By NICK BUDD
Hays Post
At Thursday’s City Commission Meeting, commissioners discussed a proposed community improvement district at the Mall at Hays proposed by DP Management of Omaha, Neb., which manages the facility.
If approved, the proposal would implement a 1-percent sales tax hike on sales generated at the mall only, bringing the total sales tax to 9.4 percent stores on the property. The revenue from the 1-cent sales tax hike would be used to pay for improvements at the Hays Mall on a pay-as-you-go basis, with a limit of approximately $3.14 million. The Hays City Commission must approve the CID in order for it to become reality.
Proposed improvements include renovations and improvements to the interior, entrances, landscaping and parking logs. DP Management also plans to demolish the bank drive-through and the former Montana Mike’s building, and add two more retail properties on the space.
“A lot of people ask ‘Why can’t you just pay for this yourselves, why do you need the city’s help?’ ” said mall representative Matthew Gough of Barber Emerson. “The answer is, in a project like this, you can set aside 10 to 15 cents per square foot for capital improvements and maintenance. At that rate, you could set aside around $30,000 per year, which would take around 100 years.”
According to Gough, the project would happen in two phases. The first phase of “prioritized improvements,” which Gough said would attract more business, includes renovations to the interior of the mall, parking lots and the installation of new lights outside, although an exact timeline of the phases has yet to be finalized.
“It’s possible that we’ll do some phase one improvements while we’re doing phase two and vice-versa, we don’t know what the future will be,” Gough said.
According to Terry Clouff, CEO of property owner DP Management, the improvements would help the mall compete with other regional retail outlets.
“The national tenants that we’re looking at are very obvious in your competing markets,” Clouff said. “We have available space for them. Some of these improvements will not be CID-eligible and they will be an expense to the owner.
Clouff also said financial backing has already been secured for the first phase of improvements at the mall. The completion of the second phase of improvements will depend upon sales growth.
Mayor Henry Schwaller brought up concerns about the roof of the building and other maintenance issues at the mall, noting some current tenants are disappointed with how the mall has been maintained.
“Tenants are not happy with the overall maintenance schedule,” Schwaller said. “Having air conditioning is kind of an issue for some of the tenants. They’ve also expressed concerns about the roof and leaks in their spaces. They say they love staying, but you’re not as responsive to the maintenance of the building.”
Commissioner Ron Mellick brought up concerns about communication with the tenants about the CID, noting some tenants are “very upset” because they haven’t had any contact with DP Management about the CID.
“There are tenants out there that are very upset about this because you guys haven’t contacted them about this and they feel like they’re being overrun with this,” Mellick said. “Some of them are talking about doing the same thing that Hibbett did and moving out someplace else.
“I would love to see the mall succeed, but this is a double-edged sword that you guys are messing with.”
Clouff said anchor tenants have been contacted, but some of the smaller stores have not.
Mellick also said the CID could hurt some businesses, especially at the anchor tenants including JC Penney, which recently closed several stores around the nation. He brought up the idea of bringing in another anchor tenant to the mall.
“I worry that if we put this CID in place, if it hurts (Penney’s) sales, they’ll be the next to leave when another round of closings comes,” Mellick said.
According to Clouff, JC Penney is in almost every property DP Management works with, and store operators have said they are favorable to the improvements. He did note they are worried about the increased sales tax.
Clouff also addressed concerns brought up by commissioners about the high rent prices at the mall for tenants. He said that the rent prices at the mall are comparable to malls across the country that are similar in size and customer base.
Commissioners Kent Steward and Shaun Musil said they were not in favor of moving the project forward.
“I just don’t think this is the proper use of tax dollars,” Commissioner Kent Steward said. “I think taxes should be used for government operations and government services. I know this money will be channeled through the city, but this is letting a business tax the people of the city of Hays (for improvements), and I just can’t stand for that.”
The issue is scheduled to be discussed again at next week’s regular meeting, and a public hearing on the proposed CID could be set for Oct. 23.