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HOW MISS. MAYOR BECAME AN ICSC DEAL MAKER

When Meridian, Miss., Mayor John Robert Smith saw in the mid-1990s that his town needed a large regional mall, he did what was then unheard of for local officials: He attended ICSC’s Spring Convention in Las Vegas and became a deal maker. Smith’s efforts paid off: The 726,000-square-foot Bonita Lakes Mall, developed by Chattanooga, Tenn.-based CBL & Associates Properties and anchored by J.C. Penney, Sears, Dillard’s and McRae’s, opened Oct. 15, 1997. Mayor Smith spoke with SCT in February about the importance of municipal involvement in retail development and how other public officials can follow suit.

How did you get involved with ICSC?
Meridian [has been] the economic hub for a region of East Central Mississippi and West Central Alabama. But in recent years, we were close to losing our retail base to other cities within a 90-mile radius [such as] Tuscaloosa, Birmingham, Hattiesburg, Jackson. … We worked with the existing mall owner to try to encourage him to update his two-anchor mall and give us the four-anchor mall we believed that Meridian deserved. We were unsuccessful.

So the economic developer here and I went to our first ICSC convention in Las Vegas seven years ago. We didn’t know at the time that local elected officials just really didn’t do this sort of thing. We literally went showroom to showroom at the convention, stating: Meridian is under-retailed. … We basically said, ‘We want to do business with a developer that can bring us four anchors, have control of the property, prove they have the financing. We in turn will get the infrastructure necessary for this mall to occur, and create the taxing district that would provide the revenues to support the infrastructure of this project.’ We viewed the investment in the mall as a business decision for the community.

How shocked were the developers to have an elected public official say, ‘We want to work with you, not get in your way.’? You may have been the only one back then.
We certainly felt like it. When we would go to them, there was obviously a look of amazement on their faces, and more than one said, ‘We have never seen a local official come to us, asking to do business and help grease the skids for it to happen.’ It played to our advantage: At the convention, they stopped and paid perhaps more attention than if we had been a fellow developer.

Our form of government here is a strong mayor form of government; his powers reflect the executive powers of the federal system. So between the mayor and the economic developer, we could make commitments that mall developers could rely on.

What else surprised you?
It appears that the normal progression is that mall developers put the deals together, and once the deal is virtually set, they then come to the local government. By local officials going first, I think the mall developers felt assured that this was a city that was taking a more than proactive role and that such a city was worth taking a look at.

Initially, we had six developers express keen interest. We had three developers visit. Simon was keen on a development in a different part of the city, but we wanted to see mall development in the city limits. We don’t get any sales tax if it’s outside the city limits. So I was willing to provide certain incentives if you’ll do this deal inside my city limits. I don’t have to face an annexation to get you. Again, it’s a business deal. … I can go to the public and say, “Here’s how much of your money I want to invest.” I’m investing new monies that will be created by this mall, which we don’t get right now because we’re losing those monies to sister cities surrounding us. So I can sell very readily that we were investing future dollars that we would never get any other way, into infrastructure that we continue to pay off for the next 30 years.

Percentagewise, it’s a relatively small business investment for a sure return. I say sure return because I felt that those of us here knew our community, knew the pent-up demand for retail, and knew this mall would be a smashing success — and it has been.

In what ways were you able to help the developer?
First of all, we went to the state of Mississippi. If you have a $50 million or better economic development project, then you can trigger state funds for infrastructure that’s needed to make this project come about. … This mall created 1,500 jobs here — that’s an important impact on this little community. The state invested all total probably about $7.5 million in this project; the first year, they had $12 million in return. That’s a business deal anyone would snap up.

We got the commitment from the state. I could get the commitment from the [city] council for the tax-increment financing. The county government put in a little more than a half million dollars into the project. Then as CBL would bring anchors to the community, I would meet with them to basically sell them on Meridian.

Are you continuing to attend shopping center industry events?
We haven’t stopped. I’m not going this year; I’m in the middle of a re-election campaign, but I’ve been all but two years between 1995 and 2001. After we got the commitment from CBL, I went and stayed around their booth to [talk to] stores like Gap or Bath & Body Works. We went last year because we need a Wal-Mart SuperCenter and a home building supercenter, a Lowe’s or a Home Depot. We’ll be opening a Wal-Mart SuperCenter with a Lowe’s this August. And there will be several other big-box anchors within a center that’s being opened just to the west of the mall.

Would you recommend that other mayors get as involved as you’ve been?
I would recommend it wholeheartedly. Mall developers and shopping center developers … have to identify the communities where the need is. Once they’ve done that, [they] are looking for communities that are willing to help them make retail growth a reality. They need elected officials who understand that this is an investment for the community. Elected officials need to understand that they need to set up a clear series of hurdles that are necessary for the community. Honestly, I think developers respect that. If you say, “We want to do business; here are the things I need to make this good for my hometown,” they respect that.

One of the things I asked of CBL is that I didn’t want a cookie-cutter mall. Meridian was destroyed by Sherman during the Civil War, but we do Art Deco extremely well in the downtown, and our mall reflects that Art Deco feel.

Would it work in larger communities as well?
If cities are not involved, regardless of their size, those developments often go where cities wish they didn’t: outside the city limits. That sucks retail dollars and the sales tax that helps keep city services running away to your competitor. Cities [had] better be involved in this kind of retail development if they want to ensure vital healthy retail commerce for their community.

We’re seeing our downtown come back now. This mall is literally on the fringe of our central downtown business district. You’re seeing specialty retailing that didn’t want to move to the mall do better in the downtown area. And we’re seeing residential development growing downtown.

Are you finding that you’re not the only mayor walking around at these meetings?
Yes. I’m seeing more of my colleagues there. We had [an Alliance meeting] at the Beau Rivage [in Biloxi, Miss.], and 75% of the audience was elected officials or staff of elected officials. They’re getting the message; they understand what it can do for their hometown.

We continue to go back because what started as an $85 million mall built out will be a $200 million investment in my hometown. You add to that the Super Wal-Mart and the Lowe’s Supercenter development, and fill in the property between the two, it’s a significant investment that will be there for the future.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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