improved connectivity, and implementing walkable, human-scale facades within the redevelopment.
The City will work towards complete land entitlement at the site, positioning the property for sale as a fully entitled project. The City will play a pivotal role as the land developer, preparing the property for sale in a project-ready state, ensuring alignment with the City’s vision for development. The objective is to attract a diverse range of mixed-use activities, encompassing residential, office, and commercial components, with an emphasis on establishing clear transit connections to cultivate a transit-oriented development. The residential units will include low to moderate (low-mod) and market rate housing forms to incentivize a cohesive community.
Staff envisions the realization of a well-executed project that adheres to established standards and urban planning principles. By undertaking the role of the land developer, the City will ensure that the property is prepared for sale and development. With the quadrant approach, there will be a continuous evolution to subsequent phases of development in accordance with the City’s land entitlement procedures.
As part of incentivizing the future development of the site, the economic development team implemented a new resource for real estate developers via a real estate email newsletter providing local real estate market information. Staff continue to work with the City’s grants teams to take advantage of potential funding sources.
Next Steps + Timeline
Consultant selection for the Phase 2 Environmental Study is anticipated by February 2024. Geotechnical and hydrology studies will be conducted in the coming months.
Future Fiscal Impact
The full fiscal impact is unknown at the time. The City has currently received low bid estimates of $38,000 for the Phase 2 Environmental Study for the first two quadrants.
The City has not yet secured hydrology and geotechnical study estimates as of yet, due to the ongoing demolition; however, they could be as high as $150,000 each. 2021-2025 Strategic Targets and Goals
Redevelopment of the Carousel Mall site aligns with Key Target No. 4: Economic Growth and Development, as it will serve as it will revitalize Downtown San Bernardino and serve as a catalyst for future growth and development.