Mayor George Stewart assured the City Council Tuesday that an agreement to construct a $100 million mall in south Provo will be finalized in the next few weeks.
"It would take a catastrophic event at this time for this mall not to happen," Stewart said.The city is negotiating with JP Realty Inc., of Salt Lake City, to build the mall on property the city acquired on south University Avenue. Dillard's, Sears and an undisclosed tenant have agreed to locate in the mall. The mayor said a fourth major tenant also is considering building a store there.
The city and JP Realty are trying to draft an agreement in which the city will be repaid the $15 million spent acquiring and clearing the mall property. Because the land is prime commercial property, Stewart said the land costs are about five times more than most mall projects.
"That makes the mall a more difficult project to complete," Stewart said.
JP Realty might lease the mall property during the construction phase and bond to repay the city at the completion of the project. The lease payment would be enough to pay the interest on the city's bond, which was used to purchase the property. JP Realty might decide to bond up front and buy the land from the city before construction starts in the spring.
Before the agreement can be signed, however, the City Council must approve a resolution on JP Realty's tax increment package. The development firm wants the tax breaks to purchase the land and make improvements.
The mayor is proposing a 25-year plan in which JP Realty would get 100 percent of the appreciated property tax amount the first year and the amount would be reduced each year until the company is paying the full tax amount. When complete, the mall is expected to generate about $250,000 more each year in property tax.
Stewart said the city will make up what it's giving away in the first few years' sales tax revenue. He said a study the city commissioned shows the mall will be the dominant shopping center in Utah County.
"It's a sizeable shift of sales tax base in the county," Stewart said.
The city has also notified residents of Silver Fox Campground that they need to be out by Nov. 1. The city purchased the park last year for the mall project but has been leasing the land back to the previous owner. Those living at the campground have been on a 30-day rental agreement. The park is zoned only for 30-day occupancy, but city officials have allowed some to reside in small trailers at the campground.
"We're going to face a little bit of an issue with the Silver Fox people," the mayor said.