Council approves millions to support renovation of major tax driver
For years, Grapevine Mills mall has been the City of Grapevine's largest sales tax generator, encouraging additional retail and hospitality projects in the area and supplementing the city's low property tax rate. Now with an estimated $40 million renovation on the horizon, city officials are once again investing in the crown jewel of Grapevine's economy.
The City Council in June approved $10 million in economic development incentives for Grapevine Mills with money from the mall's tax increment financing district. And an additional $4 million is on the table for investment in the coming years.
"There are two kinds of malls: malls people go to and malls people used to go to," City Manager Bruno Rumbelow said. "It is in our interest to make sure this is a mall people always go to."
In preparation for deciding the extent to which the city would support the mall's renovation, the City Council turned to an economic development analysis produced by Austin-based consulting firm TXP.
The 25-page report considers a number of factors in looking at the impact of Grapevine Mills, from "spillover" activity in the area to tax revenue to jobs, but the bottom line is simple: the mall is important.
"While not a traditional expansion project, Grapevine Mills' ongoing success or failure has a disproportionate impact on local employment and tax revenue," the report's summary reads. "The consequences of not adequately supporting Grapevine Mills could be significant."
Grapevine Mills mall opened in October 1997 and starting the following year, the city experienced a substantial increase in sales tax revenue. Between 1997 and 1998, revenue jumped $3.9 million, a one-year increase of 58 percent. And since 1998, the mall has generated about $47.4 million in sales tax revenue.
"In a community that's dependent upon sales taxes, the continued success of Grapevine Mills is a key component to our financial strategy going forward," Rumbelow said.
The mall is also important to local employment numbers. Grapevine's retail sector has grown steadily over the past decade, and accounts for roughly 1 in 10 jobs in the city. TXP estimates that between 1,800 and 2,000 workers are supported by Grapevine Mills each year — a full 25 percent of retail employment citywide.
TXP's analysis looked beyond the mall's immediate footprint as well, at "spillover" impact that it attributed to the mall's success and location. Five major projects — Bass Pro Shops Outdoor World, Great Wolf Lodge, the Gaylord Texan Resort & Convention Center, Legoland Discovery Center and Sea Life Grapevine Aquarium — have opened near Grapevine Mills since its establishment in the late '90s. Together, the five projects represent $417.2 million in taxable value and more than 1,900 direct jobs. And, as officials pointed out, there remains huge potential for continued development in the area. The city's two largest pieces of undeveloped commercial land sit in close proximity to the mall, as does a major tract of land owned by the Dallas/Fort Worth International Airport that is part of development negotiations between the airport and the city.
Officials say the mall has fared better than many during the economic recession, but sales tax revenue is currently flat. Caused by a number of factors, including greater competition from surrounding communities, the rise in online shopping and mall tenant turnover, plateaued sales is a primary reason for mall and city officials looking to mix things up.
Grapevine is no stranger to supporting the mall. In fact, its first economic development incentive agreement was used to attract Grapevine Mills to the city in the first place. That tax increment financing district, formed by the city, Grapevine-Colleyville ISD, and Tarrant County and its hospital and college districts, committed $27.5 million over 20 years to the mall, and it is that TIF from which this $10 million is coming.
As part of the agreement approved in June, the mall will receive $7 million from the city for interior renovations, with $1.75 million awarded at the completion of each of four phases. It will also receive money for bringing on the sort of tenants that will drive up the city's sales tax revenues. The city has set a $3 million finish line for the mall bringing on 12 new premium tenants. Like the renovations, that payment will be fulfilled in four installments, with $750,000 for every three premium tenants that open.
"A higher quality tenant mix drives higher income shoppers, which drives more sales per square foot," Rumbelow said. "That's in their interest, that's certainly in our interest."
On average over the last five years, Grapevine Mills' sales per square foot has sat at $225. If the mall were able to increase sales to match the national average of $296 in sales per square foot by the first year of renovations and build from there, TXP estimated that by the 20th year, it could produce as much as $524.95 million in taxable sales annually.
A new direction
The Mills President Gregg Goodman said the mall renovations are still in the design phase with Omniplan Architects of Dallas, the firm that handled Dallas' NorthPark Center renovation, but the roughly $40 million endeavor will transform the mall's interior.
Plans include a complete overhaul of storefronts, flooring and ceiling finishes to create a modern, clean look, added amenities such as new restrooms, and, of course, more premium tenants.
The phased work will mostly be completed at night to best avoid impacting shoppers, and may take five years or more to complete, possibly even pausing during major shopping seasons like back-to-school and Christmas so as not to disrupt sales.
And although $10 million was all that was approved in June, Grapevine is looking ahead at the possibility of renovations to the exterior of the mall as well.
The city estimates an additional $4 million will be accrued in the mall's TIF district between now and its expiration in 2017, and Simon will have the chance to apply for that money for additional work.
Inspiration for the renovations comes from the Opry Mills, a Simon property in Nashville, Tenn., that underwent renovations after flood damages in May 2010 and reopened earlier this year.
Leading the effort will be new general manager Joseph C. Szymaszek, a man whose more than 25 years of experience in shopping center management and retail includes serving as a regional vice president for The Mills and as a general manager at three of its properties, including the Opry Mills itself.
Although work has yet to begin on the renovation, The Mills has already started transitioning toward premium tenants. In recent months, both Coach Factory and Under Armour have opened, and plans are already in the works for both H&M and Michael Kors to have locations at the Mills.
"In the recession, shoppers learned they didn't have to pay full price for items," Rumbelow said. "From a strategic positioning standpoint, upscale outlet shopping is really where the future's going, and [they are] going to make sure the Mills is right at the forefront of that."