The Iowa City City Council will decide today if the Iowa City Marketplace will receive $1.75 million in the form of tax-increment financing from the city for a renovation project.
The Iowa City Marketplace, formerly the Sycamore Mall, will undergo big changes, including the addition of Planet Fitness and Lucky’s Market. The project will cost $4.4 million.
TIF is public financing that freezes a property-tax base in an area.
Mayor Pro Tem Susan Mims said that although it’s never a good idea to offer TIF to the same property twice, the circumstances regarding this location make it the exception.
“With Von Maur leaving and increased vacancy at the mall, and what that has also done to surrounding property values, this is a very important piece of commercial real estate, so I am going to support the tax-increment financing,” she said.
Lucky’s Market, a Colorado-based organic-grocery company, will be the new anchor store after the departure of Von Maur to Coralville’s Iowa River Landing.
Besides the construction of these new businesses, the mall will also have its renovation work done to its parking lot and sidewalks, as well as the addition of new landscaping.
Mims also stressed if the council does vote yes for the Iowa City Marketplace to receive this assistance, there will not be a burden on the taxpayers.
“This is being structured as a rebate, so what will happen is as the value of this property increases, and we collect additional tax revenue, part of that additional tax revenue will be rebated to the property owner,” she said.
This could be a needed boost for the location, because 40 percent of the mall is now vacant, meaning the assessed value of the location has dropped considerably.
“We’re receiving basically a couple hundred thousand dollars less in property taxes then we were several years ago when the mall had the Von Maur department store and was fully leased up,” said Jeff Davidson, the city director of economic development.
He said it’s in the city’s interest to get the mall back to the level it was before Von Maur, the mall’s former anchor, left.
“That’s why you have so many dark spaces right now,” Davidson said.
He stressed that unlike the department store, the hours of operation for a store such as Lucky’s Market would mean more business for neighboring storefronts.
“You’ll have people from 7 a.m. to 11 p.m. going to and from the mall property, so that’s great for the other stores,” Davidson said. “That gives them more incentive to stay open and be located there.”
The key question for Councilor Jim Throgmorton is whether the owners of the Marketplace would make this investment even without the TIF from the city and if so, if the tax incentive is necessary.
“I want to hear whether there’s any evidence to support the claim that a tax incentive is necessary, to support the claim that the owners of the mall wouldn’t make this investment out of their own self-interest anyhow,” he said.
