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Otter Creek Mall Development Decades in the Making

10 min read

(Editor’s Note: This is the latest in a series of business history feature stories. Suggestions for future Fifth Monday articles are welcome. Please contact Gwen Moritz at (501) 372-1443 or GMoritz@ABPG.com.)

These days, the northwest corner of Interstates 30 and 430 is an anthill of construction activity with subcontractors excavating soil, pouring concrete, moving dirt and erecting steel. Much of the action is focused on building The Outlets at Little Rock, a $30 million retailing destination scheduled to bring 325,000 SF of shops on line next summer at the Gateway Town Center.

The development bustle, next door to the Bass Pro Shop that started things rolling at Gateway, is a sight decades in the making.

Once upon a time, the outlet mall site and Bass Pro location were slated to be part of a grand 1.1 million-SF regional mall development. The fabled Otter Creek Mall never achieved escape velocity from its drawing board concept unveiled on April Fool’s Day in 1980.

The announced August 1982 groundbreaking for the “state’s largest mall” would be the first in a series of projected starts that would come and go without event.

Tommy Hodges has worked deals on the site since 1998 and seen his share of promising proposals evaporate and purchase options expire.

“Somehow the money didn’t materialize, and the property went back fallow,” said Hodges, who is overseeing development of Gateway Town Center.

He heads a list of a dozen developers who entered and exited the narrative during the past 35 years. The commercial aspirations for the property date back even further.

The story is one of exultation and frustration among its owners, with plot twists colored by bruised egos, battered friendships and testy litigation.

Today’s Gateway Town Center site and would-be location of the Otter Creek Mall were part of a big-time land play launched about 60 years ago.

The play entailed assembling more than 1,000 acres in advance of a new interstate intersection to be built near the Pulaski-Saline county line.

The exact location of the future I-430 connection with I-30 required some calculated guesswork in the early 1950s. The planned link between I-40 and I-30 was only a future prospect back then, and question marks hovered over the final, definitive route.

Faced with that uncertainty, a broad swath of land was assembled in hopes of snagging the future interchange site and with it a hefty multiplier effect in value for the surrounding property.

This acreage was ultimately controlled by James C. Becknell Sr., a Little Rock real estate investor and retired vice president and general merchandising manager of Pfeifer’s of Arkansas department stores.

“He was speculating on the route of 430, and he hit it dead on,” said Dan Robinson, an investor in the Otter Creek Mall site from 1971-85.

Becknell nailed the location of the future interchange, but a lagging timetable to build I-430 would delay development in the area far longer than expected. Becknell wouldn’t see the highway construction even start during his lifetime.

The last stage of I-430 from Col. Glenn Road south to I-30 was completed in November 1975. By then, Becknell had been gone for 11 years, and his widow, Aileen, and namesake son had teamed up with Luke Quinn and Ed Moore to form Otter Creek Development Co. with a roster of limited partners who contributed cash.

“We sort of fell into it be-cause we owned the property across the interstate” from the Becknells, Moore said in a recent interview. “When they opened 430, we were sure glad.”

Quinn and Moore had developed a Texaco Truck Center in the mid-1960s on the south side of I-30 from what would become the Becknells’ corner at I-430. The truck stop project became a landmark for successful possibilities in the area.

Aileen Becknell contributed 322 acres to Otter Creek Development Co. while Quinn and Moore added 50 acres. The planned home of the Otter Creek Mall was included in her acreage.

Real estate records indicate Aileen Becknell’s consideration for her property was $250,000. She also retained a sizable ownership stake in the property through Otter Creek Development when the investment group was formed in 1971.

Otter Creek Development was led by two general partners, Luke Quinn and James Becknell Jr.

His mother transferred her shares in Otter Creek Development into trusts for her two granddaughters, with her son as trustee.

By 1979, the Becknell family trusts would be washed out of the ownership picture. The door to that circumstance was opened by James Becknell Jr., who was in financial distress at the time.

He used the trust shares in Otter Creek Development to borrow a combined $720,000 from two Little Rock banks: Worthen Bank & Trust and First National Bank.

