Hearing shows pros, cons to Mall CID
By MATTHEW KENWRIGHT
The Mall's revitalization plan was met with praise and scorn Thursday during the Hays City Commission's public hearing about the proposal.
DP Management, the building's management company, has petitioned to use a 1-percent special sales tax at its stores to pay for $3.1 million in renovations. The funds would replace lights, floors, entrances, renovate the front, tear down the former Montana Mike's restaurant and the former First National Bank drive-up and repave the parking lot.
Matthew S. Gough, the attorney representing DP, addressed commissioners and pitched the community improvement district plan as the ideal economic development program. It differs from other plans because it does not involve a tax break.
"Among all the various types of public-private partnerships that are possible for a developer like this, the CID is probably the best one for a win-win-win scenario for the city, the applicant and the public," he said.
The financing agreement reimburses the company for completed renovations. Kansas law allows the CID to last 22 years, but DP's representatives expect the renovations to finish by the end of 2015.
The company would be solely responsible for the loan. Gough stated DP would be accountable for repaying the money even if weather damaged The Mall and stopped the revenue.
The attorney said 30 percent of retail space is unoccupied, and the former Montana Mike's location and two other outside lots can be developed for tenants. Filling all of them could yield the city hundreds of thousands of dollars.
The $3.1 million figure does not include the cost of developing the lots despite the expense being CID-eligible.
"The only thing The Mall's ownership is asking for is to do some very basic, necessary interior and exterior improvements that it hopes will be a catalyst to bring major national retailers both inside and outside The Mall," he said.
Gough touted the possible increases in regional shoppers, tax collection and jobs. The Mall could continue without the renovations, but its potential would not grow.
"Without a CID, the definition of success may become a much more narrow, limited scope," he said.
National tenants are eyeing the building, but they want to see the renovations.
DP has spent approximately $900,000 during the past five years on such projects as roof repair and outfitting the space for Stage.
Aaron White, executive director for the Ellis County Coalition for Economic Development, said a more appealing shopping center could counteract the city's declining retail pull factor. The number fell to 1.85 compared to 1.91 in 2013.
Alan Leiker, owner of G&L Tire and a mall tenant, said he recommended the commissioners stipulate local contractors must do the renovations.
Melanie Valley, a Hays resident, disputed the claim the program would not cost the city of Hays.
"Are not the city residents part of Hays?" she asked.
Valley suggested an increased sales tax would discourage customers and hurt stores' sales. Denying the CID would force DP to make a business decision.
"I personally believe corporation becomes responsible for full expense by loan, etc., or they can sell The Mall to another investor," she said.
Clare Gustin, who has shopped at the Mall since she was a teenager, said private-public partnerships can be a key innovation for development. She is certified in economic development finance.
"It was a real eye-opener to me to appreciate how for some projects if you don't have that partnership, the deal isn't going to be done," she said.
Gustin noted the Liberty Group's redevelopment in downtown Hays as an example of a successful partnership.
Linn Ann Huntington, Hays, said she has often shopped at The Mall. However, lack of air conditioning in the building's south end makes summer shopping unpleasant. She suggested including AC repairs in the CID agreement, if it is passed.
Commissioner Kent Steward read a letter sent by Gina Stern, president of Centennial Investments LLC and owner of the Centennial Mall. Stern wrote it was "galling" the commissioners would consider allowing mall customers to pay for renovations.
Stern's company renovated the property in 2009 and 2012 using local contractors and its own money.
Steward said he did not support the CID.
"Contrary to all the things we see happening in so many other communities, the last thing a municipal government should be doing is meddling in the marketplace and by doing that, short-circuiting the free enterprise system," he said.
Commissioner Ron Mellick said some of Stern's construction was not eligible for a CID because the Kansas Legislature had not passed the law allowing the program. He considered the special sales tax a "user fee" and stated people do not have to shop at The Mall because the items are considered discretionary purchases.
Commissioner Shaun Musil opposed the proposal.
Vice Mayor Eber Phelps said such topics as local contractor use, occupancy rates and start dates could be incorporated into the development agreement.
Mayor Henry Schwaller IV did not attend the meeting.
Commissioners will vote on the plan Nov. 6.
* * *
Hays City Commissioners approved infrastructure projects during their Thursday meeting.
A $30,000 bid was accepted to rehabilitate 19 manholes and 12 rings and lids. A $50,000 project for storm sewer structure lining will involve approximately 100 inlets and manholes.
In other business:
* Commissioners allowed a vehicle abandoned at 418 W. 11th to be abated.
* The city commission capital reserve account was created. It is more effective than the city commission financial policy projects account because it does not rely on projections and does not inflate the annual budget.