City commits $1.4 million to help revive mall – InkFreeNews.com
By Dan Spalding
WARSAW — The city of Warsaw took the first step on Monday toward investing $1.4 million to help rehabilitate Warsaw’s dilapidated Marketplace shopping mall.
The public-private partnership with the city and Sullivan Wickley Properties, Atlanta, Georgia, was unanimously approved Monday, April 11 during the city’s redevelopment commission meeting at City Hall.
The deal is based on using new tax revenue from an existing financial district around the mall. The city recently reconfigured the neighborhood to ensure that any new future taxes generated from mall improvements are used to repay the bond purchase used to fund the transaction.
Sullivan Wickley purchased the property in October 2021 for $3.6 million and plans to invest approximately $12.5 million.
Representatives from both sides began talking last year about a potential arrangement to revive the mall.
Essentially, if Sullivan Wickley can make sufficient repairs and lock in four large tenants, the mall would have almost 90% capacity and be able to generate enough new revenue from new improvements to support itself.
In a presentation to the city’s redevelopment commission, Sullivan Wickley’s reps seemed confident they could line up quality stores.
The first two new tenants, Big Lots and Planet Fitness, were announced earlier this month and the landlords predicted that the next two announcements – expected in the coming months – will be well received.
Reid Mason, executive vice president of real estate at Sullivan Wickley, said one of the soon-to-be-announced tenants will fill a void in Warsaw’s business environment.
The mall opened in the late 1980s and has lost a string of tenants in recent years, including Carson’s, Pier One Imports and JCPenney, and occupancy based on square footage is currently at about 14%.
Most of those department stores that recently disappeared all faced bankruptcy and largely failed to modernize their retail approach, Mason said. The situation turned into what they called a perfect storm.
Sullivan Wickley officials say it’s a good location in a strong market.
“We grabbed the property before it reached the point of no return,” said John Murphy, chief financial officer of Sullivan Wickley. “Obviously when you have roof leaks, you have mold. When you have mold, you have remediation issues.
Murphy pointed out that many issues drive up construction costs. He said tCity support will help offset some of these costs.
“You take a dead and dying mall and you take out the blight,” he said.
Randy Rompola of Barnes & Thornburg described the financial details of the arrangement and said Baker Tilly had also reviewed the plans to his satisfaction.
The agreement includes contingency plans in the event that TIF revenues do not meet expectations. For the first five years, Sullivan Wickley will serve as alternate while the Redevelopment Commission will serve as alternate for the second five-year term.
“The city would have no liability with respect to the payment of debt service,” Rompola said.
Construction efforts on the property will begin later this week and are extensive.
Almost all of the 63 HVAC systems will need to be replaced. Some stores developed roof damage that caused leaks.
Sullivan Wickley also plans to redo the parking lots and install a new lighting system.
The developer and city officials anticipate that the mall will look very different by the Christmas season of this year.
“It’s going to be like night and day in a very short time,” said Jeremy Skinner, the city’s director of community and economic development.
The deal still needs to be approved by the city council, but could be finalized in May or June.