Here’s an update on a story we told you about over the weekend: Adrian city commissioners signaled their support on Monday for tax incentives that could help a prospective Adrian Mall buyer demolish part of the property to make room for a new tenant.
The discussion was only tentative, since no purchase agreed to and no formal request for incentives has been made. “They’re taking your temperature right now to see whether you’re willing to incentivize this project and how much you’re willing to incentivize it for,” economic development coordinator Chris Miller told commissioners.
City administrator Shane Horn said the city has met with a few different investors who are interested in buying the mall, and one of them has an option to buy the property that they have until the end of the year to exercise.
The part of the mall in question is where the Sears auto department used to be. Sears had been one of the mall’s anchor stores ever since it opened in 1970. After Sears closed, part of that space was taken over by Hobby Lobby, but part remains vacant.
“They would like to demolish that location for a future establishment that they’re working on securing,” Horn said. He added that the cost estimate for demolition and some of the infrastructure work needed to get the land ready for new building is about $370,000.
Miller said the prospective buyer is a group of equity investors who own properties across the country.
“They specialize in taking underperforming commercial properties and making them high-performing commercial properties,” he said.
Miller said the city has the option of using a “tax capture” to help fund the project through the federal Brownfields Redevelopment program. Essentially, as the value of the property increased, the city would take a portion of the increased property taxes for a certain amount of time and rebate it to the owner to help cover the cost of the work. The city could place a cap on the amount to be rebated if chose to; the amount would also be limited to work that Brownfields Redevelopment regulations say is eligible to be covered.
The idea is that while the city gives up some tax revenue in the short term, it stands to gain in the long run.
“Personally, I’d like to incentivize the first part to the maximum that we can, to show that this commission is willing to work with them,” Mayor Jim Berryman said, though he added that he’d like to see the buyers demonstrate that they can make a real difference for the rest of the mall as well.
Commissioner Jerry Gallatin agreed, noting, “anything’s better than what’s there.”
Miller said the prospective developer estimated that the new building on the Sears auto site would be about a $2 million investment.
Horn said it would be nice to have a new owner for the mall, adding that the city has experienced some frustration with the current owner appealing the mall’s tax assessment every year. “It’d be nice to get an ownership group in there that understands the community and what those tax dollars mean to the community,” he said.
Berryman said the health of the mall is important for Adrian.
“I talk about downtown a lot,” he said, “but I don’t want anyone to think that we’re just concerned about the downtown.
“I want the mall to understand we’re just as concerned about that end of town,” he said.