An Eden Prairie resident for 50-plus years, David Lindahl has seen the ups and downs of our regional shopping mall, Eden Prairie Center.
Opened in 1976, the mall initially struggled until the area’s population took off. Its north anchor changed multiple times, from Powers Dry Goods to Donaldson’s, Carson Pirie Scott, Mervyn’s, and finally to JCPenney. A major renovation was completed in 2002, and a 250,000-square-foot Scheels store was added in 2020. However, the mall has many empty storefronts and needs another boost, like many regional shopping centers across the U.S.
Though far from being a “dead” mall – Eden Prairie Center has five department store anchors, several of which appear to be doing well – the market value of the mall, along with the property-tax revenue it generates, has fallen sharply over recent years.
The portion of the 1.4-million-square-foot enclosed mall, not including Von Maur, Scheels, Target, and Kohl’s, was valued at more than $90 million when the center was sold to Cypress Equities in 2013. Its value today is $30.1 million, according to Hennepin County tax records.
Over the last five years alone, the total annual property taxes generated by the mall proper and the anchors have fallen from almost $4.4 million to slightly more than $2.5 million, according to the county.
All of which is pushing the mall’s current owner, MetLife Insurance, into discussions with the city about renovating the mall’s north end, currently anchored by JCPenney. The project – a conversion of roughly 450,000 square feet, says the city – is strictly conceptual at this point, but the meetings have focused on potential uses, including apartments, offices, hotels, and a limited amount of new commercial space.
And Lindahl, as the city’s economic development manager, is squarely in the middle of it.
TIF provision sought at Legislature
Lindahl, in recent weeks, has been testifying before Minnesota lawmakers on special legislation that, if approved, would help the City of Eden Prairie once again provide tax-increment financing (TIF) to a mall renovation project.
The city, according to its finance department, contributed approximately $13 million in TIF financing over 20 years to the 1997-2002 renovation that saw the construction of the Von Maur department store and an entertainment wing containing AMC Theatres, Barnes & Noble bookstore, and several upscale restaurants – all of which increased mall traffic and property-tax revenue. Lindahl says the mall’s owner at the time, General Growth Properties, spent more than $110 million on the renovation.
TIF is a financing tool available to cities that uses the additional property taxes paid as a result of development or redevelopment to fund part of the project’s costs. When new buildings are constructed, the market value of the property and its property taxes typically rise. Classic examples of TIF projects would be building a new store on an undeveloped parcel or replacing one or more old buildings with a new, larger building. In both of these instances, the property’s market value will rise because the improvements add value to the parcel. The increased value is captured for a finite period, usually up to 25 years.
However, for a TIF redevelopment project of the type eyed for Eden Prairie Center, the area must be “blighted” as defined in state statute, and at least a portion of its structures must be substandard. The city is seeking an exemption from that requirement, similar to what the City of Burnsville obtained for the Burnsville Center several years ago, according to Lindahl.
The bill’s fate is uncertain, but state Sen. Steve Cwodzinski (DFL-49, Eden Prairie), its chief author, said he’s confident about its passage.
“We’ve got our fingers crossed,” added Lindahl.
The proposed reinvestment in the mall, Cwodzinski said, “totally” makes sense. The mall provides about 2,400 jobs, according to the city, and is an asset to the region.
“Everybody knows shopping patterns have changed,” he said. “To recoup that (property-value) loss, we’ve got to do something.”
Mall has been topic of conversation
Lindahl said city staff and Mayor Ron Case have had several conversations about possible redevelopment with mall management and the owner’s development arm over the past two years, but the topic has been top of mind for longer than that.
The city’s long-term plan, called Aspire 2040, was adopted by the city council in 2019 and identifies Eden Prairie Center as “one of the city’s major community amenities.”
“To better capitalize on its local and regional draw,” states the plan, “the city should help maximize its development potential through zoning and encourage the owners to diversify uses at the mall.”
“We’ve been aware of their situation for quite a few years,” Lindahl said. “They’re at a point now where apparently they have a green light from the owners to take the next step.”
The mall’s management declined to comment and referred all questions to city staff.
A wide range of possibilities have been discussed, and Lindahl says prominent among them is the idea of demolishing the JCPenney building and a portion of the mall proper’s north end to allow mixed-use development to occur in its place.
Eden Prairie Center isn’t alone in trying to adjust to an uncertain future for shopping malls. Edina’s Southdale Center, the country’s first enclosed shopping mall, will soon open a new Kowalski’s Market where a Herberger’s department store once stood. Other changes at Southdale and its immediate area over recent years include apartment and hotel uses, a Life Time fitness club, and a Restoration Hardware building.
Redevelopment of Eden Prairie Center would be a major undertaking, said Lindahl, one that would likely be phased over several years.
The pandemic and growth in online shopping have been a one-two gut punch for regional shopping centers across the country, he added. One of the great challenges facing the retail property management industry is how these properties will be repurposed in the future.
However, Lindahl noted that the local mall has some things going for it, including excellent access and visibility. It boasts more than seven million annual shopper visits from as far away as Hutchinson, according to leasing brochures.
The 2020 addition of the Scheels anchor shows that Eden Prairie Center’s story isn’t just about decline. The value of the mall’s southernmost parcel more than tripled after Sears, which closed in 2016, was torn down and replaced by Scheels. It went from $8,745,000 to $28,465,000, and with that increased value comes additional property taxes – $811,064 for 2024.
“From my view, the mall has been a bit of an up-and-down thing over the years,” said Lindahl. “We’re obviously very excited about the idea that they may move forward on redevelopment.”
Editor’s note: David Lindahl is a member of Eden Prairie Local News’ board of directors.
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