Mason City council approves changes to development agreement for new owners of Southbridge Mall, gets update on hotel project

Watch Tuesday night’s council meeting by heading to the video player at the bottom of this story

 

MASON CITY — The ownership group purchasing Southbridge Mall plans to close on the sale Wednesday, paving the way for transforming the 37-year-old property into an entertainment complex.

The City Council in Mason City Tuesday night approved an amendment to a development agreement approved last year with SBMC, LLC, after their announcement they would purchase the mall and repurpose it with new retail stores, several restaurants, bars and recreational businesses. In turn, the city would provide a ten-year abatement of the incremental taxes generated by the redeveloped mall with the total cost of the tax rebate not exceeding $12.75 million.

David Rachie with SMBC at last night’s meeting says his group is excited to complete the mall purchase.  “We are scheduled to close tomorrow. When people ask when is this happening, depending and hopefully we get a yes vote, we’re closing tomorrow morning.”

Rachie and fellow partner Bob Johnson of Dubuque say while they already have lined up a number of entertainment and restaurant businesses to occupy spaces in the facility, they also want to get input locally on ideas for the building and work with local business owners to fill that space.   Rachie says, “We would love for people to tell us, and we’ll try to figure out something where they can give us suggestions. If someone wants to bring a franchise in, we want to work with them. We definitely want to work with local people, that’s part of what main street community capital is in the business to do is to make place saving, change downtowns, bring them back, and also work with local people and local entrepreneurs.”  Johnson added, “Local ownership is huge.”

The primary changes to the development agreement include the sale of the arena and the adjoining office space to the city for $1. City Administrator Aaron Burnett says having control of the arena and office space, which includes the city’s Parks and Recreation Department,  provides a better situation for the city.  “The flip side of this is that we don’t have lease payments anymore. The amount that was being expended on leases can essentially be not even close the amount that was being spent on the lease can be repurposed to any of those maintenance costs that we might experience. The majority of the costs were borne by the city in that lease, so that I don’t think there was a lot of benefit that was being received in that sense.”

Among the other changes approved in the development agreement include:  the acceleration of two payments of $200,000 each at years one and two; payment of all arena lease payments due into an escrow account for closing; a $3.9 million loan guaranty for the project which provides a deed to the mall if ever utilized; and the transfer of a small section of land near the north mall entrance for right-of-way.  

 

=== The head of SBMC, LLC is also spearheading the effort to construct the Hyatt Place Hotel in the eastern part of the main parking lot in Southbridge Mall as part of the River City Renaissance project, and he says groundbreaking is still on a schedule to take place next month.

David Rachie says the main portion of the financing has been approved for the project, but he is waiting for a $15  million loan guarantee from the United States Department of Agriculture as part of the project.   “The bank has submitted it for the final approval of the USDA, which is a federal program that is guaranteeing a portion of the loan. It was pre-approved by them before we went to the banks. I know that the USDA did an environmental review, my understanding is that is done. We’re hoping that this will get approved in the next couple of weeks.”

The 116-room hotel will also feature a conference center that can accommodate up to 1500 people as well as a fitness center, food offerings and an indoor pool and be connected to Music Man Square by a skywalk. 

 

 

This story first published at 9:10 PM Tuesday April 5th — updated 4:45 AM on Wednesday April 6th