The old adage that retail follows rooftops is only partially true; retail also follows taxpayer-funded incentives.
Simon Property Group Inc. built central Indiana's newest mall, Hamilton Town Center, along a major thoroughfare in one of the state's most appealing spots for retail.
Yet both Simon and Noblesville officials say the $126 million project would not have materialized if not for an incentive deal worth $24 million.
The city of Noblesville put up $18.5 million for the design, acquisition and construction of mall infrastructuredesigned to the exact specifications of Simon and partner Gershman Brown Crowley. The project agreement calls for the city to maintain at its own expense all utilities, sewers and curbs within the mall. It even gives Simon the right to extend utilities through rights of way without "unreasonable interference from governments."
The city also gave the developers a $5.2 million credit for road impact feestaxes other landowners pay to help the county maintain its roads. The credit was $2 million more than the estimated impact-fee assessment for the mall, giving Simon extra credits to sell to other developers. The city also waived a $579,000 sewer interceptor fee.
Simon, which arranged more than $100 million in private financing for the project, also flexed its muscle to get the state to extend 146th Street directly to the property.
Noblesville put together the generous incentives for Hamilton Town Center, and a similar deal for the surrounding Saxony development, in a bid to jumpstart development in the area. The strategy already has triggered a handful of projects, including medical offices.
Noblesville isn't the only mall-hungry community that has showered public money on Simon Property Group. The company is on track to get as much as $64 million from a cut of sales taxes on a new lifestyle mall called The Domain in Austin, Texas.
That deal, which was secured by an Austin developer who later sold the project to Simon, drew the ire of thousands of residents and local businesses who formed a group called Stop Domain Subsidies.
The group gathered more than 27,000 signatures to force a ballot measure that would have banned subsidies for all retail developments. The measure was narrowly defeated in November, but the group isn't giving up the fight. They say the developer gave the city a lowball estimate of how much the mall would generate in sales tax, boosting its subsidy. They also scoff at an assertion that a mall would not have been built in the tony Austin suburb without city money.
In direct-to-the-public appeals, Simon has touted the benefits of its malls to local economies. In New Hampshire, Simon's Chelsea division set up a Web site at OutletsYes.com to lobby community support for the $100 million Merrimack Premium Outlet center.
But Simon has been known to take a different strategy when competitors seek incentives. In El Paso last year, the company fought a proposal for up to $19 million of tax incentives toward the redevelopment of an old factory and hotel adjacent to one of its malls. The company mailed pamphlets to residents near its Cielo Vista Mall deriding the new proposal as a "strip center" unworthy of "the largest tax subsidy ever granted in El Paso," the El Paso Times reported.
A few years earlier, Simon had lobbied unsuccessfully for city incentives to develop the same property.