Developers of the $1 billion Metrocenter Mall redevelopment project are set to move forward with purchasing the 80-acre site and demolishing most of the buildings by next year.
Florida-based Concord Willshire Capital LLC and TLG Investment Partners and Texas-based Hines received the final approvals needed from the city of Phoenix for a tax incentive agreement, or Government Property Lease Excise Tax treatment, last week.
This means the developers will lease the property from the city for 25 years once it's built and pay an excise tax that's lower than what the property tax would be for the apartment complexes. Right now, the site produces $500,000 in property taxes, while the new development will produce $2.5 million to $3 million annually in excise taxes through the GPLET, said Steve Betts, a consultant for the project who is also a managing director at Holualoa Cos.
"The reason that's important is that trying to redevelop an old mall like this is not for the faint of heart, it is very expensive to be able to demolish and do all of the abatement work and untangle the spaghetti of infrastructure under that existing mall and then be able to put in new infrastructure," Betts told the Business Journal.
The decrease in taxes for the apartments will help offset costs associated with asbestos abatement, demolition and removal of existing infrastructure, Betts said, adding that the costs and difficulty of taking on a project of this scope is what prevented companies from wanting to redevelop the site for 10 years.
Potential rapid bus could connect TSMC workers to light rail
Betts said this location is a "prized" transit-oriented development site due to the multi-modal transportation options such as a rapid bus link and planned elevated light rail station and expansion. Also notable is the fact that the site is close to the planned Taiwan Semiconductor Manufacturing Co. factory, he said.
"We're talking to the city about having rapid bus connections from this urban village to the north to provide worker transit to the Taiwanese semiconductor and their supplier plants," Betts said. "This urban village, which will have 3,000 dwelling units and potentially 5,000 workers, would have the ability to hop on light rail to go south into the center city or hop on a rapid bus route and go north to any of these employers that are now under construction."
In May, the first development agreement was approved to reimburse the developer for construction of parking garages. Now, the development team is preparing to close on the mall property, start asbestos assessment and demolish the buildings in the first quarter of 2023. Site work will continue through 2023 so it's ready for apartment construction to commence by the end of next year, Betts said.