Sportsman's reorganization leaves hole in Carson City center

A $400,000 facelift by Metcalf Builders is under way at Southgate Shopping Center in Carson City, but the center's owners continue to struggle to fill space in the property.

Leasing of the site of the old Walmart building on South Carson Street got more difficult after Sportsman's Warehouse, which was expected to be a cornerstone tenant, filed for Chapter 11 bankruptcy protection in March.

Rob Rothe, owner of the former Walmart building, had an agreement in place with the national sporting goods retailer to lease 70,000 square feet of newly constructed space where a portion of the Walmart building once stood.

Rothe, a Bellevue, Wash. businessman, already signed Burlington Coat Factory into an adjoining 50,000 square foot space the remainder of the space occupied by the Walmart store before it was demolished.

But the Sportman's Warehouse reorganization in federal bankruptcy court led to rejection of the lease leaving a large hole to fill for Rothe, who had agreed to a 15-year tax revenue sharing plan with Carson City to recover some of the costs associated with renovating the site.

Stu Utgaard, chairman and chief executive officer of Midvale, Utah-based Sportsman's Warehouse Holdings, said March 10 that the company would liquidate 23 stores and sell another 15, primarily its locations near the Canadian border, to UFA Co-operative Limited of Canada. The company's Reno store on Moana Lane is one of 29 locations unaffected by the bankruptcy filing.

Utgaard now says Sportsman's Warehouse may eventually open a store in Carson City after it emerges from Chapter 11 reorganization, but the company will be restricted for some time in new business development.

"We had to stop all new store expansions," Utgaard says.

Under an operating covenant filed in Carson City in 2007, Rothe would have received up to $180,000 annually for 15 years if Sportsman's Warehouse realized a minimum of $15 million in taxable sales.

The Carson City Redevelopment Authority previously had helped Rothe secure Burlington Coat Factory by providing $2 million to help with tenant improvements, says Joe McCarthy, director of the office of business development for Carson City. That money will be repaid through sales tax revenues in six years, he says.

"It is very important that we maintain and grow our taxable sales activity in Carson City in order to keep up with the cost of proving services," McCarthy says. "Over a 15-year period we would have realized about $2.5 million with Sportsman's Warehouse, and with Burlington about $2 million. It is estimated that Burlington will generate approximately $300,000 to $400,000 a year in sales tax, and our return on investment is about six years."

Forty percent of Carson City public services are funded through sales tax revenues. The loss of Sportsman's Warehouse is a blow to a city which already has seen departure of several other large soft-goods retailers.

"We needed sales generators like Burlington and Sportsman's," McCarthy says. "We hated to lose Mervyn's and Gottschalks.

"Sportsman's would have filled a niche for hunters and campers and outdoorsmen that we didn't have. This community was excited about it coming, and the economy basically ate up Sportsman's Warehouse."

Rothe's City Management Services company also owns the Reno Town Mall at South Virginia Street and Peckham Lane.

Burlington Coat Factory and the proposed space for Sportsman's Warehouse aren't the only upgrades happening at Southgate Shopping Center. Shelly Aldean, owner of the Glenbrook Company one of five owners of building space in the center hired Metcalf to renovate the facades of Glenbrook's holdings.

Work is expected to be completed by early fall, Aldean says. A majority of the smaller inline spaces at the aging retail center remain vacant.

"We have been struggling like every other shopping center in the area competing for retailers, and there are not a lot who are expanding," she says. "Shopping centers have to reinvent themselves every 10 years, so we are making the facades a little more trendy and try to be more consistent of the architecture of JC Penny's and the Burlington building."

JC Penny's and Nevada State Bank also are located in Southgate Shopping Center.