Court documents indicate the loans were linked with Becknell’s involvement in the failed redevelopment of the Little Rock train station and surrounding property into a shopping and entertainment complex augmented by office space leased to state agencies.

Becknell was unable to repay the loans, and the banks took possession of the trust shares through foreclosure. The trust shares later were purchased from the banks by the Otter Creek limited partners for $873,000, about $60,000 more than was owed in outstanding principle and interest.

During the dispute, Becknell provided an appraisal that placed the value of the limited partnership’s property at $6.8 million.

His effort to hold onto the trust shares led to a series of lawsuits in state and federal court that culminated in a 1983 ruling that settled the controversy.

Along the way, Becknell attempted to derail the foreclosure sale of the trust shares by negotiating a $2.9 million sale of Otter Creek Development land to Dean Dauley, a Dallas developer. That offer and acceptance was declared null and void in court action because the other limited partners didn’t vote on it and were unaware of it.

During his court battles, Becknell alleged that the other members of Otter Creek Development Co. conspired with the banks to push him out of the ownership picture and acquire his family’s shares on the cheap.

In his ruling two months after a three-day nonjury trial 31 years ago this month, U.S. District Judge H. Franklin Waters believed the limited partners didn’t do anything to hinder Becknell from remaining in the investment group.

“To the contrary, their attitude was that they would not do anything in any way to obstruct Mr. Becknell’s opportunity to hold onto the partnership units owned by the trusts created by his mother.

“The court was particularly impressed with the testimony of Mr. [Robert] Light [a limited partner and Little Rock attorney]. He obviously testified with some discomfort because he had been a close friend of Becknell since early childhood.

“He testified that they had known each other since they were in kindergarten together, and that each was a participant in the other’s wedding. He testified that he still considered himself to be a close friend of Becknell.

“In spite of this, and with some obvious pain, he testified that, in effect, Becknell had, because of his financial difficulties, lost sight of the reasons for which the partnership was formed.

“His testimony was that everyone at the time understood that it was to be formed for the purpose of the partners realizing long-term income, and it was not intended that it be used as a vehicle to sell real estate as contemplated by the Dauley deal.”

Mall Talk

Before Becknell’s financial meltdown, he and Quinn had considered proposals from four national shopping center developers for a regional retail project. Paul Broadhead & Associates Inc. of Meridian, Mississippi, was selected by Otter Creek Development in March 5, 1980.

A simple site plan showed a mall configuration in the shape of an elongated plus sign, tilted from true north toward the northeast. The vision for Otter Creek Mall included more than 100 stores, with four major department stores anchoring the wings of the project.

The property had recently been annexed into Little Rock, and Otter Creek Development had brought water and sewer service to its land through the formation of a special improvement district.

An April 2, 1980, article adjacent to the Arkansas Gazette’s coverage of the mall plan unveiling noted that the prime rate had climbed to 19.75 percent. Six months earlier, it had been 13.5 percent.

Before the end of that year, the cost of borrowing money would reach 21.5 percent, a record that few want to see broken.

Double-digit interest rates would dominate the decade and hang over the proposed mall, which was to be a joint venture between Paul Broadhead & Associates and Otter Creek Development Co.

M.G. “Buddy” Herring Jr. was president and general partner of PB&A, which was touted in 1980 as having 17 malls developed or under construction. The firm would morph into The Herring Group of Dallas in 1984 when he acquired sole ownership of the company.

Although his stake in the Otter Creek Mall site would pass to another, Herring worked on deals for the property off and on for more than a quarter of a century.

His last run came in 2006, when he optioned 176 acres in a deal that would have produced a $13 million sale. But Herring was unable to pull together the roster of retailers needed to make the development happen.

He filed preliminary plans for a project that included a 578,000-SF lifestyle center with a series of free-standing buildings, a neighboring 172,000-SF power center consisting of a series of adjoining buildings with space for several large retailers and eight outparcels with a combined building area of 101,000 SF under roof.

Delay After Delay

After the unveiling of the Otter Creek Mall project, Becknell in his role as co-general partner wouldn’t consent to the transfer of 120 acres to launch the joint venture with Herring’s group. That brewed up a litigious cloud in 1981 that would remain until the 1983 ruling by Judge Waters.

