The city and a Utah development company are about ready to sign an agreement that would finally begin construction on a mall in south Provo.
Mayor George Stewart said Wednesday that the city and JP Realty have basically agreed to the principles of a development contract. Both sides are fine-tuning the terms of a rough draft, and a final copy will be presented to the City Council for approval in the next three weeks."We're close enough that I might even ask for a special meeting when it's ready," Stewart said.
Over the past two years the city has spent more than $12 million buying and clearing about 70 acres of property on south University Avenue near the I-15 interchange in anticipation of building a mall there. Residents of Laurelwood Mobile Home Park were relocated, and Rome Inn was razed. The city still needs to acquire one more parcel of land from The Church of Jesus Christ of Latter-day Saints.
When they first announced the mall two years ago, officials predicted it would be under construction by now. However, acquiring the land and negotiating a development agreement has taken longer than expected. The mall design has also changed because the city once planned to buy and demolish seven motels in the area. That plan was abandoned when it was deemed too expensive.
The agreement with JP Realty will outline how the city will be repaid the $12 million it has spent acquiring the property. The city bonded for about $10.2 million, and that amount will likely have to be paid up front. The remaining $1.8 million, money the city borrowed from the energy department, will be repaid over time with interest.
Once the city is repaid, JP Realty will own the land and will build a one-million-square-foot, $100-million mall with three anchor stores. Dillard's committed to the mall two years ago, and Sears signed on during the past year. A third anchor store will announce its intentions soon. JP Realty also plans to build a separate entertainment-type center to the south of the mall where the Silver Fox Campground now sits.
"This will be the premier mall in Utah," Stewart said.
When Sears moves into the mall it will close its downtown store on 250 N. 100 West, and the city plans to buy the vacated building. What the city will do with the Sears property is undecided.
"It is in the contract that once Sears vacates that building the city will go in and buy it," the mayor said.
Once a development agreement is signed, city work crews will begin running power lines underground and installing storm drain lines in the mall area. Actual construction on the mall should begin in the spring and be complete about 15 to 18 months later.
"It will be a fast-track project because there have been promises made to tenants to have the mall open by fall or winter of 1998," Stewart said.
JP Realty has built and owns several malls and shopping centers in Utah. The company is currently building a mall in Spokane, Wash., and is expanding malls in Boise and Pocatello.
Stewart said Provo's mall will generate thousands of dollars each year in sales tax revenue. However, the city will receive no property tax revenue for the first five years because of tax increments earmarked for infrastructure improvements. After five years a portion of the mall's property tax bill will begin flowing to the city. The amount will increase yearly until the city is receiving all the mall's property tax revenue in about 20 years.
"This project means a lot of revenue for the people of Provo," the mayor said.