MURRAY — Elected leaders may have kicked the tires and looked under the hood, but they're not ready to sign off on the city's price tag associated with a proposed $125 million expansion of the Fashion Place Mall.
City Council chairman John Rush is the first to admit that the mall's owner, The Rouse Co. of Columbus, Md., creates "class act" commercial properties that are the top of the line.
But Rush was among council members who set a skeptical tone at the Tuesday night presentation by Rouse executives outlining their proposal and asking for the city's financial participation.
The proposal paints an enticing vision for the mall, which would be redone from "stem to stern" and feature a rustic lodge setting with exposed wood, limestone floors and prominent skylights. Shoppers could take a break from spending their money by reclining in comfortable couches and chairs positioned next to a re-created snow-fed mountain stream. Both Nordstrom and Dillards would increase their retail size considerably and be connected by a newly added "wing" fronting State Street that would include 30 new upscale shops.
Existing parking would give way for the expansion, and in its place Rouse would spend $13 million to construct two parking terraces that would boost current parking by 1,000 spaces.
In addition, Rouse proposes bringing in another major anchor for the 28-year-old mall, adding Meier & Frank and putting in a Meier & Frank home-furnishing store where ZCMI sits now. Meier & Frank is a subsidiary of the May Co., which recently acquired ZCMI.
The proposal, Rouse executive Greg Zimmerman said, would allow the mall to retain and improve on its status as the dominant regional shopping venue.
Executives pointed out the mall has been undersized for years, and its current configuration precludes expansion, especially for Nordstrom and Dillards, both of which want to increase their retail space and have indicated they won't renew their leases without the expansion.
In addition to the alluring vision of expansion painted for Murray leaders, the city's own financial expert pointed out the dismal fact that mall sales have been flat for the past five years, despite Utah's booming economy.
Rouse is anticipating increasing sales from $200 million a year to more than $400 million in 10 years and more than $500 million in 20 years, drawing on its experience at its 49 retail projects across the country, including Faneuil Hall Marketplace in Boston and Westlake in Seattle.
The catch that has the Murray City Council reluctant to embrace Rouse's proposal is the condition that the city forfeit its portion of any new sales-tax revenue the shopping center generates over the next 15 years.
Instead, Rouse, as the mall's owner, would pocket that money in return for the city earning extra dollars on enhanced property taxes the expansion will deliver. In addition, Rouse promises the expansion will ensure the mall stays open, stays high-end and continues to serve as Murray's main retail jewel for the coming decades.
Rush estimates the sales tax revenue Murray residents will relinquish at $22 million to $24 million.
Rouse also wants the city to waive the $450,000 in fees the expansion would require and invest $2.3 million in infrastructure costs, such as traffic signals and roads. Several council members interpret the proposal as one that allows Rouse to benefit from the profits while the city stays stagnant as it watches a revenue-producing mall produce even more revenue the city can't share.
"I don't think any of the council finds that acceptable," Rush said. Murray City Council member Krista K. Dunn also questioned the upfront costs the city would have to incur, pointing out that a few million may mean little to places like Boston, but for Murray, "it's huge."
Rouse executives said Murray's financial participation in the project is "critical" to its success and hinted that if the deal didn't go forward, it might be forced to sell the property and Murray would be dealing with new owners with identical concerns about the mall's continued financial health.
As a negotiating tool, Rush wants Rouse to consider incorporating a performing arts center with the mall so the city could at least benefit in that manner.
"We could say there is a quid pro quo relationship. We could say legitimately we have a return on our investment."
Rouse has agreed to explore the idea, and both the city and the mall owners will continue negotiations over the next 60 days.
E-MAIL: amyjoi@desnews.com