The owners of Merle Hay Mall would receive up to $400,000 a year in additional tax increment finance revenues under a revision to an 11-year-old development agreement that has led to multiple changes at the shopping center.

One thing previous agreements have not been able to shield the mall from is shifting shopping patterns. Last year Merle Hay Mall lost the Sears and Younkers department stores that had anchored the mall since its opening in 1959. They closed after their parent companies filed for bankruptcy. Mall ownership is attempting to purchase those shuttered buildings, but as is becoming true of many things retail, there are complications.

Liz Holland, whose grandfather developed the mall and who has guided its operations the last 20 years, saw the closing of Sears coming; Younkers’ demise was less predictable. Still, she has shown an uncanny ability to shift with the times. As a result, she has negotiated with Des Moines and Urbandale — the mall is a cross-border operation — for several months in order to recast the types of retail available at the mall.

In 2008, the mall, first enclosed in 1972, shifted to street-facing storefronts that were enhanced by streetscape improvements. That effort triggered a development agreement in 2008 that provided a maximum of $400,000 a year in TIF payments for 15 years. In 2013, as the mall aggregated retail pods for the development of Flix Brewhouse, the city entered a second development deal that provided four years of TIF payments at up to $400,000 a year at the expiration of agreement No. 1 in 2026.

The City Council will be asked Monday to approve a third twist to the original agreement that would provide up to $400,000 per year beginning in 2019 and expiring in 12 years. All told, mall owners could receive up to $12.4 million in TIF revenues over the 20-year life of the urban renewal area in which Merle Hay Mall operates. The payments are based on the actual increase in assessed value that results from improvements. Payments could be less than $400,000, and have been in some years.

However, enough TIF revenue has been generated in the area to provide for payments under the agreement that will be considered Monday, said Erin Olson-Douglas, the city’s economic development director.

Holland hopes to bring a new-to-the-market junior anchor to help bolster lease revenues as well as a restaurant in areas north of the Target store that helped draw more shoppers to the mall after it opened in 2005.

In addition, ownership is hoping to bring other entertainment and dining venues with appeal for families and children, Holland said.

After losing a bid to develop multifamily housing on parking lot space on the Urbandale side of the mall, Holland said she continues to pursue other housing options, including the development of a residential community for people age 55 and older in the Merle Hay Mall office tower and farther north where the former Merle Hay Cinema is located. 

Holland pointed out that the previous agreements led to dramatic improvements to the retail environment along Merle Hay Road and Douglas Avenue, singling out projects guided by businessman Rich Eychaner.

“We did our work and Rich Eychaner did his amazing work. … It’s completely transformed what’s across the street from us,” Holland said.

The third development agreement calls for payments up to $400,000 for three years as mall owners attempt to stabilize operations with retail offerings near Target as well as enlarging Merle Hay Lanes. The city also is placing additional conditions on the third agreement, including requiring mall owners to improve pedestrian traffic and access for mass transit as well as improving stormwater management. 

Additional payments under the third agreement rest on mall ownership’s ability to purchase the vacant Sears property, an effort that has been complicated by the bankruptcy filing and efforts to purchase other Sears assets by longtime Sears CEO Eddie Lampert. 

Also, Holland is facing the prospect of buying the Younkers store out of a bankruptcy auction. Younkers ownership offered to sell the property to Merle Hay Mall several years ago for $9 million.

Polk County supervisors have approved a $2.5 million loan for the purchases of both properties.