The first announced groundbreaking for Otter Creek Mall didn’t happen in 1982. However, a preliminary plat for the project was approved that November by city officials, and Dillard’s was named as one of the four department store anchors. The announced 1984-85 opening came and went.

Dissatisfaction and impatience among the limited partners in Otter Creek Develop-ment blossomed into litigation. The end result was the exodus of Quinn, Robinson, Jerry Grigsby and Larry Brashears from the investment group, and majority ownership of the Otter Creek Mall site passed in 1985 from Herring to Marathon U.S. Realties of Chicago, a subsidiary of Canadian Pacific Limited.

The $8.68 billion shipping, rail and hotel company based in Montreal purchased controlling interest in the Otter Creek land along with Herring’s other mall holdings.

The renovation and expansion of Little Rock’s University Mall and Park Plaza Mall, completed in 1988, added competitive complications.

An announced 1987 opening of Otter Creek Mall didn’t materialize. 1988 didn’t see it either. A 1989 opening became an equally unrealized 1991.

The property sign reflecting the ever-changing dates became something of a cry-wolf landmark for I-30 motorists.

The sign eventually collapsed, and some quipped that the weight from years of altered openings was responsible for the structural failure.

In May 1984, the property was linked with a loan commitment of $10 million from InterFirst Bank of Dallas. In March 1987, the land was tied to a $13.7 million funding agreement with Canadian Imperial Bank of Commerce in Toronto.

The planned mall site was mostly cleared in the 1980s, but trees and underbrush would have 20 largely undisturbed years to reclaim the land. Money reserved for the development went untapped.

“We thought that the mall would come in, and then the houses would follow,” Dan Robinson said. “But the reverse happened. The retailers wanted the rooftops to come first.”

New competitors rose up closer to residential concentrations to lure potential tenants to west Little Rock’s Pleasant Ridge Town Center, Shackleford Crossing and The Promenade at Chenal along with Alcoa Exchange Shopping Center in Bryant.

The Otter Creek Mall site languished as a no-man’s land of development despite its prescient location at the junction of two interstates.

Tommy Hodges and partners Jim Keet, Mike Flynn and Harry Aburrow put the property under contract in March 1998 and extended the agreement seven times before closing in January 2002.

They assembled 176 acres in deals totaling more than $2.4 million.

The biggest and most expensive piece of the puzzle was the Otter Creek Mall site purchased for $1.46 million from Canadian Pacific Properties Inc.

Hodges thought they had a deal worked out that would allow them to flip the property in 1999 for $6.5 million to Woodmont Co. of Fort Worth, Texas. That didn’t happen.

From 2002-10, Hodges had the property under contract to sell to four different groups, all interested in developing a regional retail center. One walked away leaving behind $200,000 spent to option the property without closing.

“It was just so frustrating,” Hodges said. “You were working hard, and it looked like you’re going to have success and something was always happening.”

The breakthrough deal to land Bass Pro Shop was the result of 10 years of work. The $3 million sale of 29.3 acres in 2012 brought retailing life long envisioned for the property.

It followed the 2010 sale of a 9-acre site for $910,000 to Love’s Travel Stops & Country Stores Inc. of Oklahoma City, which built a super convenience store/truck stop. The creation of a TIF district was critical in making the Bass Pro deal happen, according to Hodges.

The tax increment financing added a $2 million piece to the financial puzzle for the needed infrastructure to support the 120,000-SF outdoor and sporting goods store.

“All of the smiles and handshakes will turn into something else if we screw this up,” Hodges remembers thinking after winning the support of Little Rock city leaders.

The traffic generated by Bass Pro also hastened the interstate access improvements now in motion along with construction of the outlet mall. The 30-acre site of The Outlets at Little Rock closed at $5.2 million earlier this year.

The commercial project provides a curious symmetry for Hodges, who was working to develop a new residential neighborhood nearby in the early 1970s. The Otter Creek Development investors had a request.

“They came to me and asked if I would consider calling it Otter Creek,” Hodges said. “I agreed, and we opened Otter Creek in 1975.”

He never dreamed he would be working to develop their commercial land all these years later.

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